When you’re starting a new business, there’s a lot of ground to cover. Although some of it varies based on the industry, product, or customers, the key components of business planning remain the same. This is exactly why an MBA is one of the most popular degrees in the country, though you don’t necessarily need to head back to school to master the basics. Here’s a look at the top six things you should keep in mind as you establish and grow your business.
1. Have an Investor Mentality
Even if you won’t be working with investors, you should think like one. “If you’re prepared to invest in a company,” says world-renowned investor Peter Lynch, “then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” Before an investor will consider handing over cash to a company, he or she wants to know:
- How will this company make money?
- What market segment will they tap into?
- How much will they likely make?
- How accurate are their projections?
- Do they have access to emergency cash?
- What gives them an edge or sets them apart from competitors?
- Who is on the team and what experience do they have?
- Does the business have contingency plans in place?
- What’s the exit strategy? (Retain and grow, sell off to a competitor, franchise, etc.)
- What are the company’s strengths and weaknesses?
If you keep these things in mind while you strategize, you’re far more likely to create a profitable business that lasts.
2. Build a Dream Team and Treat them Well
Your initial team should be a diverse group, with each person bringing different skills to the table. Oftentimes, investors will look at the people behind a business before they examine the business or strategy, simply because it’s the people who will make things happen. They’ll be the ones planning, working, and bouncing back as setbacks occur. If you can’t bring in a full team, you can bring in consultants or look for an investor with a background that can benefit you. If you’ve ever seen TV shows like Shark Tank or Dragons’ Den, you’ve seen this in action. It wasn’t just the startup capital the businesses received. They often tapped into the investor’s sales channels or distribution lines, which helped catapult the businesses to success.
It’s equally important to take care of people. Early startups attract talent with things like ownership, titles and stock options. These create real value and inspire them to behave more like owners, often accepting smaller paychecks. That said, getting them paid on their regular schedule is essential, too. “True entrepreneurs pay their people on time, all the time,” says Econet founder Strive Masiyiwa. “And they take care of the most vulnerable members of their organizations first. I’d rather someone called me a successful entrepreneur on the basis that I never missed my payroll, than on the basis that I made a billion dollars.” For the record, Mr. Masiyiwa is now worth nearly two billion dollars.
3. Create Marketing, Sales, and Estimations Budgets
Marketing, sales, and estimations may seem like one group at first. After all, they all help your business grow and should be working together to form a cohesive strategy. That said, they should all be following different paths to help reach your goals. For example, your marketing team should know your segment and customers and be identifying strategies to reach them. They should never sit still, either. Even if they’re running successful campaigns, they need to be making adjustments in the background and running tests to see if they can improve the results. They should also be the ones identifying the pain points of your customers and creating value propositions, both of which the sales and estimations teams will use to help seal the deal.
4. Write Out Your Processes
Every aspect of your business should have a written plan. This gets everyone on the same page, ensures consistency throughout the company, and can help make sure you’re not leaving anything uncovered or to chance. As a start, you should have written guidelines for:
- Employees/ Human Resources
- Finances/ Accounting
- Customer Service
- Marketing/ Sales/ Estimations
- Research and Development
5. Know Your Numbers
Knowing your cash inflows and outflows is essential. Sadly, about 82 percent of all businesses fail because they don’t monitor theirs and make adjustments, per data from US Bank. Particularly in the early days, you should be checking inflows and outflows daily. You should also be aware of what each process costs you, so that it’s easy to do a cost/ benefit analysis and change things up to improve service or reduce costs. For example, there may be paperwork-driven departments or processes that can be better streamlined by implementing software that removes some of the labor associated with maintaining stacks of documents.
Perhaps the software will bring savings in time and money, but the only way you’ll ever know which is better is by first looking at the numbers.
6. Commit to Regular Reviews and Be Prepared to Pivot
Mark audits down on your calendar now and stick to your schedule. The needs of your company will change as it grows, as technology improves, as your product is developed and more. Bring together your best minds on a regular basis to review your processes and your numbers. Then, come up with experiments to run to see if improvements can be made, and measure the success of your efforts. Be ready to pivot when new ideas come up or when old processes are no longer effective.
Get Help from Interstate Capital
If your B2B company is struggling to increase cashflows, having trouble getting clients to pay their bills, or doesn’t know its numbers at any given moment, Interstate Capital can help. Our specialty is a service called invoice factoring, which means we purchase invoices from businesses, give them cash right away, and then handle the collections process. It helps growing companies avoid taking out loans, yet makes cash available quicker for handling daily operations, paying staff, purchasing inventory, and more. If invoice factoring sounds like a good solution for your business, get a free factoring quote today.