Hands up if you want to grow your small business, but try as you might you just can’t figure out how to do it. It’s a frustrating scenario isn’t it? You need more money coming in to be able to employ someone, but you’re at full stretch yourself so you’ve no way of getting more business through the door. Don’t worry, you’re not alone. It’s a problem that most small business owners face and here’s a few thoughts on how to overcome this common problem.
3 ways to make that financial step from “one-man band” to being a genuine small business owner24 May 2018 The Small Business Coach
Put your prices up
Yes, that sounds odd but if you have plenty of clients coming to your “door” and simply don’t have time to serve them all, it’s time to put your prices up. You’d be amazed how much of a difference even a small price rise can make
And even if you don’t have customers clambering through your (virtual) shop windows to buy your products or services – a price rise is more than likely, something you could still put in place. Now, you’re probably reading this bit thinking “I couldn’t possibly do that” and you’re one of many small businesses that would think the same. But are you really charging market rates or are you letting your small business inferiority complex damage your bottom line? Your products and services are just as valuable as those offered by bigger business and you should charge appropriately. If you’re still not sure, do some market research. Phone up your competitors (or get a friend to do it) and get some quotes and you’ll see more often than not, that your prices are well below where they could be.
Bring your costs down
Sounds obvious, but it’s not just about getting the best price for raw materials to make your products. Think about electricity, heating, water, business rates and rent. Do you really need a large, posh office in a top postcode if you don’t entertain clients at your premises? Are you heating rooms in your building unnecessarily or leaving the heating on overnight when you’re not even there? What about your energy suppliers… are you sure you’re getting the best deal?
Then there’s the subscriptions for software that you don’t use. That unnecessarily high mobile phone tariff and the monthly direct debits going out for memberships to a club or group you no longer attend, or that delivers no value to your business.
One of the best ways to bring your costs down is to go through the business bank statement on a monthly basis and question every item on the list. Ask yourself; Why is it on there? Does it need to be? Does it add value to the business? Can it be done better or cheaper elsewhere? Once you reduce your costs, you’ll have more money in the bank to consider bringing someone else on board and begin to expand.
A useful tip is to have a secondary “savings” account for your business. This helps you to save for your tax bill at year end, but can also be used to “skim” money from your main account so you can save up to employ someone in the future.
Get a loan to fund your first employee’s salary
This might seem like the simplest approach but it’s also the highest risk. If it’s not planned correctly, your small business could end up further from your goal than when you started off. If you are going to consider using a loan to fund your first employee’s salary, here’s a few things to think about first:
Exactly what are they going to do? Write a detailed profile of their role and responsibilities.
How will their role enable the business to make more money? Will they be selling (in a small business, everyone should be responsible for selling)? If they’re not selling, are they taken work of you so that you can sell?
Following on from this, exactly what will your role be, once you employ this new person? You can’t afford to sit back and relax – you have a loan to pay off and an employee’s salary to pay every month. Make sure you have a defined plan in place for yourself, when your new employee comes on board.
How much money will you need to borrow? This can be calculated by producing a business plan showing how your business will change and earn money once the new person comes on board. By making a plan including financial projections, you can understand how many months you will be reliant on the loan paying your new employee’s salary before your small business finances improve sufficiently to take over the responsibility.
Has this post struck a chord? Would you like to talk to us about how to grow your business? The small business coach offers a range of business support packages to help businesses like yours. Take action today and let’s get your business on the path to growth.