Small businesses can range from a handful of employees to a few hundred. Depending on how long these businesses have been around, there are some key tips that owners may or may not already know. Here are five bits of guidance to think about.
1: Manage your overtime.
This may not be a big deal for a company with five employees, but it is something that you have to keep track of. Overtime is an easy way for employees to take advantage of the system. Once you approve overtime for an employee, make sure that you specify some guidelines for that overtime, including hours worked, travel and entertainment costs, etc. Most importantly, make sure that your budget has overtime assumptions in it.
2: Revisit your budget throughout the year.
Budgeting is a key monitoring tool for management. If actual results of your business are not in line with the budget that you created for the year, something is not right with your budget. Even though the budgeting process should be completed on an annual basis, it’s important to revisit the budget at some point during the year, whether quarterly or semi-annually. If you notice that something is amiss with your budget early on, don’t wait to revise it.
3: Take advantage of being a good customer to others.
If you’ve been in business long enough for vendors to know that they can trust you to pay, consider taking advantage of that positive relationship. If possible, negotiate volume discounts and ask your supplier to store the goods until you need them (entrepreneur.com). That way, you’ll enjoy a lower per unit cost, and you’ll know that the goods are on hand with the vendor. You may even be able to pass the reduced cost on to your clients.
4: Don’t be afraid to get rid of bad customers.
It’s just business, nothing personal. That’s what you have to keep in mind for those high-maintenance customers that are doing more damage to your company than good. Instead of focusing your efforts on the ones that aren’t paying on time, cut your losses and move on to someone else. If a customer continues to be a problem time and time again, you have to evaluate what their business is worth to yours. If it’s not enough to make a difference in your bottom line, let them go.
5: Incentivize your employees.
It doesn’t matter what industry you’re in, employees need incentives. Consider putting a bonus plan in place, and in your budget, to motivate your number one asset: people. The idea is to improve things like sales, customer satisfaction, and productivity (entrepreneur.com). Make sure that your employees know exactly what’s expected of them and how they are part of the bigger picture. I challenge any business owner to find an employee who doesn’t like being rewarded!
Rosalind Resnick, “10 Steps to Small-Business Success in 2011”, Entrepreneur.com