Building Sound Business Foundations Aids Small Business Success
Building a small business without first laying a strong business foundation is detrimental to the business’s future growth and ultimate success.
Small businesses that survive beyond their initial start-up phase and become successful businesses with inbuilt sustainability are generally those who set about building sound business foundations from day one.
Those that don’t survive their initial start-up phase usually fail as a consequence of committing one or more deadly business sins such as:
- Financial mismanagement,
- Proceeding with inadequate business management skills,
- Poor record-keeping,
- Sales and marketing misadventures,
- Critical recruitment mistakes,
- Unwillingness to seek independent professional advice where desirable, and
- Personal well being affecting the business owner’s ability to act as the key driver of the business.
Avoid Financial Mismanagement at all Costs
If someone is not an accountant and plans to develop and operate a small business, one of the first things the business owner should do is set up a business relationship with an excellent local accountant. This accountant should have sound experience in assisting local small businesses to structure their financial systems and financial reporting mechanisms properly.
Equip Yourself with Adequate Business Management Skills
If someone owns and operates a small business and does not have well-developed business management skills, the lack of critical skills will affect their chances of success. Small business owners can quickly learn business management skills, and ample resources exist to help small businesses upgrade their skills in this area.
Records Management Systems are Critical
At the very least, from day one, a business owner should:
- Know what records need to be created, kept, and the storage duration required by law,
- Understand the importance of safe, secure, and well-organized storage and provide for same,
- Implement systems to ensure that all follow policies and procedures relating to records management, and
- Provide for back up copies for all critical records.
Sales and Marketing Strategies Impose Discipline
A well thought out and apparent sales and marketing strategy are required to prevent negative cash flows caused by ill-considered and costly marketing and advertising campaigns that fail to deliver anywhere near the sales revenue anticipated.
Proceeding to commit funds to such activities without the support of a definitive strategy is a well-trodden path to business failure, one that should be avoided at all costs. A plan provides the necessary discipline to prevent costly mistakes.
Choose the First Employees Wisely
Initial hiring decisions are often the cause of a lot of subsequent pain for a start-up business. Often expediency rules and little thought is given to the core essentials such as:
- Formalizing roles with role statements, position descriptions, and selection criteria,
- A structured recruitment and selection process that satisfies all legal requirements,
- Formal letters of offer of employment containing all agreed terms and conditions,
- Ensuring that the business cash flow can support full-time employees plus their considerable overheads,
- Recruiting the skills required by the business right now, rather than recruiting people with skills that may be helpful in the future but come at a high cost for little return in the short term, and
- The capability of those employed to grow with the business and become part of the desired business culture.
Utilize the Services of Professional Business Advisors and Management Consultants
The services of business advisors, management consultants, legal advisors, and financial advisors can be the difference between success or failure for a small business, especially where the owner is not entirely competent in all aspects of operating a business.
Many small businesses in their start-up phase are that they cannot afford to engage the services of professional advisors and business consultants. The reality is that few can afford not to hire such professionals. The providers of these professional services can ensure the correct alignment of the business objectives with the business’s resources and validate that the company is operating within the relevant legal constraints.
Looking After Number One
In the start-up phase of any business, the business owner is a critical resource. Therefore, it is beholden upon the business owner to ensure that they are initially fit for the journey ahead and that they institute a plan to ensure that they do not burn out before the business has a chance of achieving business success. These actions will ensure that the owner remains part of the business foundations and can contribute effectively towards the business building process and create long-term sustainability in business operations.