Improving Your Small or Home-Based Business
You cannot simply maintain a business. Today’s competitive age requires that you continually improve your business.
NOTE: This article benefits you (a small- or home-based business owner) if you have already completed the Self-Employment Workshop or other business startup training, have managed your business for at least two years, and have written a business plan that guides your management of the business.
Businesses compete fiercely for customers, sales, and market share. You cannot simply maintain a business. Today’s competitive age requires that you continually improve your business. Follow the steps below to help improve your business:
The acronym SMART refers to goals that include each of the following:
Specific terms that define clearly the desired result, not generalities like “improve my business.”
Measurable numbers, percents, dollars, or other terms that easily indicate progress and completion.
Achievable results within the limitations of time, money, and the other resources of your business.
Relevant goals appropriate to the direction, product, services, and market you want for your business.
Time-specific deadlines and milestones outlining when you will complete the entire goal and each phase of the goal.
You may wish to review the following examples and then draft two to three SMART goals for your business.
Focus on Specific Aspects of Your Business
You select specific aspects of your business you wish to improve: profit and loss, marketing and sales, finances, products and services, technology, or other. Begin with one aspect, and then add others until you improve three to four aspects each year. You may wish to consider each of these examples for a typical business:
- Profit and loss: Increase profits, decrease overhead, or increase margins.
- Marketing and sales: Increase number of sales, sales revenues, new customers, or sales per customer.
- Product and services: Improve your product, introduce a new product, reduce defects or service flaws, or decrease cost per unit.
- Finances: Monitor financial transactions more effectively, decrease debt, obtain new capital, improve collections, or decrease accounts-receivable timeline.
- Other: Open a new or additional location, increase facility size, renegotiate a lease, hire new employees, or obtain health benefits for you and your employees.
Develop a Dashboard to Monitor Progress
A business dashboard is like the dashboard on your car. The dashboard on your car allows you to monitor key systems of your car: speed, gas levels, engine temperature, and turn signals. Your dashboard notifies you when attention is needed to key systems such as brakes, oil, and engine status.
A business dashboard allows you to monitor key systems in your business: daily sales and production, cash collected and spent, store traffic, or product turns. Effective dashboards will also notify you of systems that need attention: inventory, sales, or cash flow. You will want to monitor some information daily, other information weekly, and still other information monthly.
The Web sites www.bizstats.com or http://www.venturelab.ucf.edu/resources_bizplan.html (make sure you review the tools in the “Kaufman” link) list best practices (or benchmark scores) of industries. You can find data, collected from thousands of businesses, about the most important processes in your industry. You may use the data they collected to set goals and compare your business with best practices in your industry. For resources available in your area, contact your local employment resource center or self-reliance center.
Programs like QuickBooks or Microsoft Excel allow you to create simple dashboard reports that can be generated and studied quickly. Create the reports by hand if you do not have access to computer programs. Line, bar, and pie graphs illustrate information for quick comparison. Choose the best report format for you. Then, review your dashboard each day, week, month, quarter, and year.
Training programs or business organizations can help you learn how to manage your business more effectively and efficiently. Resources to help you manage your business include business development programs, vendors and suppliers, or companies that can do some of the work more efficiently for you (many people refer to this last group as outsourcing).
Business Development Programs
Business development programs help you learn how to improve your business rather than doing the work for you. They teach business owners about business planning, human resource supervision, operational management, bookkeeping, legal issues, problems and solutions typical of start-up businesses, and much more. They allow you to learn from the success and failure of others. They save you time by showing what already works rather than inventing something that has already been done.
Each community offers a mixture of programs to help microenterprise or small business. You can:
- Read from a wide variety of books, journal articles, or reputable blogs.
- Enroll in community-sponsored programs such as Small-Business Development Centers (SBDC), Service Corps of Retired Executives (SCORE), chambers of commerce, and more.
- Participate in microenterprise or microfinance programs that include training.
- Join professional or community associations targeted to improve entrepreneurship or business ownership.
- Attend conferences, workshops, webinars, and other training events.
- Hire consultants or other professionals to help you grow your business.
You will find a list of good books and links to national and international programs by creating an account on ldsjobs.org. Search for local small-business programs on this Web site by selecting Small Business Resources in the drop-down search list.
Vendors and Suppliers Who Provide What You Need to Accomplish Your Goals
Vendors or suppliers do not teach you how to improve your business. They sell you the raw material you need to produce what you sell: chickens, textiles, wire, steel, or anything that you use. As a business owner, you may need to buy office equipment, office supplies, printing, advertising, or furniture.
You can improve your business by carefully selecting your vendors or suppliers. You may negotiate discounts on purchases, service contracts, and other cost savings. You may also negotiate better payment methods so that you don’t have to provide the cash at the time of purchase.
Companies That Can Do Some of the Work More Efficiently for You (Outsourcing)
Finally, you might consider hiring companies to relieve you from having to hire employees. Frequently, business owners feel they must do everything. Consequently, small tasks required to run the business distract them from more important tasks required to grow their business. The Internet allows business owners easier methods of hiring other companies to do the things the small business had to do. This process of hiring a company to do part of what your company would have done is called outsourcing. Today, you may hire:
- Bookkeeping, accounting, legal, and financial planning firms.
- Payroll firms that hire people, process payroll, and provide group benefits.
- Customer service, phone banks, and virtual assistants to answer phones, process orders, and provide clerical support.
- Advertising, marketing, or manufacturer’s representatives to sell your product.
- Information technology firms that maintain Web sites, computer networks, and data backup.
- Manufacturing companies to make and ship your product.
Plan Three to Four Additional Actions Each Month That Will Lead to Achieving Your Goal
As a business owner, you must recognize that you cannot improve your business if you continue to do the same things you always do. Successful business owners work on their business, not merely in their business. You will need to identify specific actions you will take to improve your business. Start by selecting one thing to do each week or month in addition to what you are currently doing. Then, when that one thing is producing results, add another action that will grow your business. Limit yourself to three to four additional actions, lest you become overwhelmed.
You will find ideas for action from the resources you consulted in step 2. You may read ideas in books, journal articles, or blogs. You may learn them in programs, workshops, or conferences. You may hear them in community meetings or associations.
Add Time to Your Calendar to Complete the Actions
Business owners need to plan what they are going to do on a calendar. You may use a paper on the wall, a calendar you carry in your pocket, or a time manager on your computer or cell phone. You must set aside time on your calendar to complete the actions once you decide what to do to grow your business. Protect the time so that day-to-day operations don’t prevent you from acting. Then, evaluate whether the actions improved your business—and how much it improved.
Large businesses build accountability and reporting into their operations. Each person reports to the person higher in the organization until the chief executive officer reports to the board of directors. Small-business owners and entrepreneurs encounter a challenge in reporting. To whom do you report? You have no supervisor because you supervise everyone else.
Microenterprise organizations proved the benefits of accountability in their rural banks. Each week the borrowers would report to the other borrowers on the growth of their company as they paid their loan. So, we encourage you to create accountability for your business.
Many entrepreneurs and small-business owners join or create groups to provide accountability. A group might include five to six people working towards similar goals. The group meets once a month for 60-90 minutes to encourage and support one another. The agenda for meeting with your group is simple:
- Owners state their goal, what they did since the last meeting to improve their business, the results of what they did, and what they will do before the next meeting.
- Members present a challenge or idea they have to the others. The group then brainstorms solutions or gives feedback to the person who presented the challenge or idea.
- The group celebrates one another’s successes. They also lift one another through setbacks.
Creating accountability through mentors, small-business groups, or other methods provides several benefits. You won’t feel alone in solving problems that all business owners encounter. You will find that reporting progress to others motivates you to complete the actions you outline. Because you complete the actions, the rate of improvement will increase. Others will help generate good ideas for improvement and action when you can’t think of anything else to try. Your group will regenerate you when you feel you have nothing left to give.
Don’t face the daunting task of improving your business alone. Create accountability by finding a mentor or by joining or creating a small-business group.