It is the bane of every new business (and a lot of old ones too) – the constant need to scrape together funds to make ends meet. Running a business can be very stressful. With all the myriad worries that plague your mind, not having enough money to pay your employees or creditors should not be one of them.
Assuming that you kick started your business with a clear business plan and adequate funds in hand, there can be a handful of reasons why monetary troubles still plague you. Let’s explore them in a little detail.
1. Careless accounting
To keep costs low, a lot of business owners take over non-essential functions like finance and manage their company accounts by themselves. Often, they entrust the cheapest available person who knows something about accounts with the job of managing finances. Poor move.
Your money is the oil in your wheels. It’s what keeps your business running. First and foremost, separate your personal finances from those of your business. However, great be the temptation even in tough times, never skim the till .
Invest in a competent financial manager and allow them to set up a simple and transparent accounting system for you. A financial management software like FreshBooks or CloudBooks will help you keep your payments and accounts receivable in order. They will help you create invoices, send out reminders for overdue payments to your debtors, manage your payroll and pay your taxes correctly.
Most importantly, make it a point to be diligent about each income or expense by recording it in your financial software. That way, you’ll always know where your money went at the end of the financial year.
2. Wonky resource allocation
Not spending adequate time in drawing up an annual budget for your business means you will dip into your finances arbitrarily, every time you need to buy or sell something. This means you could be spending your working capital on making long term capital purchases and losing out on lower tax rates or rebates for capital expenses.
Create a two-tiered budget, one as a guideline for the entire year and the other a monthly version of your annual budget that takes into account everyday business realities, like less foot traffic in the your store in snowy winter months. The budget will list all anticipated expenses, such as materials, land and equipment, in the normal running of your business.
By prioritising your purchases and skimping a little on your luxuries, you will avoid running out of money before the month is even over.
3. Impulse buys
Too many business owners treat themselves to unexpected and unplanned purchases for their business that can throw the entire month’s budget out of gear. It could be an impromptu office redesign project or a brand new truck for deliveries.
Every budget has a “miscellaneous” or “petty cash” section meant for just these kind of situations. However, relying on these emergency allocations in your budgets to buy something that is not even part of your annual plans is a direct reason why your funds dry up before the month runs out.
Stay strictly on script and purchase only those items that you earmarked at the beginning of the year or month. This way, you will have a reserve fund for emergencies and no guilt free about raiding your business’ finances.
4. Under quoting to clients
That we live in a competitive business environment is understating the obvious. Tons of new businesses try to break into a new market by offering extremely low rates to potential buyers. This is admittedly a great way to grab instant market share, but at what cost?
Too many businesses are in the red today because all they cared about was undercutting each other to win a client. Even if this strategy works in the beginning, relying solely on lowest prices is not a strategy viable for the long term. In the minds of customers, under quoting opens the door for further bargaining, or raises doubts about the quality of your products. Smart pricing strategies make for a sustainable business.
This article was originally posted here on Entrepreneur.com.
Leon Meyer GM At Westin Cape Town Shares 4 Experience-Driven Tips On How To Keep Your Team Productive
Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins.
Productivity is a fundamental requirement for an organisation – it’s the seed that builds a business and contributes to higher profit margins. But what’s the best way to ensure employees remain productive, and happy in their day job?
The answer is simple and highly effective and I choose to sum it up with three short phrases – respect, trust and teamwork.
In partnership with my management team, which consists of about eight staffers across various disciplines, we strive to tick these boxes.
In total we’re ultimately responsible for managing roughly 500 employees.
Five hundred employees across several departments is a mighty job. But with teamwork, good listening skills and the right attitude from the top to filter down, any business can run like a well-oiled machine.
I’d like share with you the essentials for building and maintaining a productive workforce, and these apply to all industries, not just the hospitality sector:
1. What’s your definition of a productive team and how do you achieve that?
We need to keep in mind that productivity is a result, one that CEOs and managing directors strive for with their teams. But what happens beforehand in order to achieve that result determines whether it will be achieved at all, and is equally important. I suggest the following to ensure a productive team:
Define roles and responsibilities: Direction is incredibly important; everyone needs to know exactly where they’re going and how they need to get there, so KPIs are essential.
Often when roles and responsibilities are unclear, things go pear-shaped. I am an advocate for setting clear KPIs, it’s a good way to steer us in the right direction, and in turn helps to grow the business and the individual in his/her role.
Be flexible: Rigid environments are the worst kind, allow your employees some flexibility and the opportunity to be themselves in the workplace. We spend so much of our time at work, we need to be ourselves there.
Celebrate the team: When there are achievements, celebrate them, single out individuals who are excelling and living the company values. This builds morale and is indicative of appreciation, which is fundamental when running and building a business.
2. What has and continues to be your philosophy since managing a large team?
Know your strengths and weaknesses, as well as your team’s and leverage off that. Be prepared to learn from others, no one can operate in isolation, regardless of the level on which you operate. Accept criticism and don’t bulldoze someone’s ideas, that’s how you build trust.
3. What in your view are the top characteristics the team look for in a leader?
- Be consistent – inconsistency screams bad leader
- Provide guidance – this is key, don’t turn a blind eye, give input and council
- Listen – always listen intently
- Be impartial – always be fair
- Give credit – it builds morale and shows you recognise good work
- Be patient – Rome wasn’t built in a day, and remember not everyone thinks the same as you do
4. What’s your view on an open door policy and how does it assist with managing a team and ensuring everyone remains productive?
I believe in an open door policy. It’s essential to build and develop trust. I’m the first to admit that it takes a while to build that trust, but once the team (on all levels in all departments) know your door is always open, and that they can trust you implicitly, half the battle has been won.
I host a GM’s roundtable every two months, just to establish how everyone is feeling and where everyone is at. It gives staff the opportunity to bring their challenges to the table, and I deal with them the best I can.
It’s 100 percent confidential and line managers are not allowed to attend. During this meeting we try reach common ground, and I commit to addressing and ultimately solving the problem(s).
Why Purpose Drives Profits
If you want to succeed, it’s time to start engaging where it matters.
Over the past two years, many clients have been extending brand positioning exercises into purpose-driven expressions.
When we look at it, it makes sense given the country’s demographics. With many of our fellow countrymen struggling to make ends meet, brands have stepped in to provide them with a picture of a future worth striving for.
Global customer-centricity study, Insights 2020, led by research firm Kantar Millward Brown, has attempted to understand how brands could drive customer-centric growth as well as the factors that really make a difference. The research surveyed 10 495 individuals in 60 countries, and there are some significant efforts worth investing in if brands want to engage where it matters most, in consumers’ hearts.
The research uncovered that for market-leading companies and brands, traditional value drivers such as quality, packaging, or distribution are necessary, but no longer provide a competitive advantage; most brands are capable of providing these drivers. What is important, are a few critical approaches.
1. Purpose-led brands
The study found that when companies or brands linked to a purpose, 80% of them outperformed the market. Only 32% of non-purpose led brands managed to perform better than the market.
Related: How To Calculate Gross Profit
2. On the ground
It’s important to engage with consumers in their space and on their terms. Through the use of memorable campaigns, experiential events and activations it is critical to engage with consumers on their turf.
3. Be truthful and authentic
Consumers can smell something inauthentic a mile away, especially when it’s coming from a brand. This forces brands to strive for authenticity in everything they do, especially when it comes to marketing. Building values and principle-based attributes into your brand as a guiding tool is essential.
4. Helping consumers commit
By allowing individuals to attach themselves to a brand with a purpose, it helps consumers personally commit to a cause that they consider important. When a consumer is personally invested, the link between the brand and product or service deepens.
5. Balancing heritage and modern relevance
There is a continuous tussle in balancing the traditional market, transitional market and the new consumers brands are trying to attract. Keeping the heritage and roots of the brand true to itself, while creating relevance for the new market, is a battle marketers are still fighting.
Need To Trim The Fat To Boost Profitability? Listen To Your Clients First
Jeff Bezos believed that once you win the client over by doing this, everything else will follow – not least profitability.
Finding the balance between offering the extras that set you apart from your competitors and keeping things ‘lean and mean’ to minimise wastage and maximise return on investment is a tricky balancing act.
I’ve noticed that many businesses try to attract or retain customers by offering what they think their customers want, rather than finding out what they really need, and then delivering that. That’s an expensive mistake to make – and it’s not going to achieve the business results you need.
I’ve also observed that now is the age of the new entrepreneur – the game changers who disrupt the status quo long set by big bureaucratic competitors who think that their customers will just accept an inflationary (or slightly larger) increase every year, just because they always have.
While Amazon has been around for a while now, there’s also an important lesson to be learned from its launch goal, which was to bring the price to the client. Jeff Bezos believed that once you win the client over by doing this, everything else will follow – not least profitability.
How have I applied these lessons in my business?
Firstly, we design our hotels backwards – we focus on the needs of our clients, very aware that what hotel guests wanted years ago is not what they want now. That’s why we don’t offer thing like a turn-down service with chocolates on the pillow. Nobody eats the chocolates, and nobody uses the toiletries – so why should we include the costs of these unwanted extras (and the cost of the staff required to implement them) in the final bill to our clients?
We do, however, offer free WiFi internet connectivity, free parking in our buildings, free laundry services and either bed-and-breakfast options or self-catering rooms.
Simply put, we’ve cut the fat that nobody wants anyway, and added the value that our guests have said they expect.
Our clients have said that they expect the whole hotel to be a workstation, and not just the business centre in a dark, unwanted corner. So, we’ve put a workstation in every room, with always-on access to the internet. Our hotels are designed with beautiful work spaces that cater for nomadic entrepreneurs and double up as comfortable meeting spaces, again – gone are days of boardroom only meetings, our spaces are primed for work and play in one integrated space.
Our clients have pointed out that they’re already paying for their room – so why should they pay for parking?
Many of our clients stay with us for days or weeks at a time, and have said it would be helpful if we did their laundry. So, we do that for them – and we don’t charge them for it.
It’s true that many of our old-school competitors offer a broader range of products and services than we do, but we’ve built a successful business on adding the value that our clients need, removing the costs and extras that annoy them, and keeping costs (theirs as well as ours) under control by cutting out unnecessary frills.
It’s an approach that’s worked for The Capital Hotels and Apartments as a disruptor in the hotel and long-stay accommodation industry, and I’m confident that its principles would apply to any other industry that’s ripe for disruption.
Support for Women Entrepreneurs3 days ago
11 Quotes On Hard Work, Risk-Taking And Getting Started From Beauty Billionaire Estee Lauder
Budgeting1 week ago
Planning A Year End Function On A Budget? Five Fabulous Tips To Get The Most Bang For Your Buck
Company Posts1 week ago
Why Spartan Is Focusing On SME Funding And How They Can Support Your Business
Entrepreneur Today1 week ago
Introducing The Conext Sponsorship Forum: A Platform To Explore, Learn And Connect With Great Next-Gen Sponsorships
Self Development1 week ago
Research: The Power Of Meditation That Will Blow Your Mind
Entrepreneur Profiles1 day ago
The House That Moladi Built – How Challenging Traditional Building Empowers Local Entrepreneurs
Entrepreneur Today2 weeks ago
67CEOs To Host Global Entrepreneurship Week 2018
Company Posts2 weeks ago
“Free” Online Courses Versus Interactive Classroom Courses