As we come to the close of 2019, is your business in need of a tune up? In this post, we share how one of our clients, Kelly, performed a tune-up on her business to get her engines running like new. A tune up in your small business might seem like something dangerous, but it actually is a key way to lead to growth in the long run for your business.
Kelly is a fashion designer. She is a very eco-conscious person, so she created a company around these ideals. Her line focuses on functional fashion that is sustainable and environmentally friendly. Her concept is amazing, and she didn’t need help with products or marketing. Where Kelly struggled was with business operations. While she was a wiz at design and genius of materials, her passion didn’t lie in business operations. That’s totally understandable. No one person can be a master of everything. Kelly had grown quickly, but her business processes hadn’t kept pace. In short, her business needed a tune-up.
When looking for ways to tune up your business, it’s easy to get overwhelmed quickly. How do you know where to start? Well, there are a couple of key areas you should always check.
While it’s not sexy and most people would rather avoid it, reviewing your finances is always the best place to start. The first stop is to review your cash flow. Why? Profit is like food. Cash is like air. You can live a few weeks without food, but you die instantly without air. So, think about your revenue and your cash flow to determine how at risk you might be.
In Kelly’s case, cash flows are highly cyclical, and sales often lag purchases by months. She would always hit a cash flow crunch. Kelly dealt with this problem was by factoring her invoices. Think of it like an advance. You get a percentage of your invoice today from a lender, who gets the full value of the invoice when its paid. It’s not an ideal method. Instead, we set her up with a line of credit. She had good credit and solid financials. She was just continuing to do what she had always done. This simple fix saved her a lot of money.
We come across so many small business owner, who are ready to burn out, because they try to do everything themselves. Don’t. You may think you are saving yourself money, but it won’t work. Please save yourself the aggravation and stress. To learn some time regarding how, please read our tips on Pain-Free Delegation.
Kelly was no different. She is a superstar, but she was burning the candles at both ends. Sound familiar? We all do it. We took Kelly through our Keep vs. Toss exercise, which highlighted several areas where her team could take over. This saved her several hours a week, which she could use to focus on where she excelled, design.
Sometimes we think we are saving ourselves money by trying to keep our technology too long. Intel funded a study of over 3,000 companies in 16 countries. They found a dramatic drop-off in productivity after 3 years.
Look, we understand. Tech purchases aren’t cheap, but they start to pay for themselves after about 3 years.
Kelly didn’t suffer too badly from this. She tended to hand down technology to the lower level talent. Fortunately, they had their own tech, which was faster than what Kelly gave them. While she thought this was saving her money, it was actually creating a cyber security risk. Therefore, we recommended that she stop this practice. A few thousand was worth more than one of her designs or plans accidentally going to one of her competitors.
It’s tempting to want to fall back to what you know. Starting a business is hard, and once you have it up and running well, why change it? While we’re not recommending that you up-end your business, but we are challenging you to try to learn or to do something uncomfortable. Expanding your business can be uncomfortable. However, if you avoid growing, you may find yourself becoming a dinosaur. Hence – tune up.
Being a creative type, Kelly was always trying new things. However, they were all in her comfort zone – design and fabrics. We challenged her to pick one part of the business that made her the most nervous and try to learn more about it. We all have those spots. Those places where we’d rather watch paint dry than do. For Kelly, that was finances. She didn’t like numbers. We told her, that’s OK. Most people are afraid of finances because they hadn’t been taught well. We set her up with the quick curriculum. We took her thought it. To her credit, she stuck with it. While she’ll never love it, she did feel much more confident. She realized had she been more confident she would have stop factoring a long time ago.
We all need a tune-up now and again. Bad habits can creep into the best businesses. They are like dust bunnies under the bed. The longer you wait to clean them, the bigger they get. You don’t have to clean under your bed every week, but it’s a good idea to get into some type of routine.
Brian Cairns, CEO of Prostrategix Consulting. Over 25 years of business experience as a corporate executive, entrepreneur, and small business owner. For more information, please visit my LinkedIn profile