You’ve got your business off the ground, you’ve built up a small pool of customers, you’ve hired a few employees, you’ve just obtained a crucial injection of working capital from an online lender and you might be wondering what you should do next. There are many different options for how to best utilize a small business loan, and every enterprise will have different needs to address, holes to fill and problems to solve. However, that doesn’t mean you can’t glean some insight from the lessons of top entrepreneurs.
Here are five ways small business owners can grow their companies:
- Cut costs, make money
This is the No. 1 rule of thumb for all businesses, but many entrepreneurs might not understand the gist of it. Cash flow and sales are the backbone, lifeline and muscle of any enterprise, and without it, your business can be dead on arrival. However, the steady string of stories about founders receiving beaucoup bucks from venture capital or angel investors might lead some owners into thinking they can strike it rich simply by finding the right person or firm to financially back their company. This can lead to a mentality where owners think they don’t need to worry about having a product that actually makes money. Unfortunately this route is closer to playing the lottery than building a business. Instead, owners should focus on their next sale and, once that’s complete, move on to the next sale and just keep worrying about making money for the company through the actual business process. In the same vein, reducing overhead costs and expenses ensures companies ultimately make more money in the long run. As Entrepreneur noted, this includes resisting the temptation to splurge on fancy office furniture or cutting back on your marketing budget and focusing more on affordable ways to reach potential customers.
- Follow leads, not trends
What’s hot right now won’t necessarily last forever. Sure, maybe your bakery is enjoying the current cronut trend – those delicious mixtures of croissants and doughnuts – but eventually, the line of customers will get smaller. While trends can account for a quick revenue boost, they’re generally not sustainable over a long period of time. This means sometimes you must pivot your business model to more fully align your company with the market’s demands, Delaware Online reported. This could entail shifting from solely operating a food truck to getting more involved in catering and corporate parties, or foregoing a brick-and-mortar shop and focusing strictly on e-commerce. If you must pivot your business model, this could require the purchase of additional equipment or hiring new employees, so it shouldn’t be a decision made lightly. However, if by testing the waters of other markets, you notice a significant bump in revenue, then it might be time to make that investment to switch gears and diversify your business plan or product offerings.
Even though this step sounds a lot easier than it actually is, it’s still absolutely crucial for small business owners. Since cash flow can be an issue for smaller operations that have razor-thin profit margins, simply throwing money at a problem is not an option. Instead, managers and owners need to think of outside-the-box solutions that don’t necessarily require capital investments. Whether this innovation involves changing packaging, improving delivery methods or inventing a new widget, the simple fact is that the most successful companies flourish due to being a disruptive force in whatever industry they operate.
- Have a vision
Even though most small business owners generally show up at the company each morning to face an already jam-packed day of putting out fires and solving problems, that doesn’t mean they should neglect envisioning the next steps for the business. This doesn’t merely mean figuring out what you’re going to do tomorrow or by the end of the week. Rather, having a vision entails creating a plan for the rest of the quarter, the following quarter and for the remainder of the year. Granted, this vision will need to be malleable and flexible to deal with the ever-evolving marketplace, but by having a clearly defined goal in place, you can ensure everyone in the company is working toward the same end result.
- Find problems before you find solutions
Too often, an entrepreneur invents a solution or finds a way to make an action or transaction easier, and then pours all of his or her resources and time into perfecting that particular product. However, if the original route wasn’t really a problem in the first place, it means nobody will need the unnecessary solution. Before getting too invested in something new and shiny, which might end up being useless, be sure to find a specific problem or gap in the market, and be the person to solve that problem or fill that hole.