Survival to Successful in 10 Steps | SBDC UNF

Survival to Successful in 10 Steps

Although the economy is recovering from the effects of Covid-19, it is doing so faster in some sectors than others. While many businesses are on the rebound, some business owners tell me they are still just surviving, earning enough to meet expenses but not generating a profit. If you are in that predicament, here are ten steps you can take to make your business successful again:

1. Focus on Cash

Your business runs on cash flow.  You can’t pay payroll and rent with profit from sales that are still in your accounts receivable.  You also can’t pay them with money that you used to pay bills before they were due.  Focus on collecting receivables and delaying payments until due.  If you are offered a discount for early payment, consider the effect on cash flow, not profit… in tough times you can’t pay bills with profit, you must have sufficient cash on hand at all times.  Develop a plan to build your cash on hand to a level that equals one to three months’ worth of operating expenses.  Doing so will provide a cushion that gives you time to adjust to any future conditions that may have a negative impact on your business.

2. Generate Revenue First

Redefine your daily goals and those of your employees around generating revenue.  All other activities are secondary… your business will only continue to survive if it generates new revenue each day.  Plan each day to start with, and include, every revenue-generating action you can take before moving on to other tasks.

3. It’s All About Customers

Your business only exists because customers frequent it.  Make sure that you know what they need and want as economic conditions change.  Talk to or survey your customers to determine changing needs.  Is the price of fuel enough of an issue that they would rather have you deliver?  Do you need to stock lower price brands of some items to fit their adjusted budgets?  Have their preferences for products, sizes, or brands changed? Do you need to change your hours so they can shop on the way to or from work rather than make a separate trip on the weekend?  Ask them what you can do to give them more value!  If you don’t have a referral program, consider starting one.  Your best salesperson is a satisfied customer… reward them for recommending you to new customers!

4. Update your Marketing Plan

Economic change brings changes in consumers’ buying ability, habits, and needs.  You will need to adjust what you market, how you market it, and where you market it to changes in the marketplace.  Consider who you sell to – the demographics of your market. Younger generations are not responsive to the same marketing approaches that their predecessors were. As existing customers age, their needs change. They may favor different products, sizes, services, and convenience. Product delivery, assembly or installation, and long-term care or maintenance are services that are popular as customers age. Make sure that your marketing plan relates to any changes in consumer demographics that affect you.

5. Stick with what you do best

Don’t try to attract customers who differ vastly from your core customers, and don’t try to add non-related products.  Both of these can be costly mistakes as you build up slow-selling inventory and incur the costs of marketing to an entirely different market demographic.  I’ve seen pool supply companies try to add toys and outdoor playsets to their business, only to have to sell them below cost at some point to regain some cash and floor space.  They were unable to stock the variety of items available at ‘big box’ stores, couldn’t match the prices of those stores or online sellers as their purchasing volumes were too low, and never bothered to notice that the majority of their existing customers did not have children living at home.

6. Update your Business Plan

If you don’t have a business plan, this is a good time to create one.  Don’t try to manage your business day by day as you go along.  A plan will match your resources to your needs, allow you to track actual performance against projections, and let you see the “big picture.”  The Florida SBDC at the University of North Florida provides no-cost consulting to assist you in this task.  There is no excuse not to have a current business plan.  Needless to say, 6a would be “Follow your Business Plan.”  It will not do you any good sitting in a drawer.

7. Manage by using your Financial Reports

Most accounting systems and all bookkeepers and accountants can provide you with monthly reports that show accounts receivable aging, cash flow, inventory turnover, sales trends, expenses as a percentage of sales, and other data that will help you manage your business.  Ask the SBDC or your accountant if you are unsure of what these reports are indicating.  They are the gauges of performance, just as the gauges in your car tell you how the engine is performing; your financial reports show the condition and trend of your business.  They will let you know if you need to make any adjustments before conditions become critical.

8. Protect your Credit

Your business and your personal credit ratings are important for future loans, new vendor accounts, and may be reviewed by a larger company that is considering placing an order with you.  Many people tell me that they “let their personal credit go bad” in order to pay business expenses.  They think that because the business credit is good, they can get loans.  Not so; for small business loans, banks will consider both business and personal credit standing.  If you are running into difficulty making payments due to a drop in cash flow, don’t just avoid making payments, instead renegotiate terms with your lender.  Having a current business plan that shows adjustments you will make to improve cash flow will help you present your case.

9. Turning “O’s” to “S’s”

Remember the SWOT analysis… Strengths, Weaknesses, Opportunities, and Threats?  You should perform a SWOT analysis on your business and on your major competitors.  Their weaknesses should present opportunities that you can turn into strengths.  That can give you competitive advantages (by being better or different than the competition) and you can expand your customer base, sales, and cash flow by acquiring some of their customers.

10. Look for New Opportunities

Keep networking, pay attention to new trends (one source is www.trendwatching.com), and look for new ways to add business and control costs.  Your trade association, if there is one for your business, will be a good source of information about what similar companies throughout the nation are doing.  General business publications like Florida Trend, Inc, Entrepreneur, Forbes, and Fortune magazines all have articles about how businesses are employing new ideas to boost sales and what they have done to overcome difficulties.  There may be some action, process, or thing already tested and proven that you too can implement.

Employing these 10 steps can help you pivot from surviving to successful, and are also instrumental in helping already profitable businesses become more so.

If you are a business owner and seeking assistance with your business with our 18 counties, complete our Request for Consulting Form, and one of our client intake specialists will contact you to schedule an appointment with one of our business consultants.

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