Get key business strategies right
Business owners must remain focused on the key issues that ultimately determine success or failure. With dozens of different tasks competing for your time, you need to identify activities that will make a real difference to long-term success.
Key areas include marketing, winning sales, managing cash flow and motivating employees. You also need to make sure you are managing risks and dealing with your legal obligations. You also need to make sure you are managing risk, protecting customer data and dealing with your legal obligations.
Your permanent priorities
You must keep constant track of five key areas if your business is to succeed.
Concentrate on attracting and keeping customers
- Continually research your customers and competitors.
- Work out which customers you want to target and how you will market to them.
- Actively promote your business and your products or services. For example, use pay-per-click (PPC) advertising, email marketing, social media, PR and exhibitions.
- Make sure you are spending enough time selling.
- Price your products (or services) competitively, but compete on value and service rather than on price alone.
- Revisit your prices regularly to see whether you can increase them, especially if you are faced with rising costs.
Monitor your cash flow closely
- Keep track of the balance between money coming into the business (usually mostly from sales) and money going out. Try to anticipate cash flow peaks and troughs so that you have time to deal with them.
- Set up effective credit control systems. For example, many businesses need to put more effort into getting sales invoices paid on time. Send your invoices out promptly and chase money you are owed as soon as payment is due. Implement cloud-based accountancy software to automate processes and make it easy for people to pay you.
- Use the right kinds of financing. A loan (or investment by an external shareholder) might be a better way to cover a medium-term borrowing requirement than an overdraft.
- Explore other funding options. Other options include using factoring or invoice discounting to borrow against unpaid invoices, and leasing equipment rather than buying it outright.
Make sure your employees are performing effectively
- Start by recruiting the right people. Use job descriptions to work out exactly what skills you want your employees to have.
- Lead and motivate your employees. Agree clear goals, encourage employees to take responsibility for achieving them, and praise and reward good performance.
- Monitor employee performance with regular reviews. Find out how you can help them to be more productive. Give them the tools and training they need to succeed.
- Discuss and resolve any problems and frustrations – otherwise employees will move elsewhere.
- Consider implementing flexible working patterns and optional remote working to provide a better work-life balance for employees.
Develop your selling skills
- Make sure that you, and all employees who interact with customers, have the right training, attitude and approach.
- Give salespeople easy access to the information they need.
Keep tight control over your costs at all times
- Cost control is often the easiest way to improve short-term profitability. For example, you might be able to negotiate better deals with your suppliers.
- Remove waste and inefficiency from all areas of your business.
Your business will inevitably face a range of potential risks, but with planning and good management, you can reduce them significantly. Put contingency plans in place to help you cope if things go wrong.
Take out any insurances you need
- As a minimum, you are legally required to have employers’ liability insurance (if you have employees) and third-party insurance for any motor vehicles.
- You are likely to want to insure your premises and their contents.
- Other insurances you may want include public and product liability (to help protect you against legal claims if your business or product causes harm) and business interruption insurance (to cover losses if a disaster stops you trading).
- A good insurance broker can advise you on a suitable policy.
Build customer loyalty to reduce the risk of losing a key account
- Provide a high standard of customer care and keep in regular contact.
- Diversify your customer base to avoid excessive reliance on one account.
Control your cash flow
- If cash flow problems look likely, take positive steps to avoid them.
- If disaster threatens, you might need to negotiate with your creditors or consult an insolvency professional.
Treat your employees well to minimise the risk of resignations or legal action
- Offer competitive remuneration and a pleasant and rewarding working environment.
- Draw up sensible and fair employment contracts.
- Treat employees fairly and in accordance with their legal rights. Prepare and implement an equal opportunities policy.
- Invest in training and development.
- Share knowledge and skills to avoid relying too heavily on one key employee.
Make sure your computer and cloud systems and the data stored on them are secure
- Take regular back-ups so that you can restore data if your system crashes. Keep physical back-ups somewhere safe, away from your premises and invest in cloud data backup.
- Use virus-checking and firewall software, and protect access to data with passwords. Seek professional advice about IT security from a recommended expert.
- Set up manual systems that will allow you to carry on working when devices are out of action.
Make sure that you comply with your data protection obligations
- If you process information about individuals for business purposes you must comply with GDPR regulations (effective from May 2018)
- You must comply with the data protection principles. For example, you must limit the amount of personal information you hold and make sure that it is secure.
- You may be required to register with the Information Commissioner’s Office.
Protect your premises
- Secure and insure your premises.
- Plan ahead if your rent is going to be reviewed, your lease is due to expire or before any rates revaluation.
Protect your intellectual property
- Consider patenting inventions and registering designs and trademarks.
- Only invest in intellectual property protection if it is commercially worthwhile and if you are prepared to enforce your rights.
Negotiate solutions to disputes whenever possible
- Deal with minor issues before they become more serious.
- Use informal meetings first to try to sort out problems, but don’t avoid more formal action where required.
- Take notes during dispute meetings and ensure all interactions are documented and filed.
- If you are threatened with legal action, take advice.
Get advice if you plan to trade internationally
International trade can involve entirely different challenges and risks. These are covered by dedicated IoD Factsheets:
Investing time and money in training and more effective tools and systems can pay long-term dividends.
Invest in technology to maximise business efficiency
- Work out what your business aims are, and use these to define what your IT system needs to do for you.
- Move routines and repetitive tasks (such as bookkeeping) to automated cloud services.
Save time and money using modern communications and the internet
- Email is still a cost-effective way to communicate.
- Interact with your customers on social media platforms such as Facebook and Twitter.
- Make use of in-app communication platforms.
- Instant messaging services such as WhatsApp may be useful ways to communicate with remote employees.
Establish time-saving routines
- Develop and implement straightforward policies so that you do not have to take the same decision repeatedly.
- Store information systematically so that it is easy to find (whether in paper files or on a cloud storage service).
Manage your time efficiently and help employees to do so
- Organise a schedule of tasks.
- Aim to spend most of your time on important activities that will help you achieve your business goals. Look for opportunities to delegate (or even eliminate) less important activities.
- Use appropriate tools such as task management and time tracking apps.
- Invest in developing employees’ skills so they can become more productive
Organise your time
Allocate a set time for all activities you need to carry out. Create a to-do list, stay focused and try to avoid getting distracted by minor issues.
- Check your appointments and any correspondence.
- Delegate jobs and brief employees.
- Set aside uninterrupted time for dealing with urgent tasks, and important weekly and longer-term tasks.
- Set specific times to check email, and avoid doing so throughout the day.
- Check your bank balance and projected cash flow position.
- Review the effectiveness of your marketing.
- Review monthly business performance.
- Modify your business plan and budgets.
- Review major strategic activities.
- Pay payroll and PAYE.
- Hold employee performance appraisals.
- Review overall staffing and HR issues.
- Analyse the value provided by your major suppliers.
- Complete your online VAT return and pay VAT if you are VAT-registered.
- Perform a SWOT analysis for your business.
- Have your annual accounts prepared.
- Consider whether you need to hold a company annual general meeting.
- Review your personal pension arrangements.
- Renew insurance and other important annual contracts.
- Review the effectiveness of your major company policies.
- Review the suitability of your premises. Check when any lease will expire.
It’s easy to get bogged down focusing on the short term. You must make time for ‘big picture’ strategic activities that enable your business to grow and become more successful.
Work towards long-term goals
- Identify the key factors that will determine the long-term success of your business. Marketing strategy, boosting sales, controlling costs and managing cash flow are four key areas.
- Use a SWOT analysis to help you understand your strengths and weaknesses, and the opportunities and threats that face your business.
- Consider using other techniques, such as benchmarking, to help you assess and improve the overall health of your business.
- Establish a small number of key performance indicators (KPIs) to monitor and act on.
Prepare a forward-looking business plan
- Use the plan to set out how you will achieve your objectives.
- Review and update the plan regularly.
Keep moving ahead
- Aim to continually improve the way you do things. Encourage employees to make suggestions.
- Continually improve products and services. Be ready with new or improved products before your existing products become tired and uncompetitive.
Continually monitor key external factors which affect your business
- Keep up to date with changes to your market and what the competition is doing, so that you can refine your marketing plans and take advantage of new opportunities.
Plan for your personal long-term security
- Make sure you have adequate pension arrangements.
- Plan how you will exit the business (eg by selling it to another company).
- Take professional advice on financial issues if necessary.
Stay focused on your core activities
- Don’t become distracted or neglect your core work when buying or selling a business. Managing your business must still be a priority, even if you feel under pressure to work on a deal.
Comply with legislation
Legal problems can tie up critical resources and take up your time. If your business is found to have broken the law, it can prove very expensive while your reputation can also be irreparably damaged.
Find out about the laws that are likely to affect you
- Ask your advisers.
Comply with employment legislation
- Key areas include offering equal opportunities, providing written terms and conditions of employment, and ensuring that you do not dismiss an employee unreasonably.
Provide a safe working environment
- You are legally responsible for everyone affected by your business, including employees and members of the public.
- A health and safety risk assessment is the key to meeting your obligations, although you may also have to create method statements.
- If you have five or more employees, you must have a written health and safety policy.
Fulfil your duties as a director
- You must act in the interests of the company. Specific responsibilities include ensuring that the company files its statutory returns on time.
- If the company gets into financial difficulties, you could become personally liable. For example, if you are negligent or if you allow the company to continue trading and borrowing when you know there is no reasonable prospect of repayment.
Keep accurate financial records and prepare proper accounts
- Make sure you have solid bookkeeping systems from the start. Take advice from your accountant. Not having good financial systems in place can prove disastrous.
- Having access to accurate, up-to-date financial records and accounts can enable you to better manage and develop your business.
Make sure you meet your tax liabilities
- Make sure you have the right systems to deal with PAYE for employees and VAT.
- Plan ahead to make sure you can pay any tax due, including corporation or income tax on profits, PAYE and VAT.
Stay on the right side of IT law
- Only use licensed software.
- Comply with GDPR regulations (effective from May 2018).
- Take advice on how the law applies to your emails and your website. Make sure you know how the law applies if you trade online.
Get help and advice
Contact business support organisations
- Business support organisations such as enterprise agencies and Local Enterprise Partnerships can offer independent advice, information and services to help small businesses. Advice may be free or subsidised.
- Find out what your trade association and local Chamber of Commerce can offer.
Work with good professional advisers.
- Use an accountant who understands your type of business.
- Where necessary, use a solicitor with experience of advising small businesses.
Find external skills to cover any weaknesses you have
- Consider employing skilled freelances, contractors or consultants in areas where you cannot afford to take of staff or develop in-house skills.
- Consider appointing an experienced non-executive director (or business mentor) to provide a regular assessment of what you are doing.
- If you are planning to trade internationally, contact the Department for International Trade.
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