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Leadership in Small Business 101, Part 5: 5 Ways to Keep Your Finances Healthy

If you have been following our “Leadership in Small Business” series, first, thanks for reading!

Second, you already know that successfully leading your business is a full-time job. Getting a small business up and running is no easy feat. In fact, 80 to 90 percent of startups fail during the growth stage. The primary reason for failure is due to a lack of money.

Although money isn’t the only important thing in running a small business, it will certainly help make your life easier and pave the way to success. The good news is you don’t have to have an MBA or be a certified accountant to manage finances. Here are five ways to help you keep your business finances healthy.

1. Build a financial system.

Your first step should be to build a solid financial system that your employees and your customers can follow—and one that you can depend on. It can be easy to lose track of invoices, bills, and customers if you don’t have an organized financial system, and that can lead to disaster.

By taking the time and spending a little money upfront to build and establish a working financial system, you can keep track of invoices, receipts, payments and transactions, which is important for ensuring healthy cash flow.

2. Make billing and invoicing a habit.

Although billing and invoicing aren’t the most exciting areas of running a business, they should be a priority. Getting into the habit of billing and invoicing on a regular basis will not only ensure healthy cash flow within your business, but it will help get customers to pay in a timely manner.

3. Make it easy for customers to pay.

While we are on the subject of billing, invoicing, and customer payments, one way to make sure that customers pay in a timely manner is to make it easy for them to pay. For example, setting up multiple convenient payment methods, such as cash, credit card or PayPal can help. The easier you make it for customers to pay invoices, the more likely they will make on-time payments.

4. Establish your pricing model.

Many businesses are inconsistent with what and how they charge customers. Of course, every customer’s budget is different, and every business offers sales, discounts, and promotions during certain times of the year, however, establishing a baseline pricing model can help keep payments consistent. Additionally, having a consistent pricing model can help plan your business’ financial goals.

5. Are you charging enough?

If you already have a pricing model in place, then it may be time to review it to make sure you are charging enough. If you have been in business for a few years, then it may be time to consider increasing your prices. In fact, a price increase typically results in at least 10 percent profit margin growth. If you are unsure of what to charge or if you are worried about overcharging, then compare your pricing model with that of your competitors.

Keeping your finances healthy should be a priority for new entrepreneurs and small startup businesses. Establishing a solid financial system will keep your finances healthy well into the future.

Leadership in Small Business 101, Part 4: How to Keep Your Company’s Data Secure

Entrepreneurs put a lot on the line for their businesses. Although certainly not recommended, entrepreneurs often sacrifice their health, their time, and their personal financial security for their businesses. However, one of the things that entrepreneurs should never sacrifice is security.

In a day and age when security is of the utmost importance for customers and businesses alike, businesses should invest in implementing solid security practices to keep data, employees, customers and equipment safe from cyber attacks and other malicious security threats.

Read on to learn more about why data retention is important, what ransomware is and how to avoid it, and how to implement best general security practices to keep your customers, your employees, and your business safe.

Data retention

The Internet and technology have made the impossible possible. With a seamless network and a mobile device, business owners and employees have access to just about anything from just about anywhere. Powerful? Absolutely. But dangerous? You bet.

Think about it: If your employees can access your data from anywhere, others probably can, too—even if you think your data is secure. This is why implementing password-protected and encrypted email and cloud accounts is so important for protecting data.

Avoiding ransomware

Ransomware is a malicious attack on a computer system that can cause devastating results. A common example of ransomware is a virus. A cybercriminal will upload a virus to computer, which can damage programs, compromise data, and render your computer or system useless.

Unfortunately, ransomware attacks are on the rise; therefore, it’s important to take the proper steps to ensure your data and your equipment are protected. Install a firewall, encrypt your data and files, and educate your employees on identifying a potential security attack, such as suspicious emails, potentially hazardous email attachments or suspicious links. These are all crafty tactics used by cybercriminals to successfully attack a system.

Best general security practices

Implementing best general security practices can protect your business, your customers, and your employees. Taking simple measures, such as implementing a data backup system and a company security policy are just a few examples of how you can easily protect your business from security attacks.

Additionally, your own employees are likely your greatest risk. Taking the time to educate and train them on your company’s security policies and teaching them about common signs of cybersecurity attacks and phishing attacks will dramatically reduce security risks.

Your business is your lifeblood, so going the extra mile to care for your data and your systems is absolutely necessary today. If you want to learn more about how to implement best security practices in your business, check out this article.

Look for part 5 in our Leadership in Small Business 101 series next Wednesday: “5 Ways to Keep Your Finances Healthy.”

Leadership in Small Business 101, Part 3: How to Plan and Execute for Growth

Being an entrepreneur is no doubt a full time job. It’s no secret that entrepreneurs and small business owners have a lot on their plates—not to mention the overwhelming pressure of knowing that 80 to 90 percent of startups fail during the growth stage.

Whether you own or operate a business in a physical location, such as a small retail store or office, or whether you operate virtually, the principles of being a true business leader don’t change, nor do the steps for planning and executing growth.

One of the biggest mistakes that most entrepreneurs and small business owners make is that they often confuse being a manager versus a leader. And, yes, there is a difference. A true business leader does more than delegate, oversee the day-to-day tasks, and review time sheets at the end of each pay period. This is a manager. A leader, however:

   •     Taking control of finances
   •     Networking
   •     Creating a synergy with your employees

So how exactly does this relate to business growth? Let’s take a look at how becoming a true business leader can help align employees with your vision, how to set your business up for success, as well as how to plan and execute for growth.

Get your finances under control

Let’s talk money for a second. Although “entrepreneurship” seems like it’s all about the money—especially since we are all in the game to make a living and put food on the table—deep down we know that money isn’t the real driver behind what we do.

Unfortunately, the primary reason why most small businesses fail during the growth stage is due to lack of money. You can easily avoid this by making smarter financial decisions, cutting down on frivolous spending, and teaching your employees the same. Getting your finances under control and improving cash flow will put your business in a better position to grow.

Get employees behind your vision

A number of organizational tactics and methods can be used to help employees think outside the box, use active creative problem-solving, and embrace innovative solutions. Small business owners can do this by simply deploying action-oriented training to encourage the entrepreneurial mind. Additionally, creating a collaborative company culture is key to getting employees behind your vision.

Start Networking

Networking is the key to growth. Although as an entrepreneur or small business owner you already have enough on your plate, finding the time to network might seem impossible. However, networking and staying in touch with your community—both online and offline—will open doors to multiple opportunities. Some ways to do this include hosting events and attending events, such as local meetups, conferences and seminars, and joining other organizations and associations. Additionally, teaching your employees to stay in touch with your network will help boost morale.

There are a number of things that entrepreneurs and small business owners can do to making planning and executing for growth easier. Here are a few examples:

   •     Taking control of finances
   •     Networking
   •     Creating a synergy with your employees

As for you brave entrepreneur, never lose sight of why you started your business in the first place. Remember that a true business leader should strive to be a better entrepreneur and a better leader each day. Keep an open mind, embrace new opportunities, and never stop learning.

Look for part 4 in our Leadership in Small Business 101 series next Tuesday: “How to Keep Your Company’s Data Secure.”

Leadership in Small Business 101, Part 2: Creating Opportunities Through Management

The best way to see the quality of a leader is to look at the people they lead. Look for opportunities being created. Look for innovation being driven from the ground up. If you see meaningful productivity in a company, that’s the sign of a great leader.

So how do you get your employees to create these opportunities for your company? What can you do as a leader to build a culture that drives innovation? You have to give your employees a feeling of ownership.

There are 3 ways to build
a sense of ownership in
your employees:

1. Get out of the way.

If you hired well, you’ve hired experts. While your employees may not know everything there is to know about running a company, they do know how to do their job. Instead of telling your employees exactly how to get something done, give them a problem. Tell them you need to find a way to get 500 more leads to the sales team a month. Ask them to take some time, think about it, and come back with a solution. Important: Make it really easy for them to actually come back and talk to you about it.

2. Create vision.

One of the best ways to get your employees behind your vision is show them the details. Be as transparent as possible with your employees. Here’s how:

   •     Show them the financials.
   •     Show them where you want to be.
   •     Show them how you want to get there.

If you can get your employees to share in that vision with you, you’ll have a team of competent people working towards a common goal, instead of people sitting around taking orders.

3. Know how and when to say no.

Occasionally, your well-meaning employees are going to come to you and present something that is an obvious dud.

First, make sure it’s actually a dud. Listen to them, get a second opinion, and take your time to form a response. You might be overlooking something.

Second, if it’s actually a dud, see if it can be tweaked into something that’s not. But remember, the further away it is from the original plan, the less likely they are to feel ownership.

Third, if it’s just really bad, let them down gently. Tell them clearly that you appreciate them and their proposal, but it’s not right. Give them some direction, try rephrasing the original problem, and let them try again.

If you create a feeling of ownership in your employees and you get them behind your vision, they’ll take you to where you want to go.

Look for part 3 in our Leadership in Small Business 101 series next Wednesday: “How to Plan and Execute for Growth.”

Leadership in Small Business 101, Part 1: Hiring and Retaining the Best Employees

If you look closely at strong businesses around the country, you can find one thing in common: a strong leader. Without a strong leader, a business lacks the vision, the foresight, and the drive to grow into something extraordinary. Here at Mozy, we’ve seen businesses grow from small startups to huge enterprises, and they all had one thing in common: a strong leader.

In our Leadership in Small Business 101 series, we’re going to take a look at some of the skills and traits that great business leaders share, and then provide real world tactics you can use to lead your business to success.

Hiring the right talent

One of the traits strong leaders share is the ability to find the right people to work with. When you’re looking to grow your small business, it can be tempting to go with the less expensive employee. This can be a costly mistake.

Generally, the employees you find on the lower end of the pay spectrum have the least experience. While in some cases this is appropriate, such as entry-level positions, hiring someone with no experience to run something important like marketing, sales or finance is risky.

When you’re hiring, hire the best people you can afford. Start by reaching out to friends and associates (or current employees) for referrals. When you hire people through personal connects, you start building a company culture that keeps people around. According to Gallup.com, 74% of people use friends and family to hunt for jobs.

If you’re not having luck with your personal connections, post your job on LinkedIn, Monster.com, and other job boards. Cast your net wide and then start interviewing.

Getting the right talent to join your company takes more than just a nice paycheck. Employees want to know where the company is heading, and they want a  sense of purpose. Give them vision for where your company is heading. During the interview process, show them how they would be a part of that vision.

Don’t overpromise and underdeliver with future pay and benefits, or you’ll lose them down the road.

Building a strong culture

While there are a lot of gimmicks out there to build a strong company culture, the number one most important thing you can do is prove to your employees that you care about them. If you’re going to buy a pool table for your employees, make sure you let them use it. Other things to ensure about your employees:

   •     Make sure they’re taking breaks.
   •     Give them raises when you can.
   •     Tell your employees to take a vacation, and
   •     Make sure they’re not stressed about work they need to do while they’re there.

If you can show your employees you care, you’ll keep them around.

Being a strong leader is challenging but rewarding. If you can lead your company well, you will have all the tools you need to grow your business.

Next Wednesday: “Leadership in Small Business 101, Part 2: Creating Opportunities Through Management.”

The Biggest Mistakes You Can Make While Growing Your Business

As a small business owner, one of the most exciting (and terrifying) parts of owning your own business is when it starts to grow. You realize you’ve got a winning formula, but now you’re not sure where your business is going to go. The possibilities keep you up at night; unfortunately, so does the fear. You want your business to grow into something long term, so you don’t want to make any major mistakes. Well, we’re here to help you avoid some of the more common mistakes business owners make when their company starts to grow.

Mistake #1: Taking on all that growth yourself

If you own a small business, there’s a high chance your company started out as a one-person operation. You’re used to doing everything yourself, and honestly, it can be hard to let go of any of it. The problem is if you don’t pass anything off, things are going to start falling through the cracks. As you start getting more customers, things are going to get busier and busier.

To avoid this mistake, write down all the tasks you do for your small business. Next to those tasks, write down how much time each takes. Then, write down if you’re an expert at it, you do it satisfactorily, or you don’t know what you’re doing. Using that list, think about the kind of person you could hire to fill some of those roles that take a lot of time and you have little expertise in.

Mistake #2: Hiring the wrong employees

When you’re looking to hire employees, don’t make the common mistake of going with the easiest hire. Whether they’re a family friend, or they’re the least-expensive option, you can easily hire somebody that won’t perform, or worse, cause more stress. You have to make sure they are the right fit for your business needs.

Whatever role you’re hiring for, make sure you do your due diligence. Research the role online, look for advice that other business owners have hiring for that role, and look for specific interview questions. Look for the self-starters, the ones who don’t need a lot of hand-holding to get the job done. These people are the future leaders of your growing company.

Mistake #3: Not investing in your infrastructure

As your business grows, you need to take a hard look at what your location, your equipment, and your processes can handle. Take a few minutes and think about how your location, equipment, and processes would hold up if you had twice the amount of business. What about 10 times the business? One hundred times? You want your business to be scalable, so look for software solutions, equipment, and processes that can grow with your increasing business.

Mistake #4: Not preparing for cash flow needs

A huge mistake a lot of small business owners make is not preparing for future cash flow issues. Too many small businesses wait to apply for a loan until their business is in trouble, and at that point, capital can be hard to find. If your business is doing well, now is the time to go to a lender for a line of credit or a business loan. Also, consider applying for a Small Business Administration loan, which have much lower rates than typical small business loans.

If you can avoid these common mistakes, your business will likely continue to grow and be successful. What other mistakes have you seen small business owners make as their business grows?

How to Stop Wasting Time and Start Seeing Results from Your DIY Small Business Marketing

As a small business owner, it can be hard to see what the best marketing channel is for your specific product. Everywhere you look, you see marketing “tactics” that will “explode your Twitter following overnight” or “start a viral movement.” Unfortunately, the majority of companies out there will see zero positive impact, and going viral is extremely difficult and not always a good thing.

So how do you find the best marketing campaigns for your small business that you can run?

Let me walk you through a simple and effective plan that will get you the business you need. Take 20 minutes and follow these simple steps.

Identify your customer’s problem

The first step is to identify the problem that your small business solves. You know your customers better than anyone, so try and get in their heads.

Take a few minutes and write down some common problems your customers have.

Here are three examples:

A family restaurant:

Problem: “I need a place where my family can eat that has reasonable prices, good atmosphere for kids, and good food.”

A mortgage broker:

Problem: “I don’t even know where to get a home loan and I’m worried I won’t understand the process when I do.”

A business accountant:

Problem: “Our company needs software that allows our accountants to work closely together so we can quickly and efficiently help our customers.”

Show the solution

The next step is to consider each one of the problems you wrote down, then write down two sentences that show how your business solves that particular problem. For example:

Problem: “Our company needs software that allows our accountants to work closely together so that we can quickly and efficiently help our customers.”

Solution: “Our innovative accounting software allows your team to work together quickly and effectively.”

Solution: “We’ve built a suite of tools to help your accountants work together on the same project in real time, saving you and your clients time and money.”

Also, consider looking through your customer testimonials or reviews for snippets that show how your business solves people’s problems. These can be the most effective messages you can share.

Now that you’ve got some good solid ad copy, run it by someone you trust to give you honest feedback. Don’t let your ego get in the way; make sure to listen to what they say. Make changes as necessary.

The last step is to find the best way to get your message in front of your audience. It’s important to recognize that one size does not fit all. If your clientele is small business across the nation, odds are you’re going to need to reach out to your customers on the Internet or through trade publications. If you’re local, it might be the newspaper or local Google ads.

The best way to find the right marketing channel is to determine where your customers are when they make the “decision.” For example, people frequently check Yelp for restaurants, so if you’re trying to find new customers, you may want to take out an ad in Yelp. If you’re a plumber, you may want to take out an ad in the local newspaper or put an ad on Craigslist.

Here’s a list of common marketing channels for small businesses: 

   •     Google AdWords
   •     Facebook ads
   •     Forum banner ads
   •     Bus stations
   •     Local newspapers and radio stations
   •     Yelp
   •     Craigslist
   •     Trade shows
   •     Magazines
   •     Local television

Now that you’ve got your copy and you have your channel, all you have to do is place the ad. Then, make sure to watch the results closely. If it’s not successful, consider changing the message or going with a different channel. Once you find an advertising campaign that works, it can bring profits for years to come.

What kind of success have you had running your own marketing campaigns for your small business? Reply in Comments below.