“Nobody asked you. Nobody told you. Nobody stopped you. You just did it.” At a recent event, I was engaged in a conversation about small business ownership with a good friend of mine, Nancy from Moody’s Analytics. We were discussing the trials and tribulations of small business ownership when she made the above statement. So short, so simple, and so powerful all at once.
There is simply one rule to live by in small business if you want to stay in business. The rule is the change in your operating expenses should mirror the change in your gross profit. This is typically called expense control. However, it should be called the essential function of a business. It’s essential because without it your company will die.
Just for fun I searched the Internet for trends in “accounting financial services.” I wanted to see how my target audience was viewing the shift in the industry from transactional to advisory services. My search revealed some interesting patterns. The one that stood out the most was the absence of small and mid-sized firms in the search results. I sifted through 5 pages of listings before finding a firm name that I didn’t recognize.
The saying goes, “If you want to know what a person thinks is important, just look at where they spend their money.” It holds true in your personal life as well as your business. It is also very hard to hide from your employees, competitors and customers. They see where you invest and draw a conclusion as to what your spending means. The question you should ask yourself is, “Does the message say what I want it to say?” Let’s hope that it does.
With the vast amount of information floating around the atmosphere, there are occasional nuggets that simply connect with you. You’re introduced to it and time stops, like an external force telling you of the moment’s importance in your life. You digest the moment and for an unknown reason, you know this piece of information will change your thought and behavior. The longer you consider the nugget of information, the more you internalize it until you can no longer tell the difference between the tidbit of information and your own beliefs.
Don’t do it they said. You’ll damage the brand and reduce its value. People don’t trust free products. The list of reasons why you shouldn’t launch a free product is long. The scariest of course is “how will your company survive?”
But let’s image you answered the survival question and genuinely felt that your product could positively impact the world. The only thing between a noticeable change in the lives of small business owners and your product was letting them know you existed. It’s no small task, but it’s the biggest question in many entrepreneurs’ minds. How do I get my product in more hands? In many cases similar to ours, the answer is to give it to the people who can benefit the most.
There are many reasons to start a small business. They may include being passionate about the work, a desire to work for yourself, or a need to give something back to society. Successful business owners also want to retire using the money they generate from their business. In my case, this became the focus of my investment strategy. It wasn’t always, but this last “great recession” changed my mind.
It’s amazing how cash can slip through the fingers of even the most frugal small business owner. It just happens without you realizing it. It’s not like anyone walks out the front door of their house and says, “I’m going to spend all the cash in my business, so I have to struggle to make payroll.” For some business owners, this is never the case, but for others it is an ongoing struggle.
The process starts by making sure you have enough money to make rent and cover most of your fixed expenses. Then your vendors want paid for the last order before they will deliver the next. You have unexpected repairs happen the same month as you initiated an advertising campaign. Then a snowstorm hits the area and traffic through your store comes to a grinding halt. It happens just that fast in some businesses.
I have the good fortune to talk to banks and marketplace lenders almost daily. In every case, the focus is on expanding their portfolios and reviving the branch banking system. That’s right, reviving. Branch banking is dead, but it is also in the best position to help small businesses.
Not long ago, the average business owner visited their local branch about 29 times per year. Today, it’s less than 3. With all of the banks investment in technology, banking has become easier and you can do it from anywhere. Great for the consumer, terrible for the relationship manager who used to excel at talking to his business clients who visited the branch.
I grew up being among the first generation of video game players. To be honest, I still dabble with them when I’m bored. The evolution of the games has been amazing to see. But what I have not enjoyed is the evolution of the controllers. What started as a knob that I could rotate to move a cursor up and down the screen (Pong), has become an assembly of buttons, triggers, and joysticks (PS4) that I rarely know how to operate correctly. It’s overwhelming to try and figure out the thousands of combinations you have to instantly create to be successful in playing a video game today.