When times get tough, it’s easy to lose sight of fundamentals that lead to success. This is true in both large and small businesses, but especially in small ones. Small businesses often have a much smaller margin of error without getting in serious trouble. Sometimes the loss of a single customer can sink a small business.
Whether you are big or small, these 10 simple fundamentals still apply and they work in good times, but are especially important in tough times.
1. “The purpose of a business is to create and keep a customer”
The late Theodore Levitt said that a long time ago and he was so right. I’d add the words “happy and profitable” at the end.
2. Whatever you sell your customer—a product or service—make it high quality and be reliable
Reliability is an under-rated attribute that is very valuable.
3. First, take care of the customers you have, with the products and services that made you successful
Then look for more things you can do for those same customers, within what you are good at doing. Expand very carefully, because with opportunity, comes risk.
4. Charge a fair price—neither too high, nor too low.
The former will cost you sales; the latter will cost you your business.
5. Always consider what is most important to your customers
Usually it’s to get what they expected in quality, service, on time, and at a fair price—with an occasional new idea thrown in. Measure every decision on how it will affect those deliverables.
6. Know your costs, and charge enough to cover them and make a profit
If you don’t, you won’t be in business long. And if you don’t watch out for this, who will? If your costs are not competitive enough to do this, figure out why and do something about it.
7. Manage your cash flow very carefully
Running out of cash kills more small businesses than anything else. Learn to make a cash flow projection worksheet and use it.
8. Stay focused on doing what made you successful and keep your eye on competitors
Common mistakes are expanding into new areas too rapidly: taking the wrong kind of business—just because you can sell something to someone, doesn’t mean you should—or compromising on quality, service and reliability.
9. Hire the right people
That means people with the skills, experience and attitude (a very important, often overlooked point) you want. Train them well and communicate your expectations and what they are responsible for doing, and getting done (accountable for).
When you realize you have hired someone “wrong,” do not delay in dealing with it. There are few things that can poison an organization faster than having one “bad apple” in the bunch. Firing someone is hard; not firing someone who should be fired, is worse. Give them fair warning, time to improve (and tell them what needs improving) and if they are not making it, do the right thing and cut them loose. You’ll be doing them a favor too. Note: If you happen to hire someone with a bad attitude, it’s even more urgent to deal with that mistake and get them out of the business. A bad attitude can be contagious.
In closing, you may have heard that “the customer is always right.” That’s wrong. “The customer may not always be right, but the customer is still always the customer.”
Without customers, you have no business, so take care of them. But don’t be afraid to make a profit. Business is a competitive game where the score is kept in money. If you win, you get to play again. If you lose—“game’s over!” And those rules never change.