For many entrepreneurs, starting a business is the easy part. The challenge really begins with how to grow it into a real company. Here are 10 rules that every startup should follow to grow its business profitably.
1. Thou shalt watch thy cashflow. Remember that sales are vanity, cash is sanity. The most the important financial statement to review monthly is the cash flow statement. All other documents can lie. If you want to learn about cash, simply look at your bank statement. Do you have more money at the end of the month than at the beginning? If you have more at the end, then your business is cashflow positive.
2. Thou shalt have a brand strategy. Too many entrepreneurs become whatever the next customer wants them to be. Think through the actual pain your business solves and craft a memorable brand around that message. More businesses are successful solving a niche problem than a broad one.
3. Thou shalt not grow thy company broke. Many entrepreneurs try to grow their companies too fast. They don’t have the cash, people, systems or infrastructure to do it effectively. As a result, they eventually go broke. Do not be afraid to grow slowly and profitably. Choose profit growth over revenue.
4. Thou shalt keep thy current customers happy. So many entrepreneurs are so busy chasing new customers into their front doors, they can’t see the existing customers escaping out the back door. Happy customers will always want to buy more from your business. This is Amazon’s strategy. Many consumers shop elsewhere and then buy on Amazon because of their outstanding customer service.
5. Thou shalt keep thy overhead low. Try to keep as many expenses as possible tied directly to revenue. Entrepreneurs go out of business because their fixed overhead (like rent, equipment and people) are too high as their revenues fluctuate.
6. Thou shalt guard thy reputation and not speak badly of thy neighbor. In a connected world of the Internet, reputation is your most valuable asset. Watch and listen to what customer say about you. Never directly criticize your competitors.
7. Thou shalt get referrals from existing customers. Too many times, entrepreneurs do not ask satisfied customers for referrals. This activity is one of the most powerful forms of marketing. Ask and ye shall receive!
8. Thou shalt reward outstanding employees frequently and fire bad employees immediately. Many entrepreneurs need to recognize the best contributors on a regular basis and not delay firing employees who are hurting the business. Everyone in your organization knows who the good and bad people are. It’s up to you to do something about it.
9. Thou shalt review thy financial statements monthly. The biggest mistake entrepreneurs make is not to review their statements monthly. Find an accountant that can explain them in terms you can understand.
10. Thou shalt take an annual vacation to recharge. Most entrepreneurs take too little time off. This is necessary to recharge yourself and to see how your business does without you.
Read more of Barry's small-business advice here.
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