According to a recent Intuit study, one in five startup owners are losing sleep over the profitability of their business. The future success of your company is an obvious source of anxiety, but you can relax and prepare for some business therapy, because making money isn’t as tricky as some would have you believe – provided you’re diligent and prepared to make sacrifices.
Get a Good Handle on Your Costs
We all dream of the high life; lounging on an undiscovered Central American beach, sipping pina coladas all day. But the first order of business for your startup is survival. The early days are going to be hand-to-mouth type stuff, so you need to be acutely aware of the costs affecting your business.
The primary concern should be what is giving the company results, and business decisions should be made weeks or months in advance – because you’re so organised. Any immediate day-to-day choices should be made with cold, hard facts, rather than with passionate impulse. Running a ruthlessly lean business pays dividends when the company starts to take root and grow. For example, you can take inspiration from the Toyota Production System, which helps the car manufacturer maintain the global production lead in the automotive industry by eliminating wasteful activities and promoting positive socialisation.
Data is in the Driver’s Seat
Big data is nothing new; as 20th-century American statistician W. Edwards Deming said, “In God we trust. All others must bring data.” But in business it’s still fairly fresh, and apparently all companies need it even if you’re in the business of customised romance novels.
If you aren’t aware, big data allows you to analyse customer and client behaviour to provide a better product or service. It can be a real money spinner, provided you use it correctly.
Analytics tools are very cheap and accessible, so measure everything! We are all aware of Google Analytics and you should be tapping this resource because the more data we have, the more precise our insights.
Did you know that IBM Watson Analytics can help you prepare and present data in a very user-friendly way? The super-computer can also help you make accurate predictions based on the data it’s fed. You can also try it for free.
What about Canopy Labs? This customer data platform crunches data to help you predict future consumer behaviour and buying patterns. The best part? The service is free for up to 5000 customers.
Don’t Just Throw Money at Marketing
Burning cash on fancy new office space or a luxurious company car can build the company’s prestige, however, sometimes such extravagant displays of wealth are better reserved for later, when you can fully realise the benefit of them. The same goes for marketing, there’s no point in buying thousands of dollars’ worth of advertisements if no-one is going to engage with them.
The number one marketing activity that small business should focus on is keeping the stakeholders happy. Do your research, ask them questions and be personable. This strategy only costs you time (which you can price accordingly), and can lead to more business referrals.
Social media has also amplified word-of-mouth marketing, so it’s important to place some energy into that space as well. An angry customer can hit the web and sling mud at your reputation whenever, wherever. So here are some quick tips to handling social media: be honest, respect your company and involve the customer.
Don’t forget to fail, too. Failing in business is part of the learning experience, and guarantees you’ll know what to do next time to ensure you’re making all the right moves to increase profitability all year round. Get back on the horse and do it again.