Adopt these 10 healthy business habits and you’ll reap the benefits as your business grows.
1. Develop a business plan
Business plans set practical and realistic business goals. Review yours every month as a reference for the future.
Brian Machray, Director of small business consulting firm Corporate Crafting, says it can be surprising how many small business owners do not have a business plan. “You need one for general purposes to make sure you have a workable strategy that everybody understands,â€ says Machray.
If you don’t have a business plan yet, you can download our free business plan template.
2. Develop action plans
Set action plans for your business and review them every week. “They can be very simple things, such as if you need to move premises, who is responsible for finding it, how much is it going cost, what’s the timeframe,â€ says Machray. “Business plans should also be made up of a collection of action plans. That’s one of the key things that financiers look for but also one of the key things that small business entrepreneurs should focus on.â€
3. Revisit your budget
Keep your budget active and review it on a weekly or monthly basis. “Small businesses can use technology to bring budget information to the present rather than looking into the past,â€ says Machray. “This helps you to make real-time decisions rather than getting to the end of the month and seeing that sales were down by 50 per cent.â€
4. Consider your funding mix
Assess your mix of debt and equity funding each month to determine if it is right for your business. “If you have too much debt, it will make your business very unattractive to an equity investor,â€ points out Machray. “Also, a lot of people go straight to equity sources to fund their business, but the reality is that they are going to take 45 to 50 per cent of your business off you. So, you have to think carefully about the best way to fund your business.â€
5. Manage your cash flow
The best way to ensure you have sufficient working capital in your business is to carefully manage your cash flow on a weekly basis. “You should optimise your suppliers and customer payment terms,â€ says Machray. “You should also negotiate your fixed costs to see how much you can save.â€
6. Maintain your records
Accounting software (such as QuickBooks Online) makes daily record keeping simple. “You can save, archive and send all your records to the cloud in minutes and access them at the touch of a button,â€ says Machray. “There really shouldn’t be a need for hard files, unless they are documents like contracts.â€
7. Build the right team
Are you working with the best people to help your business succeed? “This means the right accountant, the right lawyer, the right admin support,â€ says Machray. “There will be some outlay to building the appropriate team, but it will pay dividends in the future.â€
8. Define specific KPIs
Set weekly and monthly key performance indicators that are specific to your business. “This could be the cost of your suppliers or your specific sales strategy that sells products,â€ explains Machray. “You should be quite bespoke in how you identify your KPIs, because this helps you to be more focused in making sure your business is profitable and grows sustainably.â€
9. Prepare management accounts
Monthly management accounts can help you keep an eye on the bigger picture of your business, such as sales and expense trends. “It means that you can be constantly absorbed in what your business is doing and you’ve got a financial picture the whole time,â€ says Machray.
10. Review your pricing
Review your pricing each year to determine if it needs to change. “Whether you’re selling goods or services, you need to know how much you need to make per unit to break even and then you need to think about your strategy and how to maximise your selling price,â€ says Machray.