Poor Management results in small business failure: Here is how to manage yours well...

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Introduction:

As small business owners, we face many challenges like competition and money problems. We talked before about reasons why small businesses fail, and bad management was one of them. If we don't manage well, we might get lost in daily work and forget about long-term goals. In this blog post, we'll talk about six things to help you manage your business better. We'll look at things like having clear goals, knowing what your customers want, and keeping your money in order. By doing these things, we can be better business owners and make our businesses successful.

This Blog's contents:

1. Set clear goals and priorities

1.1. What is a strategic plan?

1.2. How do you develop a strategic plan?

1.3. Practical tips to help you set clear goals and priorities

1.4. Goal Setting: SMART criteria

2. Develop a scalable business model

2.1. What is a scalable business model?

2.2. Pros and cons to scaling your business

2.3. Practical steps or tips to scaling your business

3. Customer needs & preferences

3.1. Why focus on the customer?

3.2. How do you standout from the crowd?

3.3. Practical steps to implement: know your customer + your competition

4. Networking and building connections

4.1. Where to go to build a network?

4.2. Practical tips: how to network effectively?

5. Manage your finances

5.1. Why it is important?

5.2. Do you have a good financial management in place? (Quiz)

5.3. How to implement a financial management system

6. Automate, automate, automate

6.1. Pro’s and con’s of automation

6.2. Assess which technology is best for your business needs

6.3. Some technologies widely used by small businesses

Conclusion

1. Set clear goals and priorities

Without a clear plan for the future, your business can easily become lost and directionless. It's important to set clear goals and priorities to keep your business focused and moving forward. In this section of our blog post, we'll explore the importance of developing a strategic plan for your business and provide practical tips to help you set clear goals and priorities. By following these principles, you can guide your decision-making and resource allocation and drive your business towards success.

1.1. What is a strategic plan?

A strategic plan is like a map that helps a business know where it wants to go in the future, and how it will get there. It's a list of the important things the business wants to achieve, and the steps it will take to reach those goals. By having a strategic plan, a business can stay on track and make decisions that move it closer to success.

Many people use the terms "strategic plan" and "business plan" interchangeably, but they are actually two different documents. A business plan typically outlines the specific steps you will take to start and run your business in the short term, such as securing financing, marketing your products or services, and hiring employees. On the other hand, a strategic plan is a more long-term document that outlines the broader goals and objectives you want to achieve over the next few years. It provides a road-map for your business, helping you make decisions about resource allocation, growth opportunities, and risk management. While both plans are important, a strategic plan can help you stay focused on your overall vision and direction, while a business plan helps you execute specific tasks and achieve short-term goals    

1.2. How do you develop a strategic plan?

To create a strategic plan, start by defining your long-term vision for the business. This could be where you see your business in 5-10 years. Then, break down this vision into specific and measurable goals. These goals should be aligned with your vision and help you move towards it. Once you have your goals in place, it's important to assess your current resources and capabilities. This will help you determine what steps you need to take to achieve your goals. Finally, put together a timeline and action plan that outlines what needs to be done, by whom, and by when. Keep in mind that a strategic plan is not set in stone and may need to be adjusted as circumstances change.

1.3. Practical tips to help you set clear goals and priorities

Setting goals is important, but it's not the end of the story. To be successful, we need to act and work hard to achieve what we want. This means planning carefully and doing things consistently until we reach our objectives. In short, we have to work hard and stay focused to turn our goals into real achievements. Here are some tips to help you in goal setting:

1. Start with your vision: Begin by clarifying what you want to achieve in the long-term. What is your ultimate goal for your business? What do you want to accomplish in the next 3-5 years?
2. Break it down: Once you have your long-term vision, break it down into smaller, more achievable goals. What do you need to accomplish in the next year to move closer to your long-term goal? What about in the next quarter?
3. Prioritize: Determine which goals are the most important and which will have the biggest impact on your business. These should be your top priorities.
4. Assign responsibilities: Once you have identified your goals and priorities, assign responsibilities to specific team members. This will help ensure accountability and keep everyone on track.
5. Review and adjust: Regularly review your goals and priorities to ensure they are still relevant and achievable. Don't be afraid to make adjustments as needed to stay on track.

By following these practical tips, you can develop a strategic plan that will guide your decision-making and resource allocation, and ultimately help you achieve long-term success for your business.

1.4. Goal Setting: SMART criteria

When you decide what you want to achieve, it's crucial to make sure that your goals are clear, measurable, realistic, and have a deadline. This is where the SMART criteria come in. SMART is an abbreviation of five important elements that make goal-setting effective. It's a popular tool that helps people and businesses set goals that are specific, achievable, and relevant to their overall plans. By following the SMART framework, small business owners can measure their progress and stay on track to achieve their goals.

In the example above, a small business owner who wants to increase the number of customers by 20% within the year can use the SMART criteria to make their goal more effective. They can make it specific by defining the percentage increase, measurable by tracking progress with a customer tracking software, achievable by setting a challenging yet realistic target, relevant by supporting the overall business strategy, and time-bound by setting a deadline of within the year.

2. Develop a scalable business model

As small business owners, we may dream of expanding our business, but without a scalable business model, growth can be difficult to impossible to achieve. A scalable business model is one that can handle an increase in customers, sales, and operations without sacrificing quality or efficiency. In this section, we will explore the importance of developing a scalable business model and provide actionable tips on how to evaluate and refine your current business model to support growth and expansion.

2.1. What is a scalable business model?

In the context of small business development, scalable means having a business model that can adapt and grow in response to increased demand or expansion opportunities without a significant increase in costs. For instance, if you run a bakery, having a scalable business model means that you can bake more bread without needing to invest in a bigger oven or hiring more staff.

2.2. Pros and cons to scaling your business:

The decision to scale your small business comes with advantages and disadvantages. It is important to carefully consider the pros and cons before deciding to scale your small business.

2.3. Practical steps or tips to scaling your business

Scaling a business can be a challenge, but there are practical steps you can take to make it happen. "Scaling Lean: Mastering the Key Metrics for Startup Growth" and "Scaling Your Startup: Mastering the Four Stages from Idea to $10 Billion" are two books that have given us invaluable advice on how to scale our business. The tips below consider what is contained in both these books and when you apply them, you can make your business bigger and more successful. This is not an overnight exercise but this is a process and we are learning more with each day we spend working on our business and serving our customers. 

1. Know your best customers: To do this, you can create a survey or ask customers directly what they like about your product or service, what made them choose your business, and what they would like to see more of. This can help you tailor your marketing to attract more customers like your best ones. For example, we use Google forms to create survey's and get information from our customers directly. 
2. Watch the important numbers: To track these numbers, you can use a simple spreadsheet or a free tool like Google Analytics. For example, to track your customer acquisition cost, you can divide the total amount you spent on marketing by the number of new customers you gained in that period. To track your customer lifetime value, you can calculate how much a customer spends on average with your business over the course of their relationship with you. To track your conversion rates, you can measure how many people who see your marketing actually become customers.
3. Make things easier: To do this, you can automate some of your business processes using tools like Zapier or IFTTT. For example, you can set up an email autoresponder to send a message to new customers thanking them for their purchase and offering a discount on their next order. You can also create templates for common emails or documents to save time. We are testing platforms like HubSpot and Mailchimp with our blogs, newsletters and sending emails to groups.
4. Hire good people: To find good employees, you can post job listings on websites like LinkedIn or Indeed. You can also ask for referrals from people you know or your current employees. Once you have some applicants, you can use a simple interview process to ask questions about their experience and skills. You can also offer training to help them develop the skills they need for the job.
5. Get money: To get money for your business, you can look for investors who are interested in your industry or business model. You can prepare a simple business plan that explains what your business does, how you plan to make money, and why you need funding. You can also create a pitch deck with some slides that show key information about your business, such as your target market, your competition, and your revenue projections. We use the 1 page business plan as it is simple, easy to complete and goes straight to the point. We have also found numerous templates on Google to use for our pitch deck, and have been able to use them in discussions with our strategic partners.

To grow and succeed in the long term - which is what we all want, businesses need to scale up, which can be tough. But, with good business management, like setting clear goals, measuring progress, and building a strong team, we can make our businesses stronger. Scaling is not just a one-time thing, it's a continuous process that needs ongoing change and improvement. With the right attitude and plans, we can take our companies to new levels and achieve our goals.

3. Customer needs & preferences:

To run a successful small business, it's important for us to focus on what our customers want and need. This can help us stand out in a crowded market and build a loyal customer base. To do this, we need to understand our customers by doing research on their behavior and preferences. Once we have a good idea of who our customers are and what they want, we can create strategies that focus on meeting their needs. Good management practices are important here, too. They can help us make the most of our resources and identify opportunities for growth. In this section, we will explain why customer-focused strategies are important and give you tips on how to do market research so you can make better business decisions.

As a side note: this section means a lot to me since serving customers well goes beyond just meeting their needs and preferences; it involves showing them care and respect. As business owners, we have the opportunity to make a positive impact on the lives of our customers. This can be as simple as greeting them with a smile or going the extra mile to help them solve a problem. In the Bible, Colossians 3:23-24 says, "Whatever you do, work at it with all your heart, as working for the Lord, not for human masters, since you know that you will receive an inheritance from the Lord as a reward. It is the Lord Christ you are serving." By serving our customers with love and dedication, we are not only fulfilling our responsibilities as a business owners, but also serving God.

3.1. Why focus on the customer?

One famous quote from Mahatma Gandhi is, "A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so." This quote emphasizes the importance of customers in any business. Without customers, there can be no sales, and ultimately no business. It is crucial for us to understand and prioritize their customers' needs and preferences in order to succeed and grow. As without them - we have no business being in business.

3.2. How do you standout from the crowd?

'Differentiation' means finding ways to make your business stand out from competitors in the eyes of your customers. This could be through offering unique products or services, providing exceptional customer service, or creating a memorable brand. Differentiation is important because it helps your business attract and retain customers, even in a crowded market. When customers see that your business is offering something that others are not, they are more likely to choose you over your competitors.

To ensure that your business is differentiated, a good business manager needs to have a deep understanding of their target customers and what they value. This involves conducting market research to learn more about customer needs and preferences and using that information to develop strategies that align with those needs. It also means being creative and willing to take risks to develop new and innovative products or services that stand out from the competition. Finally, it's important to continually monitor the market and stay up to date on industry trends to ensure that your business remains relevant and differentiated over time.

As our desire is to be good (if not great) business managers, this sets a high standard for us in how to conduct ourselves and our business. 

3.3. Practical steps to implement: know your customer + your competition

There are certain steps we can take to know our customers and our competition for us to standout from the crowd.

1. Define your target market: Identify your ideal customer and understand their demographic, geographic, and psycho-graphic characteristics. This will help you tailor your products and services to meet their specific needs and preferences. There are plenty of templates available online for you to do these exercises.
2. Conduct surveys and focus groups: Collect feedback from your customers on their experience with your business, products, and services. This can help you identify areas for improvement and make necessary changes to better serve their needs. You can talk/call/text/DM your customers, and you can use tools like Google forms to create customer surveys.
3. Analyze your competitors: Research your competitors to understand their strengths and weaknesses. This will help you identify opportunities for differentiation and make strategic decisions to stand out in the market. Most businesses have websites and some social media accounts - this makes your job much easier to study their tactics, their offerings and why customers love them.
4. Monitor social media: Keep an eye on social media platforms to understand what people are saying about your business and your competitors. This can provide valuable insights into what customers are looking for and help you refine your strategies accordingly.
5. Continuously gather feedback: Regularly collect feedback from your customers to ensure that you are meeting their needs and expectations. This will help you build strong customer relationships and create a loyal customer base. Do not be afraid of negative feedback - invite it from your customers or those who do not want to do business with you. This will help you improve the parts where you are not doing well and this will only be good for you going forward.

By following these tips, as small business owners we can conduct effective market research and develop customer-focused strategies to differentiate ourselves in a competitive market and grow our businesses.

4. Networking and building connections:

Building relationships and partnerships is key to business success. By connecting with others who have access to resources, expertise, and new opportunities, we can grow our businesses and achieve our goals. This is why it's important to identify and cultivate key relationships in our industries. In this section, we will provide you with actionable tips on how to build strong networks and partnerships for your business. With these tips, you can expand your reach and gain access to the support you need to take your business to the next level.

4.1. Where to go to build a network?

The people we surround ourselves with can have a significant impact on who we are and what we achieve in life. Networking with like-minded individuals who share our values and goals can help us build positive and fruitful relationships that contribute to our personal and professional growth. By surrounding ourselves with people who want to make a positive impact on the world, we can be inspired and motivated to do the same. These tips can help you find the right places to connect with just the right people for you:

1. Attend industry events and conferences: Look out for events and conferences related to your industry, such as trade shows, seminars, and networking events. Examples include the Africa Tech Summit, SA SME Digital Summit, and the Small Business Expo. We haven't attended any of these but we have them on our list for the future.
2. Join a local business association or chamber of commerce: Joining these groups can help you connect with other business owners in your community and gain access to resources and support. Some examples include Johannesburg, Cape and Durban Chamber of Commerce and Industry. We attended a Durban session and we made some valuable connections there. 
3. Volunteer in your community: Volunteering is a great way to meet new people and build relationships while giving back to your community. Consider volunteering at a local school or charity event or joining a service organization like Rotary or Lions Club. Most of our voluntary work these days is centered around our local church but we have plans to reach out to areas around us and make meaningful connections.
4. Participate in online communities: Social media platforms like LinkedIn and Twitter can be great for connecting with other professionals in your industry. Join groups related to your business or industry and participate in online discussions and events. We have an online presence now and are actively involved in some online communities - to be honest we are not very good at this yet as our primary strategy for now is building connections offline (i.e., with those in and around the eThekwini - Gillitts area). 
5. Attend local church events: Churches are often at the heart of communities in South Africa and attending events can help you meet and connect with other like-minded individuals. We are actively involved in our local church (Sarepta church: 11 Old Main Road, Gillitts) and this has provided us with invaluable lifelong friendships and connections. 

By implementing these tips, YOU can start building strong networks and partnerships to help your small business grow and succeed.

4.2. Practical tips: how to network effectively?

To make sure you make the most of your networking opportunities – take note of the following tip and guidance:

1. Elevator pitch: Prepare a short and concise introduction about yourself and your business. This should be no longer than 30 seconds and should include the key elements of what your business does and what makes it unique.
   
   For example:
   
   Hi there, I'm Mandla and I run a popular Shisanyama in town called 'Mandla's Braai Spot'. We serve up some of the tastiest grilled meat and traditional South African dishes, and our customers love the lively atmosphere and great music. We're always looking for new customers to share in the good vibes, so why not come check us out and experience the true taste of South Africa?
2. Business cards: Have plenty of business cards on hand to distribute to potential contacts. Make sure that they are well-designed, with clear and up-to-date contact information. We have networked without business cards and this is not a problem either just as long as you are confident with yourself and business. But yes, the people do look at you funny especially when they all have business cards and you don't.
3. Dress appropriately: Dress professionally for the event, but also in a way that makes you feel comfortable and confident.
4. Research attendees: Research the attendees beforehand and identify people you would like to meet. Make a list of potential questions you can ask them to initiate a conversation. Having questions beforehand is very important especially for us introverts. This can help keep you calm as you know what to expect and what to say. 
5. Listen actively: Be a good listener and take a genuine interest in what others are saying. Ask open-ended questions and take notes to remember important details. Pay attention:  People love talking about themselves so much that simply listening to them can make you seem like a great conversationalist.
6. Follow up: After the event, follow up with the people you have met. Send them a personalized message, connect with them on social media, and schedule a follow-up meeting. Remember: the money is on the follow up.
7. Be prepared to answer questions: Be ready to answer questions about your business, such as what services or products you offer, what makes you different from competitors, and how you have helped other customers. Don't take offense when they ask you questions. You know your business and you spend most of your time working on it - they are not being difficult and they aren't stupid. So welcome people's questions, and answer them as best you can. To do this - prepare yourself. 

Building trust is a crucial aspect of successful networking. People are more likely to do business with individuals they know, like, and trust. Therefore, it's important to take the time to build genuine relationships with those you meet through networking events. This means actively listening to their needs, offering support where possible, and following through on any commitments made. It's also important to be honest and transparent in your communications and actions. When you build trust, you lay the foundation for long-lasting and mutually beneficial business relationships. Remember that building trust takes time, effort, and consistency, but it's an investment that can pay off in the long run.

By following these tips and being well-prepared for networking events, you can make valuable connections and build your business network.

5. Manage your finances

Managing finances effectively is crucial for small businesses to succeed. It means making smart decisions about money, like creating budgets, keeping track of cash, and managing debts. This helps businesses operate well and stay financially healthy. In this section, we'll talk about good financial management and how to do develop this. 

5.1. Why it is important?

Managing finances is crucial for small businesses. Poor financial management often leads to business failure. In a previous blog post, we discussed how inadequate funding is a common reason for business failure. A good financial management system will help you address this issue. Without proper financial management, businesses struggle with cash flow and debt management, causing financial stress. By creating and sticking to a budget, tracking cash flow, and managing debt, small businesses can improve their chances of success and avoid financial problems. Good financial management is essential for a healthy and thriving business.

5.2. Do you have a good financial management in place? (Quiz)

These questions below will help you determine if you have a good financial management system in place or not. Simply answer yes or no to see where you stand. No excuses necessary.

1. Do you have a clear and realistic budget that you stick to?
2. Do you regularly monitor your cash flow and have strategies in place to manage any fluctuations?
3. Do you manage your debts effectively, i.e., by keeping them under control and making timely payments?
4. Do you make informed decisions about spending and investments, based on careful analysis of your financial situation?
5. Do you have a good understanding of your financial metrics and use them to make informed decisions about the future of your business?
6.  Are you transparent about your financial performance and share information with stakeholders, such as investors and employees?

If all your answers are YES, you have a good financial management system in place. If most of the answers are NO, then you have a poor financial management system in place. If it is a mixture - then you have an average system in place. Whether poor or average - you can always improve your financial management system.

5.3. How to implement a financial management system:

If you want to go at this alone without hiring a competent bookkeeping firm like RoA. Here are some examples of how to implement good financial management practices:

1. Develop a realistic budget: Create a monthly or annual budget that includes all of your expected income and expenses. For example, if you run a restaurant, your budget might include food and beverage costs, rent, salaries, and utilities.
2. Monitor your cash flow: Keep track of your cash flow by reviewing your bank statements regularly and creating a cash flow statement. If you notice any fluctuations, adjust your budget or find ways to increase revenue.
3. Manage your debt: Keep your debt under control by making timely payments and negotiating with creditors if necessary. For example, if you have a loan, make sure you understand the repayment terms and plan accordingly.
4. Make informed decisions: Use your financial data to make informed decisions about spending and investments. For example, if you're thinking about expanding your business, analyze your financials to make sure it's financially feasible.
5. Use financial metrics: Use financial metrics like gross profit margin and net income to track your performance and make informed decisions. For example, if you're trying to increase profits, track your gross profit margin over time to see if your efforts are paying off.
6. Keep accurate records: Keep accurate and up-to-date financial records, using accounting software or tools that work best for your business. This will help you track your finances and make informed decisions.
7. Review and adjust your financial plan: Regularly review your financial plan and adjust it as needed to ensure your business stays financially healthy. 

In conclusion, managing finances effectively is crucial for small business success. By developing and monitoring budgets, tracking cash flow, and managing debt, you can establish a strong financial management system that will help you make informed decisions, avoid financial problems, and improve your chances of long-term success. With the right financial management practices in place, you can focus on growing your business and achieving your goals.

6. Automate, automate, automate

Investing in technology and automation can be a game-changer. By adopting the right tools and technologies, we can improve efficiency, reduce costs, and scale more quickly. However, with so many options available, it can be overwhelming to identify and implement appropriate technologies that will work best for our businesses. That's why, in this section, we'll explore the benefits of investing in technology and automation for small businesses and provide you with tips on how you can identify and implement the right tools for your business. So, let's dive in and discover how technology can take your business to the next level.

6.1. Pro’s and con’s of automation:

Pros:

1. Technology can help you work faster and get more done
2. It can save you money over time
3. You can grow your business more easily with the right technology
4. Technology can help you keep track of important information
5. Your customers will have a better experience
6. You can be more competitive in your industry

Cons:

1. Technology can be expensive to buy and maintain
2. It may be hard to make new technology work with what you already have
3. You need to take care of technology and make sure it keeps working
4. Some people may lose their jobs to technology
5. Technology can sometimes have problems and stop working
6. You need to train your employees on how to use new technology

Remember to think about these things carefully before you decide to invest in new technology for your business. There are both advantages and disadvantages to consider, so make sure you choose the right technology that will work best for your business needs.

6.2. Assess which technology is best for your business needs

Use the below to assess whether a technology is suitable for your business or not:

1. Identify your business needs: Consider what tasks you need to accomplish and what problems you need to solve. This will help you identify what technology solutions could benefit your business.
2. Research your options: Look into different technology solutions and research their features and capabilities. Consider the cost, ease of use, and customer support available for each option.
3. Consult with experts: Seek advice from industry experts or technology consultants who can help you evaluate different options and make an informed decision.
4. Consider scalability: Choose a technology solution that can grow with your business, so you don't have to constantly invest in new technology as your business expands.
5. Test the technology: Before investing in any technology, try it out with a trial or demo version to ensure it meets your business needs and works well for your team.
6. Get feedback from employees: Involve your employees in the decision-making process and get their feedback on how the technology will impact their work.

By following these tips, you can assess whether a technology solution is a good fit for your business and make an informed decision that will benefit your business in the long run.

6.3. Some technologies widely used by small businesses:

It can be overwhelming to navigate the vast landscape of available technologies to help grow your business. We are also busy testing a number of technologies to see whether they are suitable for our business needs. The below provides some names and brief descriptions of technologies that are used by other small businesses in the country.

1. QuickBooks: An accounting software that helps small businesses manage their finances, including invoicing, tracking expenses, and generating financial reports. QuickBooks offers a free 30-day trial.
2.  Shopify: An e-commerce platform that enables small businesses to create online stores, manage inventory, and process orders. Shopify offers a 14-day free trial.
3.  Asana: A project management tool that helps businesses organize and prioritize tasks, collaborate with team members, and track progress. Asana offers a free version with limited features, as well as paid plans.
4.  Hootsuite: A social media management tool that allows businesses to schedule posts, monitor social media activity, and analyze performance. Hootsuite offers a free plan for managing up to three social media profiles.
5. Mailchimp: An email marketing platform that helps businesses create and send email campaigns, manage subscriber lists, and track performance. Mailchimp offers a free plan for up to 2,000 subscribers and 10,000 email sends per month.
6. Zoom: A video conferencing tool that enables businesses to conduct virtual meetings and webinars. Zoom offers a free version with limited features, as well as paid plans.
7. Canva: A graphic design platform that helps businesses create professional-looking marketing materials, such as social media posts, flyers, and infographics. Canva offers a free version with limited features, as well as paid plans.

These technologies cover various aspects of small business needs such as project management, social media management, email marketing, financial management, and customer relationship management. Some of them offer free versions while others have affordable pricing plans. It's important to assess which technology fits your specific needs and budget.

Investing in technology and automation can bring significant benefits to a small businesses, helping to improve efficiency, reduce costs, and scale more quickly. By assessing your business needs and choosing the right tools, you can take advantage of the many benefits that technology has to offer. However, it's essential to be aware of the potential drawbacks, such as the cost of implementation and potential job losses. By carefully weighing the pros and cons and choosing the right technologies for your business, you can position yourself for success and growth in the long term.

Conclusion:

Managing a small business can be tough, but by following some key principles, we can make it easier. It's important to have a strong business plan, set realistic goals, and develop a marketing strategy that fits your goals. Managing money well is also important. Using technology and automation can help us work better and save money. But we should choose the right technology carefully. As small business owners, we should keep learning and improving to stay ahead of our competition. By using these principles, we can make our small business successful. By continuing to learn and improve, we can avoid the mistakes of poor management that we talked about earlier. If we manage our money, marketing, customers, and automation well, our small businesses can grow. Remember, managing a small business can be hard, but if you work hard and learn, you can achieve your goals and be successful.

At RoA, we are committed to supporting small business owners like you on your journey to success. We are walking this journey together. We offer a range of services and resources to help you implement these key principles of small business management, including financial management, marketing, and automation tools. Our team is dedicated to providing personalized support and guidance to help you achieve your business goals. Don't hesitate to reach out to us for assistance - we're here to help you in every step of the way!