Recently, I had a private consulting session with some growing startups: nine out of ten indicated their businesses needed money to shoot up; another set of seven out of ten wanted managerial support; and three out of ten implied they could do better with the help of a good team. In building a business, one advantage is recognising what’s important to its success and growth.
The above set of startups I described indicated what they thought their businesses badly needed: analysing their operations and structures, only the latter group of the three sets was right about needing the support of a team to improve. The rest had all they needed – except knowledge of what to do with it.
Money is a critical aspect of running a business, and most of the time it happens to be the only challenge SMEs see as their biggest problem. Here’s the question: is money – or lack of it – at the root of most or all small businesses’ inability to achieve results?
The truth is that no business has absolute financial freedom; they only have controlled finances, and money is not at all the only factor needed to win in business. In fact, it has become many startup owners’ downfall rather than their growth. It will amaze you how some western startups are strategising their businesses to opportunities, instead of prioritising cash, and are still breaking status quos.
Yes, you need money, but money isn’t the major challenge: strategy is! Assuming you have all the money, what will you do with it? The response of some startup owners would be: “run my business of course, and expand!” How do you run the business and expand? This is what is crippling SMEs. Getting the action before the plan the plan is misplaced; there’s a plan before the action. They get the money before the plan/strategy and not the plan before the money.
Here are some tips to get your focus off the ‘money’ and get you down to real work
- Firstly, your small business need more than just money
Financial intelligence will increase your financial possibilities available to your business. Acknowledging this phrase “money is not everything your business needs” is the beginning of your financial intelligence. “Change your focus from making money to serving more people. Serving more people makes the money come in,” – Robert Kiyosaki, Author of Rich Dad Poor Dad.
- Get a financial goal
How much will it cost for you to achieve your goals? Some goals are free, but some business-goals have costs. The difference here is knowing your ‘cost-cash and income-cash’ and planning toward it. Setting a goal provides your business with a reality-test for growth and targets, boosts your saving and investment decisions, and serves as a progress reference.
A financial goal goes a long way to inform your business’s financial standing, what you actually need money for and what you don’t, and gives you financial independence. Money without a plan is money soon gone.
- Operate a week-to-week budget
A monthly financial plan is usually quite long for small businesses; they end up incurring unwanted debts and spend above their intended budget. Get a weekly operational budget. For many small-business owners, the process of budgeting is limited to figuring out where to get the next cash to meet this week’s expenditures.
There are many financial obligations to meet in a given week, so it that is already hard to find the time to do long-term financial planning. Weekly budgeting is one powerful financial tool available to startups, and a good way of adopting proper financial management skills and discipline. This will enable you to easily control cash flow and not go ‘mad’ trying to find more cash for business.
- Work within your short-term plans while you are still a small business
Usually, you will hear experts say: “the biggest mistake for a small business to make is to think like a small business” – the implication is not to avoid thinking like a small business or not being ambitious, but to think smart and take wise decisions. It also doesn’t mean do not be profitable or have big goals for your business – but while you’re still a small business, be great at it.
Long-term plans are good for future growth and expansion; but since it’s difficult for small businesses to leap up, they help to keep sight of the immediate plans and achieve results.
- Don’t “play big in a small pocket”
Many startups like to impress. Start where you are, make use of what you have, and cut your coat accordingly to your size: we all have read or come across quotes such as these. We already know the plight of small businesses, and it would be even more hectic and challenging to fit into the market as a rather bigger ‘outfit’ than what you are – a ‘startup’.
Start from home if you have to; be patient until you can afford employees, and as well learn to run within what your business can currently make or is making. “Beware of little expenses; a small leak will sink a great ship” – Benjamin Franklin