Profitable shops are profitable for a reason. Often times it may seem like magic, however to those ‘in the know’, it’s just good old fashioned common sense…
Here are 9 of the most common sense ‘secrets’ to successful shop management:
1. Ensuring Sufficient Capital
The number one reason for business failure is running out of money. Smart shop owners crunch the numbers before starting their venture or expanding one. They take a hopeful, yet realistic view of the way things might play out and ensure sufficient money to cover the lean periods.
2. Accounting For Your Business
Smart shop owners know that the numbers speak volumes. They regularly visit with, and discuss details with their accountant. They monitor their bank accounts closely and keep track of their accounting systems. If they’re running a computerized system, they don’t rely blindly on the computer systems and have various checks and balances in place to validate the data.
3. Buddies With The Bank
The smart shop owner knows that the time to forge strong and positive relationships with the bank manager is before they need the bank’s services. They also realize that this pre-emptive approach allows them the chance to present the best image to the bank manager prior to any future meeting. Bank managers can sense financial distress and without any prior history for them to recall, the meeting may well not go as expected.
4. Forging Intelligent, Selective Alliances
In business there is the generally accepted rule that “many hands make light work.” Conversely “too many cooks spoil the broth” and unless some care and consideration is taken when working together, the careless shop owner may end up with more trouble than it was all worth. A smart shop owner knows that although a ‘friend’ might be an easy hire or an easy business partner, they may not be the best choice in the long run.
5. Keeping A Close Eye On The Competition
Keep your friends close, and your enemies closer… Okay, a little ‘cloak and dagger’ maybe, but the smart shop owner knows that knowing oneself is only half the battle. A smart owner also keeps a very close watch on their competition. They realize that competition is good for business – not bad, and that healthy competition stimulates business rather than repressing it. Also, the smart shop owner knows that by watching their competition they can learn their business strategy, their sales strategy, their pricing strategy, their advertising strategy and whole lot more.
6. Paying Their Taxes
The smart shop owner pays their taxes. They accept that it is part of business and factor it in to their overall business model. Instead of focusing on clawing back a few pennies here and there, the smart business owner focuses on building more wealth, they have a positive viewpoint not a negative one.
7. Managing Their Cash Flow & Receivables
Just as ensuring sufficient capital is necessary to start or grow a business, sufficient capital is required to operate a business. Smart shop owners know this and keep a very tight reign on their receivables. Smart business owners know that sales do not necessarily equal financial success - collecting the payment for those sales equals financial success.
8. Diversifying Their Risk & Exposure
The ‘never put your eggs in one basket’ is second nature to the smart shop owner. They diversify their risk and their revenues wherever possible. The smartest shop owners realise there is a situation they need to avoid called “effective control”. This is where a single revenue stream becomes responsible for more than 15% to 20% of the overall company revenue. In this instance the control is no longer in the hands of the shop owner, but in the lap of the client!
9. Intelligent & Results Oriented Marketing
Smart shop owners know that throwing advertising ‘out there’ is not the way to go. They know that advertising is all about sales and that all advertising is really just like a paper-based sales person. Ultimately this silent salesperson is accountable and responsible and the smart shop owner manages it that way.
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