Global inflation is real. In these trying times, planning a small or medium-sized enterprise is truly challenging.
For those with bare minimum capital and big dreams at hand, there’s no other way than to deal with the situation head-on. Entrepreneurship is all about risk, after all.
But, there are a few ways to minimize the risks involved. In this article, we’ll share six business tips that can help you make the right decisions and plan out your SME properly and safely.
Let’s check these out.
- Validate your plan
Seeking validation is not the healthiest of habits. But when it comes to SMEs, validation takes on a different definition. It’s equivalent to risk assessment.
Once you have an idea and you’re ready to work on a promising business plan, make sure you reach out to the public and acquire validation. We’re not asking you to make a public announcement, asking anyone and everyone if the plan is good to go.
Instead, we’re asking you to validate your business idea strategically. Research the existing demand for your product idea. Identify the target market and predict the growth potential.
It’s a good idea to present your target market with a question that helps you indirectly validate your business plan. For example, if you plan to launch a content marketing tool for LinkedIn experts, you can run a survey or poll on LinkedIn, asking:
Unique post ideas generate better engagement. Would you like unique post ideas delivered to you?
Their answer will help you predict whether you have a viable plan or not.
- Distribute funds in a 2:1 ratio
As the owner of an SME, you need a quick win to sail your boat further. You cannot invest in long-term strategies to reap the result of your efforts years later.
Therefore, we recommend adopting a 2:1 ratio regarding the distribution of funds. Spend twice as much on product or service development as compared to marketing.
As you improve your product or service, you will retain existing buyers and convert them into long-term clients. And the improvement process will often include the acquisition and implementation of customer feedback.
This, in turn, will set you up as a customer-valuing-business. Your target audience is more likely to trust you and the quality of your product will improve too.
Also, if you’re bootstrapping your business or beginning with no capital, you might want to consider these five ways of acquiring capital for your small business.
- Maximize your borrowing power
Borrowing is also an intelligent means of funding your business. But you cannot borrow a large amount unless you strengthen your borrowing power.
Fundamentally, borrowing power refers to the amount of credit or loan you can acquire from a financial institution. It depends on your credit score, financial history, and your current needs. And working out your borrowing power is an important part of growing your business.
As a small business, you should also continuously work to increase your borrowing power. You can do that by:
- Establishing business credit
- Working with vendors who can report your positive history of payments
- Opening a business checking account
- Repaying any outstanding business or personal debts
- Using a business credit card for business needs
If you practice these, you can confidently take out large loans and get the funding you need. And that’s because when financial institutions scrutinize your financial history, they’ll find nothing but positive repute and credibility.
- Begin your journey with a management tool
Managing a small business is a very tough task. You won’t have a big, sorted, and neat team. You and your employees will often have to wear multiple hats and deal with different domains.
In such a scenario, it’s difficult to keep track of completed tasks, to-do lists, and tasks in progress. And mismanagement ultimately results in losses, poor or slow growth, as well as unhappy employees.
For that very reason, we recommend small and medium-sized businesses undertake a keen approach towards management. You can use free SaaS tools like Slack, Zoom, Asana, and Trello to manage your day-to-day activities and operations.
- Prioritize customer experience over competitor analysis
Keeping an eye on your competitors is just as important as listening to your customers’ feedback. But if it comes down to choosing between the two, you should go with customer experience.
Why? Well, that’s because as an SME in its early stages, you’re already focusing on establishing, planning, and laying the foundations of your business.
In doing so, you can surely conduct a competitor analysis and identify your competitor’s strengths and weaknesses. But it’s impractical to compete and expect to win an established business’s customers.
What if you win them, bring them to your business, only to lose them when you can’t offer consistent quality?
So, it’s best to focus on retaining your existing customers and stabilizing the quality of the product/service you offer. In this process, there’s a chance you can outsmart your competitors.
- Facilitate employee morale
As a young business, your employees are your assets. Their dedication and efforts are your resources.
We recommend facilitating employee morale for rapid growth. You can do so by:
- Communicating often
- Appreciating every little effort
- Giving work-free uninterrupted breaks
- Equipping them with the proper tools
- Incorporating cost-effective fun employee activities into the routine
- employee incentives and share schemes
With these, they’ll feel motivated to give their best (and take your business to the next level)!