While hundreds of thousands of new businesses are born each year, studies by Gallup, The Kauffman Index of Entrepreneurial Activity, and Fraser Institute indicate that even more are dying. Chances are each month you hear or read about a closure, or suddenly notice a “For Lease” or “For Sale” sign on a commercial property — in your locale as well as others.
Whether these closings are due to a slow economy, too little capital, an insufficiently-skilled business owner, or other factors, there are strategies sometimes overlooked that could help companies remain on solid footing. Here are a few:
Examine insurance coverages. Can you lower your business insurance premium by increasing your deductible? Are there items on your inventory/property list that are less likely to be damaged? Are there obsolete items? The needs of growing companies change over time; evaluate your coverages every six months. Also examine your life insurance policies. Perhaps a costly whole life policy could be replaced by a less expensive term policy offering similar coverage.
Enlist your banker’s assistance . For all reviews, make certain you prepare the requested financial reports. This ensures a constructive meeting focused on key issues. And if you’re aware of potential problems, share them. Work with your banker to address them.
Hire the right people. No business leader excels at everything. Hire people who complement your weaknesses, and whose personalities mesh well with others in your organization. Once they are on board and trained, delegate.
Have a plan for expansion. Once a company has demonstrated it has a sound product/service and a solid customer base, explore related/adjacent markets and ways to generate more business from current customers. These avenues typically have limited risk and great growth potential. And in some cases, trying new markets won’t require an extensive amount of time or money.
Prepare for the unknown. A key supplier unexpectedly raises prices because of their raw materials costs. A new tax is put into effect impacting your industry. A piece of equipment breaks down that must be repaired or replaced to keep shipping product. It’s best to be prepared for emergencies along these lines. Do you have available credit? Or do you need alternative financing for the short term?
Schedule time off. No one can be at their best if they focus on their business 24/7. Whether you would enjoy a weekend out of town, a few hours on the tennis court, or dinner and a movie, the time you spend not thinking about the business will help you think more clearly when you are in the office.
Finally, take a lesson from top companies and take risks. Continually look to increase efficiency, enhance your product/service offerings, and deliver greater customer satisfaction. These efforts will ensure that your business thrives long term.