City : Enterprise Walk : Making sure you succeed
Congratulations - you’ve put a lot of hard work and effort into getting going. It can be tempting to think that you can relax now.
Once you are established, and have done everything a few times, it gets easier. But it is important that you continue to pay attention to your business, so that your hard work isn’t wasted.
Cash keeps business in business. However healthy the order book and profit margin, if a business runs out of cash it won’t be able to pay its suppliers, its wages, or its overheads and it will fail. It’s important that you make sure that you bill your customers regularly for work done, and encourage them to pay on time. More details can be found https://www.gov.uk/avoid-business-cashflow-problems
Business Continuity and Disaster recovery
Fire, flood, theft – we all hope they won’t happen to us. But if they do, many businesses affected will fail in the next year. To avoid that being you, it’s important to think through how you would carry on doing business – can you find alternative premises, have you got copies of your important data, will your customers go elsewhere if you can’t supply them?
More details can be found https://www.gov.uk/government/publications/business-continuity-guide-sample-chapter--2
Growth in your business should lead to increased profits, and is generally welcome. But growth has its own challenges:
- Have you got other skilled people you trust who can work with you? If not, how are you going to recruit them?
- Are you going to need larger premises, and how much will that cost?
- Are you sure the price you charge will cover your costs? If not, the more you grow, the more money you will lose.
- If you use particular ingredients in your product, are you sure larger quantities are available?
- How will you finance your increased costs until you get paid?
- Is growth dependent on one big customer? If so, what happens if they cancel the contract, or cut the price they will pay – can you survive?
- Given all the above, do you need to grow? Would you be better off getting better at what you do now, and keeping your existing customers happy, and paying?
No matter how good your business is, it will be affected by changes in other areas. One way of thinking about this is a PESTLE analysis:
- Political factors are basically to what degree the government intervenes in the economy. This can include changes in taxation rates, regulations or public spending. Government can try and promote certain goods (eg encouraging investment in film) while discouraging others (eg banning the display of cigarettes).
- Economic factors such as growth, inflation and interest rates. In a recession, people have less money to spend, so they change how they spend it –the recent rapid growth of discount supermarkets is an example of this.
- Social factors such as population growth, migration and cultural attitudes. Locally, we have an aging population, which increases demand for care services. This has been balanced by inward migration by young adults, which has led to a higher birth rate and increased demand for education and services for children.
- Technological factors can change the way you do business; a small company can now market itself and do business across the world. But technological changes can also disrupt established businesses – Nokia and Blackberry were once market leaders in mobile phones, but both have been overtaken by rivals.
- Legal factors include Health and Safety legislation, contract, consumer and employment law. This may mean you have to allow employees to work flexibly, or that there is demand for your service to help other companies meet new legal requirements.
- Environmental factors such as climate change and resource use can lead to public demand for recycling, better energy efficiency or reduced carbon emissions. This can open up opportunities for new businesses, while putting established carbon-intensive businesses under pressure.
Your business may be a small part of the local market, and PESTLE factors may not make much difference to your operations. It can be useful to use this as a way of thinking about new opportunities that may arise, or how you will deal with additional challenges.