When I started FrugalLocal and LocalMoney, I only used my mobile phone to publish social media posts to get my message out there. As my business grew, I added a blog, email list and other things that my followers asked for. Starting my small business wasn’t as costly as I thought it would be, but it did take a lot of time. As time progressed, I had to add functionality and services that were required to sustain my growing business.
To avoid being reactive (and stagnating) in our approach to business, we need to strategically (and proactively) grow our business from a one-man side hustle to a big business, without sacrificing the bottom line.
We need to build our business for long-term sustainability and profitability.
In this article, I want to explore overarching ideas and concepts that we need to sustain our business.
Working with money in your small business – financial management
You’re not a charity, you’re a business
Running a profitable business is vital for the survival of your business. Money is the life in your business, and unless you’re able to sustain the cash flow running into your business, it will fail. But what does this look like in real life?
Let’s take this scenario: A client pays you R 30 for a cup of coffee. From that, you need to deduct two types of expenses: The cost of the coffee machine (capital expenditure/CAPEX) and the cost of the staff, coffee beans and rent (operational expenses/OPEX). What is left is the profit. Having these simple calculations early on can help keep your business on track in the long run.
How will you monetise your idea/small business?
Startups often don’t make money in the first few months or years. Facebook, for example, knew that it will be able to make money through advertising once it has enough users. The mechanisms for making money are called ‘forms of value‘. For example, with FrugalLocal/LocalMoney, I am using the access to market form of value – companies pay me to get access to my followers.
How do you keep track of money coming in and going out?
Whether now or later, we all need to put things in place for scaling and growing your business. For example, early on I sent invoices that I created in Photoshop/Illustrator. It wasn’t long before my tax advisor was freaking out with the extra admin this created for her. Opting for an invoicing tool where I was able to mark invoices as paid and set up recurring invoices has helped me streamline my business.
How do you keep track of money coming in and going out?
Setting financial goals
I have struggled for years with the idea of setting financial goals simply for the fact that we don’t really have control over revenue and customer actions. We shouldn’t, however, shy away from putting down financial goals – having goals that you don’t meet is better than having no goals at all.
Grow your goals over time. In the beginning, it might be signing your first client, making a R 1000 sale etc. and then escalate to making 10 sales, and then selling 10 000 products.
As a guideline for goals, I recommend using the SMART methodology – goals need to be specific, measurable, achievable, realistic, and timely.
Getting your message out there – Marketing and sales
I hate mass media marketing, it’s so spammy and forces you to watch ads that you’re not interested in. Imagine trying to have a conversation with someone, but getting constant interjections from a random person. I believe we need to change our approach to building better relationships with our customers.
Closing the deal – giving and receiving
For me, marketing is about giving away free stuff/information that will help people. At some point, people will need custom advice, coaching or assistance. When this point is reached, the sale is made and you have an inflow of cash into your business.
Note that the whole process before the sale is one of giving – it’s only at the end that you receive (the sales transaction).
Sales funnels and processes
Not all sales are simple. For my influencer business, the company contacts me, and I make the tweets, publish and invoice. But in software development, the commitment can be costly and complex. Mapping out the customer journey is called a sales funnel. Doing this identifies the bottlenecks where potential customers fall off and gives you insights into how customers think about your product and service.
Internal and external communication
Keeping the communication channels open
While I was still employed, one of my co-workers alerted me that we have an incident. This was a new word in the office and inquired about what this meant. It surfaced that management had decided to introduce a new system where if two or more people are affected, it would be classified as an incident – but didn’t let the support staff knew that this was the case.
A company is like a machine with different parts. Communicating staff changes, company performance, structural changes and marketing communication changes is vital for company culture, productivity and long-term sustainability.
Communicating with your customers
Simon Sinek writes in his book “Start with Why” that customers buy into a company’s vision, rather than into their product. We need customers to buy into who we are, as this will convert them from customers to raving fans. In practice, this would mean that all communication should align with who we are.
All marketing messages should be clear and on point.
Leadership and management
Bookshops have shelves dedicated to leadership formulas, systems and processes. Although I believe reading these books is good for you and your business, putting this into practice is where the tyre hits the road.
Get to the point where you can delegate the work
When I started my coding business, I decided to outsource my LinkedIn marketing. Even though I received a lot of connections, I didn’t close any sales nor learn anything about my customers. I learned that early on in your business, you need to have a certain level of control over your business, which allows you to learn how things work.
This is, however, not sustainable in the long run, especially as a business grows. At some point, you need to delegate your authority to others. A good example of this is Henry Ford:
“…I have a row of electric push-buttons on my desk, and by pushing the right button, I can summon to my aid men who can answer ANY question I desire to ask concerning the business to which I am devoting most of my efforts. Now, will you kindly tell me, WHY I should clutter up my mind with general knowledge, for the purpose of being able to answer questions, when I have men around me who can supply any knowledge I require?”
To build a sustainable business, you should keep on dreaming and working towards something bigger than what you have now. Strategic foresight is all about thinking about tomorrow and where your business is going:
- Read and research where your business industry is going.
- Dream about where you want your business to go.
- Strategically make changes to your business to align it to your vision.
Balancing the roles in your small business
I recently spoke to a few small business owners in different phases of their businesses. I found that early-stage businesses often overvalue technical implementation. For example, writing code takes precedence over marketing, designing logos is more important than customer relationships, and coaching clients is more important than automating processes in the business.
Michael Gerber, writer of The E-Myth calls this working in your business, rather than on your business. He further explains that each business has an entrepreneur, a manager and a technician.
While the Manager lives in the past and the Entrepreneur lives in the future, the Technician lives in the present
In the beginning, a small business owner will need to be all three. It’s important to not neglect any of these.
Imagine thinking about your business as a project. You need to manage the marketing, the technical output, operations and finances. If you’re a one-man show, this can sound like a challenge – and it is! If you do want your business to grow, you will need to make sure that you’re up to date with all the admin and know that you’re on track with your goals. I want to touch on different project management techniques with an example for each:
- Lean – focus on delivering value, rather than a well-rounded offering. This can be done through testing what your customers value – e.g. run a Google Ads campaign to see what the customers are clicking on/interested in
- SCRUM – Planning your goals in 2-week sprints, that will allow you to deliver small things consistently – making a big difference in the long run. For example, in the next 2 weeks, you want to have a basic Google Ads campaign live and working to test if users want to know about x feature in your product
- Waterfall – once a project is approved, it is passed on to the technical implementors with a deadline. For example, a client approves your social media campaign. You now need to do the technical implementation by the given date.
KanBan – run tasks with statuses attached (To do, doing, done). All statuses should always flow in one direction, and never back to the previous one. For example, a feature needs to be built for your software. It is defined in a To do ticket, once started it moves to doing. Once done, it moves to done.
Time management in your small business
Managing your time is challenging – especially if you are a one-man show. I like to make lists of all the things I have to do each day. In that list, I have eagles (important and urgent) and vultures (unimportant and not urgent). My aim is to resolve the eagles every day, as they are the things that have the highest impact.
To manage your own business well, you need multiple skills – basic financial skills, project management, leadership, marketing and balancing the different roles you need to fulfil in your business.
Keeping track of everything can be challenging. I like the idea of focusing on the importand/urgent eagles in my day to day operations, however, there are some things that I also add that are important and not urgent yet.