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Achieving Growth
Customer Service
A
very common mistake made by smaller businesses is to not take customer
service seriously. Too often, managers think all it entails is answering
the phone promptly and being polite to customers – and how often do
companies fail to do even that!
In fact,
customer service can soon become more important to a small
company than sales and marketing, helping it retain customers
(selling to existing customers is much cheaper than finding fresh ones)
and maximise its income from them.
Good customer service can also help gain new
customers, as word spreads about how great a particular company is to do
business with. Managers should, therefore, have a strategy for customer
service which goes well beyond simply being polite on the
telephone.
So how do you go about delivering good customer service? Begin
by thinking what customers might reasonably expect as a basic level of
service. For a shop, that could be having friendly, knowledgeable sales
staff to help them and a good range of products in stock. That, in turn,
means being careful to hire the right kind of people, giving them adequate
product training and having effective stock control procedures in
place.
But achieving a
basic level of service isn’t enough if you want your small business to be really
successful. You must find ways to exceed the expectations of your
customers – remember, the objective is to have them tell their friends and
colleagues that your company is “great”, rather than just “not bad” or
“OK”.
One low cost way to do this is to consciously control
the expectations of your customers, by always making promises to them that
you know you can exceed. For example, if it will take a week for your shop
to supply a spare part you should tell the customer it will take ten days.
Then when the part arrives ‘early’ he or she will think you have done a
great job getting it to them so soon.
Market Research is vital
It really is! But too
often managers think that market research is an expensive
and unimportant 'optional extra'. This stems from a misunderstanding
about what it is exactly and what it involves.
For example,
you might think it requires spending thousands with a research company.
But in fact market research could be as simple as looking
in Yellow Pages to see how many competitors are already
operating close to where you are thinking of opening a new outlet.
Done properly, market research will in fact save you both time and
money. By not doing it, you will be taking unnecessary risks, miss
valuable opportunities and probably blunder into very avoidable
pitfalls.
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Finance
Financing
a New
Business
Instead of regarding raising start-up capital as
something separate from your business, it may be more useful to see that
the capital is the business.
The amount of money you get, the way you get it and the terms on which it
is given will often have a direct influence on the development of your new
venture.
Likewise, the nature of the company you want to start
will influence when, where and how you get your precious capital. A lack
of appreciation of the interconnectedness of these two things, the
business and the capital, is what leads to untold frustration for many
entrrepreneurs.
“This is obviously a great business proposition, so why
won’t anyone give me money?” they ask. Chances are they are looking in the
wrong place for finance, given the kind of businesses they want to
start.
It’s also important to appreciate that financing your
venture isn’t likely to be a one-off event. You may need cash injections
in the future to keep things on track even if you make a profit from day
one. In fact, if you do very well, get lots of business and start to
expand rapidly, you will almost certainly need more money.
And what if the business gets off to
a faltering start? How will you find the extra cash to
keep going until the business becomes more
successful?
Alternatively, you may be lucky enough to have all
the money you need already, perhaps from an inheritance. The very
important thing to remember here is that having money doesn’t, on its own,
make you an entrepreneur. In some ways, it is the struggle to get the
money you need to start a business that turns you into a real business
person. If you aren’t able to raise the money to start your new business
from external sources then that could be an indication that you are no
entrepreneur.
Banks are the first place
many people think of when it comes to getting start-up money (Barclays
Bank estimates it at one in four). After all, they’re desperate to lend it
in order to make some profit, right? The key thing here is that the banks
really do want to make a profit and definitely don’t want to lose the
money they’ve lent. But, you say, surely they’re willing to take some risk
to make that profit? The short answer is no.
Banks get a
relatively modest return for their lending – they certainly aren’t going
to double their money overnight. This fact alone means that they must at
all times minimise the risk of losing it. The easiest way to do this is to
only lend when they can be sure of getting all their money back if things
go wrong.
In practise, this means a bank will typically expect you
to raise finance from other sources and/or put up saleable assets (eg
equipment or premises) as security which will match the money it will be
lending the business. Saying that, some banks may relax the 50/50 rule for
smaller loans or if you already have a personal account with
them.
Finally, unless your business idea is exceptionally
straightforward, the bank will expect to see a business plan before it
agrees to hand out any cash.
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Common
Mistakes
Why Businesses Fail
Companies don’t
usually fail because of any fundamental flaw in the idea behind the
business. Too often, it is due to their managers making poor
decisions based on misconceptions they hold about basic business
principles.
A prime example of this is taking on too much new
business in the belief that quick growth is good for the
company.
In fact, it is controlled, steady growth that
businesses should be trying to achieve.
Rapid, uncontrolled growth generally results in poor cash flow,
which is the biggest cause of business
failure.
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Professional
Services
Accountants
Your accountant should be chosen carefully because he
(or she) can be an important part of your team, providing advice and
acting in many ways like a mentor. He must also be able to gain the
respect of your managers and co-owners, so that his advice gets taken on
board.
Recommendations from your network can steer you in the
right direction when making your choice, but still use your own judgment
about whether a particular accountant will be able to provide the
attentive service your start-up needs and is also someone you can get on
with. And talk to more than one before making a decision.
Smaller businesses are generally better off using a
smaller accountancy firm, because it is more likely to provide the
personalised service they need and it will also be cheaper than using a
big name.
You should find an accountant who is happy to help set
up your internal accounting systems by suggesting which processes to adopt
and recommending a computerised accounts package that is compatible with
their own systems. The accountant should provide advice on how you can use
a bookkeeper to both keep you constantly informed about what’s happening
financially in your business and also to minimise your overall accountancy
costs. He should also be willing to provide help with financial planning,
if required.
There are many ways in which your accountant
can save you money, including helping you and your business pay as little
tax as possible. But this can only happen if you keep him informed about
what you are doing – so talk to your accountant when you do anything
financially significant, such as a large purchase or the sale of major
capital equipment. It may be that you would be better off leasing rather
than purchasing, or delaying the sale until the next accounting
period.
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