How do you build value for a small business? Two key fundamental factors are:
1) Having an excellent understanding where the company stands at all times, and
2) Knowing how to plan for future growth – at all times.
Many small business owners are constantly bombarded with day-to-day operating hassles that detract them from focusing on building a valuable firm. In addition, rising costs such as health care expenses and wages have the potential to hamper their growth potential. But it doesn’t have to be this way.
Here are five steps every small business owner can take to build value for their company:
1) Set time aside every month to review your balance sheet and look for inconsistencies in your expenses. If they are not where they should be, take immediate action to get them back to where you want them to be.
2) Conduct a basic industry analysis and look for how much others are charging for similar products or services, both locally and nationally. Compare these prices with your own and determine whether or not your company should increase its prices. But remember to consider the price sensitivity of your customers.
3) Review your operating practices such as peak and off-peak times and compare them to staffing levels; inventory volumes and compare them to peak and off-peak time periods; and review your accounts receivable to accounts payable ratio to ensure your firm collection’s policy is on par.
4) Conduct an operations analysis and look for bottlenecks that slow your operations down and prevent or delay your company from making money. Look for way information technology can help remove these bottlenecks and make your firm more efficient.
5) Once you have your expenses, income and operations in check, look for opportunities that will ensure the long term success of your company. Be creative, and remember to open up your mind and look outside the box!
If you are a small business owner and you find that you do not have the time to work on building value for your company, Scopo can help you accomplish any or all of these five steps – and more! Contact Scopo today to speak with a trusted strategic advisor who has the expertise and capabilities to help your small business succeed, and you’ll quickly learn why we say “Your Scopo is Our Scopo!”k here to edit.
Joe Immordino, MBA