Nowadays, the very important element of doing business is to introspect the financial stability of the business. However, to bring business to stability, you need to follow some rules. Participation in transactions for the purchase and sale of companies develops a valuable skill: the ability to comprehensively look at a business, evaluating it through the eyes of a potential investor.
Observing numerous examples of successful and not-so-managerial decisions helps to better understand why business sustainability rests. Let’s try to present this understanding in the form of several practical tips. Other companies looking for development — like analysis of factors affecting the value of a business is relevant everywhere.
Take care of your staff-Provide protection financially.
At the post-industrial stage of development of society, people are more important than machine tools. It is the enthusiasm, motivation, attitude to the work of a particular person that creates the desired result. The paradigm of “indispensable no” is becoming a thing of the past, respect for the staff pays off many times over. The staff is responsible for the policies, procedures, and system relating to finance, accounting, budgeting and likewise. Hence, for retaining dedicated employees, sometimes it is wise to adopt some strategies. For example, getting your employee’s avail term life insurance with flexible and customized options. This way, the employees will feel that they belong to the organization and the company will secure itself against recruiting a replacement.
Avoid dependence on a single supplier.
The supplier base should also be as diversified as possible. Otherwise, the supplier, feeling the company’s dependence on its products or services, may dictate terms. Therefore, it is useful to have spare suppliers and periodically carry out part of the orders through them in order to maintain flexibility. In case of any uncertainty, there are chances that you incur huge losses. Hence, choose wisely and save your costs.
Develop a sales system.
Everyone knows that business resilience depends on sales first. However, serious mistakes happen here too. For example, a customer is associated with a company only at the level of a specific sales manager. The manager quit — the client doubted. This is especially true for the B2B sector (business-to-business), where the loss of even one client is sensitive to business. The sales team is the most important aspect of the business plan.
Document at least key processes
A business in which the basic processes are formalized is less dependent on individuals and their unique experience. Working algorithms in the form of job descriptions, templates, plans, programs, and internal libraries capture the accumulated knowledge and form the framework for business sustainability.
You can understand your real effectiveness only by comparing yourself with direct and potential competitors — this is benchmarking. In the short term, a business can survive due to the individual, often temporary, factors of competitiveness. However, in the long term, he should strive for the best domestic and international practices and standards. The issue is the regularity of the implementation of recommendations and implementation details.
Test your business model.
Who are your key consumers? What value do you create for customers? What resources provide competitiveness? Over time, the eyes of managers and owners are “clouding”, and obvious factors of both positive and negative nature may fall out of sight. “Due to what factors does the business work and make money?” Is the key question that you need to ask yourself from time to time.
Diversify your customer base.
We often face situations where a single customer in a company has a significant share in the revenue. The higher the number, the higher the risks. The higher the number, the higher the risks. In our practice, companies met when the share of one client exceeded 50%. It is obvious that the potential loss of such a client will lead to a significant modification of the business model, and possibly to a loss of business for the owners.
This question is always quite painful, so it is critical for top management to determine the principles for such activities. The key criterion should be profit. Everything connected with the generation of income must be maintained at all costs. Office repair, purchase of new equipment, indexing can be postponed.
Describe your strategy.
It’s amazing how many companies don’t have a strategy and marketing plan described on paper. Usually, they are in the heads of individual owners and managers, but ordinary employees are in a non-acquaintance condition. And if there is no coordinate system, it is difficult to make the right decisions. Goal setting is the most important thing.
Set up management financial accounting.
Unfortunately, many companies are faced with the problem of high-quality financial accounting, which supplies the necessary information for decision-making. As a result, work accounting is done approximately, budgets are missing, and the owner and management will know about the real state of the business when it is too late. Be it real estate trading or likewise — accounting is necessary in any case.
Are all these things too obvious? Right. However, the obvious often recedes into the background, and it must be periodically remembered. And no less important is the regularity and details of the implementation of these important for all the evidence. Successes!
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