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30 Do’s And 20 Don’ts In Starting A Small Business

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Monday, March 19, 2012

Tips For Starting A Small Business

When starting a small business there's much to think about. Here's a few tips to help you focus in on what is important.

Understanding your market is important, in that by doing so you will not only generate business, but understand how much profit you can expect to make on your sales.

Don't be shy about making a profit- it's why most of us are in business. If, for example, a customer says they can "get something cheaper at XYZ giant retailer", explain to them the advantages of your products/services, and that you are not in business to compete with XYZ. Even if the products you offer are similar, you probably have advantages in personal service, location, shopping convenience, etc. If the customer is insistent that price is the key to their decision, as a business owner you need to decide if their business will generate an acceptable profit, or if you should walk away. Keep in mind that if you cut your price word will spread and it will be difficult to recapture your present price level. Generally our policy is to offer specials on a limited selection for a fixed time, to generate new business. We don't cut our prices in response to isolated comments.

If you are a retailer, do invest as much as you can afford in a point of sale system, preferably a fully integrated one. A good system enhances your ability to manage your business in several ways- customer service, inventory management, and pricing to name a few.

Do gain a good handle on your business processes- purchasing, accounting, inventory control, pricing and gross margin. Marketing and customer service are critical, but increasing sales doesn't benefit the business unless those sales are generating bottom-line profits. Set realistic goals not only for sales volume, but also for average gross margin, inventory turns, shrinkage, spoilage/obsolescence, operating expenses, etc. This will refer back to the business plan George mentions above. Monitor at least quarterly, if not more frequently.

Engage people with complimentary skills in your business. If you are a marketing/customer service oriented creative person, engage a number cruncher. You'll enjoy the business more and avoid pitfalls.


Anonymous said...

Great tips!

Starting a small business can be agonizing and refreshing in so many different ways. Don't forget to keep your patience (and sanity!) as you deal with the day-to-day growth of your new business.

I really like these two points:

+ Do gain a good handle on your business processes

+ Engage people with complimentary skills in your business

Very good points, and things that should be continued through the life of your company.

Options Trading said...

I also believe that a good marketing strategy is important in starting a small business. Many companies fail because they lack proper planning.

Brand Me said...

I'm about to start a small business and these tips will surely be helpful.

I know it's hard to begin from scratch but very lucky to have resources like these posted on the internet. Thank you!

Jimmy Smith said...

Your tips was really helpful for my business. thanks a lot!!

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