As a small business owner do you tend to work in your business, or on it? And what’s the difference? Here’s why you should do both.
Working in your business means you’re totally immersed in the here and now. The everyday stuff. You keep things running smoothly. You maintain good customer relationships. Vital management reports are set in place so you’re familiar with what’s what. Your systems work like clockwork. Your accounts are current and your cash flow’s healthy. You’ve sourced good suppliers. You’re handling your marketing and advertising with aplomb. Everything’s going smoothly. Which sounds fantastic. And it is fantastic… well done!
Working on your business, however, means you’ve got all of the above in hand plus a tight grip on the potential effects of all your excellent activity and hard work. You don’t just have your nose stuck firmly to the grindstone. You’ve planned where you want to be in the future, whether it’s one, two or five years ahead. You know roughly how you intend to get there. And you regularly take time out for analysis to check your progress, identifying exactly where you’ve got to so far.
Simply working in your business might be absolutely fine, provided you’re happy as you are and don’t want to expand. Some sole traders have absolutely no desire to grow. They stay small and neat because they don’t want to get involved in the hassle that comes with employing staff. Why? Because the minute you get into employer territory, a vast raft of HR and employment related administration, employee rights, employee benefits, identity, insurance, rules and regulations, health and safety issues and so on come into play. Employing just one person can be incredibly time consuming. And getting it wrong can mean nasty fines of thousands – even tens of thousands – of pounds.
Be a business owner who doesn’t stand still
Others take a different approach. Yes, they stay the same size… but they don’t stand still. They put their prices up. If you’re in high demand, you might be able to get away with a significant price hike and still enjoy the same amount of custom. Alternatively you might be hell bent on working less and taking more leisure time – in which case putting up your prices can buy you the time you need to kick back and chill out.
Whatever your circumstances, needs and desires, even if you’re 100% happy toddling along as you are, you need a plan. Staying in the same place can require as much effort, creativity and imagination as growing.
If you’re committed to growth and expansion you should always pin down – in advance – what you’re going to do to achieve it. It’s no good growing randomly and organically without thinking through the implications in detail. You need to grow sustainably.
Here’s a few ideas about the kind of questions to ask yourself as a business owner:
Will you need new, bigger premises? Or will you have to move away from home working and rent space for the first time? If so, will the increase in business you’re enjoying cover the extra costs or will you run into trouble with your rent if you encounter the smallest blip?
Are you likely to experience a sustained increase in demand for your products or services, or is the increase in business you’re experiencing a coincidence, a one off, seasonal or event-related?
Have you created a solid, reliable business plan for growth complete with short, medium and long term goals, financial projections, marketing strategies, resourcing plans and more?
Do you have a disaster and emergencies plan in place so that if business suddenly takes a nosedive, you’ll be able to survive without going down the tubes?
Have you established how willing is your bank or other financier to support your business if you run into difficulties or need extra finance to grow to the next stage?
Have you taken a pragmatic approach to the inherent potential in your business or are you off with the fairies? Being honest with yourself is much better than being overly optimistic… if you do better than you’ve projected, any extra profit is bunce and you can use the fact that you’ve done better than expected to your advantage
What are your competitors doing? Can you mirror them and grow in the same way, have they cornered your market or are they in danger of taking it over altogether? What plans have you in place to win back your competitive position if they unexpectedly overtake you?
Can you cope with the extra administration that expansion brings or will you need to factor in the cost of good quality virtual or actual assistance?
Are you on the ball or has familiarity with your business blinded you? Do you need a reality check? It’s always a good idea to get a fresh pair of eyes on the case to check your assumptions are reasonable, not way off piste!
Are there any extra costs and liabilities allied to growth? New systems, hardware, software, furniture and office equipment, telephone lines, server space, warehousing…?
Is your online presence up to the job if you expand? Make sure you plan for – and cost – any upgrades so you’re not hit with unexpected expenses at a critical time. Plus are your systems ready to take the burden of expansion? If not can you replace or upgrade them first rather than waiting for a crisis to hit?