Darek Hunt has over 20 years’ experience working at large wall street firms working with individuals and businesses to grow and sustain their financial programs. He is the founder of Aurora Strategic Advisors in Lumberton where he continues his work helping individuals and businesses achieve their financial goals. Darek also serves as an Entrepreneur-in-Residence specializing in finances for The Thomas Entrepreneurship Hub.
While many have seen the impact of Covid-19 on their business, owners must assume that this will not be the last time such an event may challenge even the strongest of companies.
Putting together an operating plan may sound difficult, but the results will be worth the effort.
Overview of your business:
If you are an established business, review your business plan. Go back and see if the business is meeting the objectives you created in the beginning. Is the business meeting the desired goals, margins, and promises made to your customers? Has the business over-extended itself with debt or has it extended into areas that do not meet the core mission? Have you expanded your footprint for an online population?
If you are a new business, review your business plan and be careful not to fall into the “I’m doing it better than everyone else” trap. Never underestimate the value of loyalty either by your new clients or your competitors’ clients. Invest in technology and embrace the internet. While some businesses were not able to take full advantage of online services, some that could found themselves doing extremely well during the pandemic. Avoid debt in your first 2 years. Look to friends, family, and local banks first for loans and the best terms possible. Keep it legal and draw up some type of contract before dealing with friends and family. I have seen many relationships end because there were no expectations established.
Whether your customers are local, state, or federal agencies, the patient that walks in the door, or the person that brings their car to your garage, your customers are your lifeline. When times get tough, customer service and promise rise, and when things are going great, the service drops.
How many times have you heard this statement, “when they first opened, they had the best customer service, but that was a long time ago” or even worse, “guess they have gotten so big, my business doesn’t matter”.
Businesses in all sectors have suffered from this trap. I would rather see a business limit the number of customers to maintain a high level of service rather than expanding beyond the scope of their ability to deliver “great service”.
As a practice, send out an internet survey to your clients. I know many business owners are surprised at the replies that come back. If they are good, keep doing what you are doing. If they are bad, don’t get angry, make changes and look forward to the next survey.
Remember, over-deliver and under-promise. As a business, you can manage for the best outcome.
Managing Cash Flow:
All three tasks in this blog are important, but cash flow management is a critical task for all businesses especially new businesses. A more established business can give you a clear breakdown of the cost of products, margins, and what they are putting into the bank.
I have seen more new business owners increase their paycheck after a good first year instead of banking the revenue. A new business needs to keep salaries to a low, hire only must needed employees and manage debt.
Keeping debt ratios low and maintaining strong balances at a local bank may open the door to much-needed loans when the business needs to grow. In today’s ever-increasing dependence on technology, digital credit monitoring services and models can crush a new business’s hopes of securing much-needed lines of credit. This is a key reason why I stress to all my clients to maintain emergency funds, and cash surplus accounts to hedge downward conditions or times when credit does not exist or is limited. While these are just a few ways to keep your business fine-tuned for any economic condition, they will always help a business owner have clear visibility to the health of their business.
Entrepreneur-in-Residence-Finance for the Thomas Entrepreneurship Hub
Founding Principal/Investment Adviser Representative
Professional Investment Advice for Individuals, Corporations & Nonprofit Organizations