Sales, Solvency and Survival
Three words that every business has to focus on, no matter how big or how small.
- “Sales” is what we spend most of our waking life thinking about. How do I get more? How do I make them more profitable? How do I stop our competitors getting them? How can I get theirs?
- “Solvency” is what causes most of our sleepless nights. How do I finance that new branch? How do I pay the wages this week? How do bank managers think? Do they think??
- “Survival” is what we are in business for. To build something that is sustainable, perhaps for our kids, our retirement or even just our sense of achievement.
We also tend to focus on those three words in that order as well. And that is why so many new businesses fail in the first few years and why so many established businesses fail when they try to expand.
Whether you are a new business starting up or an established business looking to expand, you need to address those three areas in reverse order:
The long term sustainability of your business will depend upon three factors:
- Your personal work load and time management skills. You must have in place systems and processes that can continue without your day to day attention.
- Your personal and professional support network. You cannot sustain a business over the long term without a good support network. Both personally, from friends and family, and professionally from others in your industry and your advisors.
- Your situational awareness of future threats and opportunities in this fast moving Century. You must find the time to keep up to date on global and local changes in customer attitudes, communication lines and technology.
Your day to day Solvency is determined by:
- The strength of your balance sheet, both actual and perceived. Your balance sheet will determine your available resources for any expansion and will be the key factor in any banker’s decision making process.
- Your terms of trade with customers and suppliers. This will determine how quickly you can expand without ‘over trading’.
- Your relationship with your bank manager. Never an easy one but one that is crucial to ensure they support you through thick and thin.
To increase your sales you need to:
- Maximise your relationship with existing customers. Do not waste time and money on gaining expensive new customers until you have maximised your opportunities with your current ones.
- Look at acquiring your competitors' business directly. Buying out competitors or recruiting their best staff is often much easier and less risk than organic expansion.
- Develop a marketing machine to bring you a constant flow of new leads. Then carefully monitor and track those leads to maximise your conversion ratio.
If you focus on those three areas, in that order, you will greatly enhance your bank balance, your self-confidence and the quality of life for you and your family.