The 4 Pillars of Business OperationsLinda Jenkins, September 20 2017
Success as a business owner can be elusive if you do not make certain key activities efficient. It does not matter if you have a brick and mortar, online or home-based business. It also does not matter if you sell services or products. EVERY entrepreneur must have a handle on these four pillars of operations in order to increase revenue and sustain long-term growth:
1. Getting and Keeping Customers
How well do you know your customers? You must be able to define the demographics, likes, needs and wants of your customers. Your products and/or services must help them solve a problem and save them significant time or money.
Having problems keeping customers? Concentrate on these factors to increase revenue and improve customer loyalty:
- Provide excellent customer service. Always exceed your customer's expectations.
- Everyone loves free stuff. Provide something basic and free that will bring customers back to your location or web site.
- Make sure you are providing multiple ways for customers to provide you with feedback so you can continuously improve your products and services.
- Develop metrics around what customers care about. Measure business performance based on what is important to your customers (not just you).
- Give customers a reason to return. Provide discounts or other rewards to repeat customers.
- Become an expert at promoting your business.
2. Completing the Work
Maintaining the discipline and motivation required to complete all the tasks necessary to keep your business running is not easy; however, the downside of inefficiency in this area of operations is enormous. The longer your company takes to complete projects and tasks, the higher your costs and lower your profits will be.
You can ensure that work is completed with the greatest efficiency by making improvements in these areas:
- Outsource tasks so you can stay focused on activities that directly impact profit
- Hire the best employees and ensure that they are incentivized to correctly and quickly complete projects
- Delegate tasks and ensure that individuals are empowered to complete their work with minimal intervention
- Use organizational tools to stay on track.
- Learn how to fund a business and control expenses so that you can turn a profit faster and concentrate on revenue-generating activities (instead of just chasing the next sale because you are worried about cash flow).
3. Billing the Work
Adopting an efficient system for preparing bills, sending invoices and tracking customer accounts is crucial for getting paid faster. At a minimum, your billing system should allow you to:
- Establish payment terms (ie., net 30)
- Record customer contact information and related notes
- Customize invoices to display your company logo and contact information
- Create billing statements that detail the amount invoiced and payments received
- Set up memorized billing transactions for customers that you bill regularly
- Print reports on outstanding balances and aging on overdue accounts
4. Collecting Your Money
Small business debt collection is an unfortunate reality of dealing with customers. Eventually, you will encounter customers that refuse to pay or cannot pay. Therefore, it is important that you have processes in place to effectively deal with overdue accounts. You must also clearly assign the ongoing duties of monitoring accounts receivable aging reports and pursuing collections to a responsible party that can act with authority. First try to recover debt by calling the customer and sending past due notices, then graduating to a demand for payment letter if necessary. If these warnings go unheeded, be sure to establish a relationship with a collections attorney that can skip trace, pursue litigation and execute garnishments to recover the debt. For specifics on these processes, read When Customers Don't Pay: Tips for Collecting Your Money.
Determine which of these four pillars of operations is currently weakest in your company, and make improvements now to see the greatest positive impact on your profits.