Small business, by definition, is something that is run out of minimal resources and budget. It is hence quintessential for these business owners to make the best use of what is available and thus extract the maximum mileage out of their resources. What this means is that SMBs get very little leeway when it comes to experimentation and exploration of new channels. This is a vicious cycle because without experimentation, you can never know what’s best and what should be avoided.
So how do small business CEOs get out of this catch-22 situation? Here are some tips.
Validate Everything
If you are a family run business with years of operation under your belt, it is likely that a lot of money you spend on marketing and operations are already budgeted for. Maybe you have always advertised once a month on the local newspaper Classifieds section. Maybe you buy all your supplies from the wholesaler with whom you have been dealing for 25 years. These things do not change too much. But if you need to optimize your resources, you will need to free-up a portion of this budget. Instead of listing your product every month on the classifieds, do it once a quarter, and use the money that has been freed-up to try online advertising, for instance.
Reduce your supplies from the longtime wholesaler friend and try sourcing a portion of your supplies through Alibaba. When you do this, you can validate the performance of the two alternatives and choose to spend more on the alternative that works.
Question Every Expense
Why do you have to pay that hefty retainer to your lawyer instead of paying per-hour? Why does your product cost so much to be manufactured? Why do you still pay so much to your cable company if you can get dedicated small business internet lines from alternatives? If you have been asked these questions before, it is very likely that an answer to justify the expenses has already crossed your mind. It’s natural – our human mind is programmed to justify all that we do with a notion that an alternative is not possible at the moment.
French philosopher and mathematician, Rene Descartes proposed the famous ‘Methodic Doubt‘ principle that will help you overcome this mindset. He suggested that the only way to remove our prejudiced beliefs is to question everything we know. By questioning every expense in your business, you will be able to find an alternative that is better and efficient.
Incentivize Productivity
If your business employs people outside your own family, then one of the tried and tested ways to enhance productivity is to incentivize them. This typically should be done at the hiring stage where you ensure that a component of their salary is in incentives (based on their job profile).
For existing employees who have been with you for years, it is not a good idea to propose a change in salary structure now. For them, incentivize them with bonuses for every time they find a more productive alternative. This keeps them constantly on the toes to bring greater success to your business and thus brings about a culture of efficiency.
Photo credit: Cimitree1 / Flickr
