The 25 holy commandments of business
The rules you can't afford to ignore
Business, like life, is a fickle game. It's unpredictable, often
uncontrollable, and oscillates wildly between soaring highs and
crushing lows. But take faith: Smarta is here to help. Adhere to
these rules religiously, and you will survive the unforeseen with
the brilliance you always knew you could.
1. Double your overheads and halve your sales when
Meet your new budgeting mantra. However foolproof you think your
plans are, sooner or later the, ahem, faeces will hit the fan. It
probably won't be your fault, but you still need to cushion
yourself to stand a chance of safeguarding your cashflow - and your
survival. When it comes to budgeting, it's always better to be
2. 80% of your sales come from 20% of your customers
Like it or lump it, this is true for almost all businesses.
Which means you need to start finding out which of those one in
five of your customers are the ones who keep coming back for more
and work your socks off to keep them happy and keep them
3. Be a shameless cheapskate
If you're not getting things for free, you're not trying hard
enough. Assume your budget for everything is zero, then barter like
it's 1999 BC. Offer your skills or swap your product for business
services rather than paying for them (get on Gumtree to skillswap).
Work from home
instead of splurging on offices and call in favours from everyone
you know. Read this case study for more ideas.
4. Always make three forecasts
Which will be: best case scenario, worst case scenario, and
expected outcome. If you can still turn a profit (or at least not
lose a fortune) when the worst case happens, your business will
make it through the toughest of times - the recession being a case
in point. Planning to this level impresses bank managers and
5. Always have a contingency fund
At some point, you'll need it. Trust us. And don't dip into it
unless it's a real emergency. Wanting to take out another advert in
the local press is not an emergency.
Tell everyone who'll listen about what you're doing, extra
enthusiastically. If you tell 100 new people in the next month,
you've got a ready-made network to turn to for supplier
recommendations, potential collaborations and free referrals.
7. You must be able to explain your idea in a sentence
There really is nothing more tedious than having to fake
interest while someone else blathers on for half an hour about
their great achievements. Keep your description of your business
punchy and super-concise, and leave them wanting more. If you can't
explain your own business simply, you can't sell it.
8. Always draw up contracts when borrowing money
We don't care if you're borrowing from your old boss, your best
mate or your Siamese twin: you have to do this. We know it's highly
unlikely you'll screw one another over, but it means you can refer
to the contract to protect your relationship from those awkward
conversations about whether or not you owed them £100 last month.
Read this feature to find out
9. Always have at least three USPs
Because if you're not doing at least three things better than
your competitors, customers will choose them instead. This applies
however long you've been in business. But fear not: brilliant
customer service costs you nothing and is one of the greatest USPs
small businesses have over larger rivals.
10. Reinvest profits
This is not the time to extend the swimming pool of your fifth
home in the Maldives. If you've got a bit of free cash in the
business, plough it back into making your IT more efficient,
investing in a new hot product to up sales or a spot of
advertising. Get more organic growth strategies here.
11. If you don't know how you're going to make money, you don't
have a business
Twitter be damned. Unless you have squillions in VC cash to
squander, their 'we'll figure out how make money later' strategy is
totally unsustainable. If you can't bring money into the business,
there is no business. Simple as that.
Time to get anal. A yearly budget doesn't help you with anything
- what about seasonal peaks and troughs? You need to budget
monthly, if not weekly, to keep control of cashflow. And check your
accounts daily - knowing the totals in all your books at the end of
each day is one of the most golden secrets of success.
13. Cash is more than king - it's your new god
You might have won the most lucrative contracts this side of
Premiership football, but without ready access to cash, you have
nothing: no way of buying materials, of paying staff or
freelancers, of filling your next order. Remember almost all
payments due to you will come in late (think months late). You need
cash to cover the interim. Watch this video on
cashflow management for advice.
14. Turnover's vanity, profit is sanity
It's all well and good boasting a £10m turnover, but if your
costs are £9,999,999, you're scuppered. Always look at your bottom
line. Everything you sell should make you a profit, and you need to
keep an eagle-eye on outgoings.
15. Without sales, you have no business
If you only learn one skill in business, learn how to sell.
Partner with a sales pro if you're struggling. Don't put this one
off, or you'll find yourself out of business before you know what's
hit you. Without money coming in, you have nothing.
16. Test, test and test again
Spent days and weeks and months developing your latest idea?
Then don't for the love of god waste all your most concerted
efforts by not checking the darned thing works. You need to get
loads of people - not people you know - to try out your
product/service/website. Then use their feedback to improve it.
Repeat ad infinitum - or at least enough times that no one has any
complaints with it any more.
17. Don't put off until tomorrow what you could do today
The secret to getting ahead is getting started. Don't fanny
about waiting for the 100% perfect concept to magically hit you -
just get out there and start doing business! Make decisions
quickly. And tackle your to-do list right now. Procrastination
kills progress deader than a very dead duck.
18. You idea doesn't have to be new to work
There really is no shame in pinching an idea you like and doing
it better. Sure, you need to watch out for those pesky copyright
and patenting laws, but if it's just a clever concept that's caught
your eye, plagiarise away. Many of the most magnificent commercial
empires were founded upon someone else's bright idea, and yours
could be too.
19. Work hard and be nice to people
How often have you seen someone with those plain evil eyes, with
a frown so downward curving it gives you vertigo, with a glare that
would make Beelzebub shiver, and thought: "Hey! That's the kind of
person I'd like to buy my cupcakes from!" We'll bet not so much.
Politeness and smiling counts for an immeasurable amount in
business. Just be sure to back up your charming chat with a lot of
elbow grease behind the scenes and you'll be set. Read this
blog to see what we mean.
20. Be tough on your idea
Now we know we always tell you to be super-enthusiastic, but at
the same time you have to be your own worst enemy a bit in
business. Markets are tough - you've got to pick out all the flaws
with what you're doing before customers do. And you've got to be
realistic. Only extensive market research, viability analysis and
user testing will tell you whether your idea is really going to
21. Focus on long-term customers, not one-offs
Repeat customers are the holy grail of sales. They advertise you
for free to their friends, they help you forecast, they save you
marketing money, and, crucially, they buy your stuff. Read this
guide to find out how to keep them coming back for more.
22. Think big, start small
You may well want to be the next Branson with your own personal
fleet of flying Ferraris, but it's not going to happen by the end
of the month, however hard you work. Start small to test your
business model first, then build from there. Don't employ staff
until you absolutely have to - they only add hassle, cost and red
23. If you want build a super-business, make your start-up
That said, you need to have an eye on your plans for global
domination (or just plans to open a second branch). If you expect
to grow in size, make sure you get equipment and technology that
can grow with you. Cloud computing can really help here. Don't get
tied into long-term property leases if you plan to expand rapidly
within the next few months.
24. Take risks - but calculate them first
Fools rush in where angels haven't yet done their calculations
and research. You should know by now we love risk-taking - it's the
lifeblood of innovation and keeps business alive. But any risk you
take needs to be carefully calculated. Only risk money you can
afford to lose, and take risks that have minimum impact if they
don't work out, and maximum effect if they do. We've got Theo
Paphitis explaining more about evaluating risk here.
25. Don't assume it, prove it
Beware assumptions! They are a dark cloud lurking ominously over
your future success. If you assume you'll get £2,000 of revenue a
month and plan around that,
everything will fall apart when you realise you can only do
£800-worth of business. If you assume people will pay £49.99 for
your product, your model will crumble when you find they're only
willing to pay £20. Get selling on a small scale and test
everything so you can base your plans on the infinitely more solid
foundation of hard proof.
Smarta Business Builder
To help you on your business journey, we've created Smarta Business Builder, the complete online
tools package for growing your business. Website
Documents and Email - all in one place
- from just £20 per month with no contract! Try it out today.