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 budgeting

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 ultra-conservative.

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 buying.

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 investors too.

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.

6. Evangelise

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 more.

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.

12. Micro-budget

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 work.

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 tape.

23. If you want build a super-business, make your start-up scalable

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.

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