What’s Next? Strategies for Handling Common Small Business Dilemmas
by Liz Hester, Staples® Contributing Writer
Running a business is like chess. Both are games of strategy and execution. When faced with a new situation or a key decision point, it can be hard to plan your next move. Here are four common scenarios small businesses face and expert advice on how you might handle them.
Scenario 1: Should I hire another staffer?
One of the biggest steps in growing a business is hiring staff. “If you’re thinking it’s time to hire, then usually you’re feeling overwhelmed,” says Lorin Beller, a life and business strategist for entrepreneurs based in Cardiff-by-the-Sea, CA. To make the correct move, explore your skills and finances.
“The first hire [should be] someone who can offset your weaknesses,” Beller says. Or you may choose to hire someone to meet a key need, like sales or finance. Of course, you also have to address your comfort level around the additional payroll expense. “For some, it’s having one year of [employee] salary in the bank,” Beller says. “For others, it’s two months.” Still, some business owners feel confident they can generate enough sales to cover the cost of additional staff.
Scenario 2: How do I deal with a slow-paying client?
This is one of the trickiest business situations because “you want to treat clients with respect and not jump to conclusions about non-payment,” says Andrea Ferguson, founder and president of AndiSites Inc., a Web design and development company in Chapel Hill, NC. But you also need to get paid.
Ferguson uses an online program to send reminders at preset times using a “billing@” email address. This provides a layer of separation between her and the payment process and helps her to keep client relationships friendly.
“If they’re just not paying, I almost always reach out personally, seeing if there’s something like a payment plan we need to implement,” she says. “Almost always when it’s approached that way, people will respond with an explanation, an apology or both.”
Scenario 3: Should I outsource my bookkeeping?
Bookkeeping is easier today thanks to handy financial software and online banking. But that doesn’t mean you should do it yourself.
Bridget Weston Pollack, vice president of marketing at the SCORE Association, suggests hiring a bookkeeper “if you’re not 100 percent sure of where the balance sheet is, where the money is coming from and what it takes to make a profit.” But even if you’re good with accounts and have the time to keep your own, invest in a periodic review by a professional just to be sure everything is in order.
Scenario 4: How long should I work without making money before calling it quits?
“It depends on how much money you have saved and what the predictions are,” Weston Pollack says. “A general rule of thumb is six quarters or 18 months. If you haven’t made money then, you most likely won’t succeed.”
“Take the time to understand cash flow and timing of payments,” she continues. “Many people don’t take into account how long it will take to get paid, or the time that [a creditor] will expect payment from a small business owner.”
Beller says it’s also important to gauge the return on your emotional investment. “Don’t lose sight of your vision,” she says. “But once you do lose sight of it, stop.”