Internet Radio Show: 21st Century Entrepreneur | How CEOs of Small Companies Grow Their Business | Aired Friday, May 8, 2015 at 12 NOON
This Friday May 8 we will be airing another episode of “21st Century Entrepreneur” which is an Internet radio program aimed towards educating business owners and their advisors on how to make their businesses more successful and profitable. It is a show hosted by JC Maldonado who is the CEO of BizGro Partners, a Business Development Firm that helps small and midsize companies grow, expand, and transition. This week we will discuss strategies for growth implemented by CEOs of successful small companies. We will be interviewing Chris Chew, a Marketing Director of CEO Space which is an Online Media company that focuses on giving small business more exposure through media outlets and events.
Below is a blog discussing business growth and key factors an entrepreneur should focus on in order to create a successful enterprise. Finally, we have gained some interesting insight during our recent interviews from experienced entrepreneurs. To hear recorded versions of these shows, click on 21st Century Entrepreneur Archives.
A business must grow its sales in order to prosper. It is important that as an owner, you are not looking for more sales for the sake of making more sales. Today, you must make sales at a profit in order to prosper. This means the price in which you sell your product or service must exceed your costs associated with making that sale. You may say that is simple enough but you would be surprised to hear all the horror stories we have come across regarding businesses that service customers that produce little to no profit. When you think about it, there are only 3 ways to drive sales upward:
- Retain existing customers while getting them to buy more;
- Buy customers through the implementation of marketing strategies; and
- Buy customers through business acquisitions.
Further, the key to increasing sales is making the decision that as a business you are going to conduct yourself as an organization that is sales and marketing driven.
A business can grow by simply producing more profits. Three (3) ways to increase profits are to:
- Simply make more sales at a profit;
- Reduce operating expenses; and
- Reduce the cost of sales.
Increasing sales and reducing operating expenses is productive, but the CFO really earns his/her keep through the proper management of the cost of sales. Cost of sales by our definition is simply the cost of the goods and labor necessary to make, deliver, or provide your product or service. A simple 2%, 3%, 5%, or 10% reduction in this area can add thousands and in some cases hundreds of thousands of dollars to the bottom line. It is important to analyze your vendors and labor force that make up your cost of sales at all times.
Profitability without cash flow is simply an illusion. If you cannot receive profit in your hands, what good is it? Cash flow is a killer for most businesses and it normally stems from one very simple problem. The business’s terms with its suppliers are worse than its terms with its customers. In other words, many businesses have to pay their suppliers a lot faster than the time it takes to collect money from customers. If these dynamics are not properly managed, profitability is never enjoyed because you will always be chasing your tail. It is important to negotiate proper terms with suppliers and in some cases get them to support your business as you grow. Remember your growth can have positive ramifications on their business and they must realize this. Further, don’t become the bank all the time with your customers. Develop disciplined collection strategies so that you can always have cash in the bank. Remember as an entrepreneur you cannot run out of cash and you must always find further ways to generate more of it.
Do you own a business or do you own a job? Your business no matter how you run it will possess some sort of Enterprise Value. The problem is that for most owners, their business is not worth what they think it is. A simple way to determine whether your business has real Enterprise Value is to simply ask yourself, does the business run without me. If the answer is yes, then you may have a business that you can sell to a 3rd party for substantial value. If the answer is no, if you were ever to sell the business, you the owner would have to come with the deal. One simple way to grow your enterprise value is to increase your earnings while developing your business in a way where it has less dependency on you as an owner. This is a perfect measuring stick of whether you are growing your business’s enterprise value.
So to recap, growth in a business can be achieved by the increase in Sales, Profitability, Cash Flow, and Enterprise Value. Further, growth in all four (4) areas can lead to an entrepreneur developing extraordinary wealth.
To learn more about business growth strategies, call us at 201-496-6931 or email us at email@example.com.