My office does a lot of strategic planning with our small business clients, and we are often asked by new clients for assistance in this area. Before we can offer in-depth planning, we schedule an introductory, get acquainted meeting, where we’ll ask a lot of questions. The first question is, How do you make money?
Before we can help a business grow, we need to know if it’s capable of growing. If the business is losing money, or has never made enough money to be sustainable (and pay the owner a decent return), we’re not ready to talk about growth. Before growth comes stability.
So we ask: Can the business make enough money to pay all bills, fund the next cycle of sales, and pay the owner? If it doesn’t now, can it ever? The model is: You sell the product (including services) to your chosen target market, which wants it enough to pay your price. If you’re not making money, does your targeted market actually want what you sell? Is it the right target market? Do you really understand the wants, needs, and fears of your target market? Are you charging enough, or too much? Do you understand the competition, and what would make people choose you over them? Why would someone buy from you?
Next question: Assuming that your business is capable of making enough money but doesn’t have the funds to purchase the needed resources, how will you fund them? What would it take to hire the personnel, purchase inventory and equipment, and correctly market your business, including having a decent website and digital marketing? Before talking about funding, you’ll need a budget, including a cost estimate for all of the needed resources.
If your business is losing money, it will be hard to find a bank or other lending institution to loan you money. Before seeking funding, we may advise you to work on some things: your personal credit, reducing business debt, and tweaking the model. Your number one goal will be making the business stable, viable, and capable of growth.
(Source: Alisa Kirk, Area Director, UGA SBDC in Morrow)