How to Run a Successful Business Regardless of Budget
There are fewer things harder than running a successful business. In fact, 18% of private sector businesses fail in the first year, and that number jumps to 49% after five years. When you throw budget into the equation things typically get a bit harder considering most startups, small businesses, and other business ventures are not sitting on big profit margins.
So how can you run a successful business without falling victim to the pitfalls so many other companies can’t seem to avoid? Well, it requires good research, effective marketing, a high-quality and desirable product/service, the right people, and some luck.
Often when a business is getting started, or even established, money and budgetary concerns are the most important topics discussed. Unfortunately, money does make the world go around, and companies need to have the right processes and procedures in place to ensure they are maximizing revenue and minimizing expenditures. However, this is always easier said than done. So how does budget factor into how to run a successful business?
Looking at the Budget of a Successful Business
There are management and budget practices consistent across businesses of all sizes that enable them or increase their chances of being successful. An organization that is both financially sound and able to project sustainable growth is one that is able to balance the relationship between educated risks and conservative behaviors.
Tip #1: Don’t Go At It Alone
Creating, maintaining, and adjusting a budget requires insight and help from a village, not just a single leader. There are several blind spots and weaknesses a business owner may have when it comes to them being entirely responsible for an organization’s budget, regardless of size. Having the input, ideas, and insight from others within your organization will help you build and adhere to a budget that doesn’t jeopardize sinking or stagnating your business.
Tip #2: Be Realistic, Not Optimistic
Hoping for the best is never a bad mindset, but numbers don’t lie. As an organization, you need to treat the budget, financial trends, and ongoing consumer behavior with a realistic attitude. In other words, how to run a successful business often boils down to knowing how the real world works. Expenses often end up costing more than originally planned for, unexpected costs will arise, and sales will ebb and flow. Being honest with your budget and forecasted revenue will help keep you out of the red.
Tip #3: Understanding The Time/Money Relationship
The saying time is money might sound cliche, but a successful business lives by it. Every business is selling its time in one way or another. There comes a point in the delivery of goods or services that too much time is being wasted, and a profit becomes unfeasible. A good organization knows how to manage time most effectively so that there is a positive financial return on time efforts by all employees on all levels. When a business can best manage this concept, favorable results tend to follow.
Real-World Examples of How to Run a Successful Business
A Small Team Knowing How to Manage Cost
So how does a company implement these best practices and others to run a thriving business in today’s ultra competitive market? Boho Magic, an eCommerce seller of handcrafted Bohemian jewelry, has been able to grow and expand hand-over-fist for the past 15 years. As a competitive small business, Boho Magic and its owners Nataly and Liar have learned how to balance costs and pricing, and establish a budgetary model that works for them, as they craft products that typically retail for around $50.
A National Reach Due to Capitalizing on Smart Budget Moves
More money, more problems, right? Well, for many ballooning companies, a growing budget can actually become an issue that once before was easier to manage on a smaller scale. Cruise America, one of the largest national RV rental companies, has been able to turn a bigger budget into more opportunities. Established in 1972, Cruise America has shown how to hit on consumer demand, prioritize budget KPIs, and reinvest back into the company itself. Today, over 130 rental locations exist, thanks in part to top-down leadership knowing how to best utilize budget throughout decades of work.
A Company That Deals With Money & Shows How to Use It
LendThrive, a lending provider specializing in catering to small businesses, understands the importance (and power) of the dollar. As an organization granting quick-turn-around loans of upwards of $150,000, they must have a buttoned-up process and tracking system in place when it comes to budget management. LendThrive is the model example of a real-world business knowing how to forecast ROI, plan for unexpected or worst case financial outcomes, and be realistic about what makes the most business sense. Having large sums of money constantly flowing in and out of their accounts, means their financial modeling and budget behaviors leave little to no room for error.