17 Mar Five things every business owner must know
- Know your company’s value proposition – What benefit does your product or service provide to your customer? If it’s not saving them money, helping them make money, or relieving some pain, it’s just a commodity.
- Understand your cost structure thoroughly – You need to know your variable and fixed costs for everything that you sell. Too many tech companies don’t account for labor when calculating their gross profit, so they don’t know how to price their services or calculate how much they will make from a new sale.
- Clean up your revenue – Take the time to analyze the profitability and repeat-ability of each of your products and services, and of each customer. Your business will be more valuable, and easier to manage, if you have profitable, recurring revenue spread out among a wide customer base. This exercise may cause you to consider dropping a product, or perhaps even a customer.
- Use the best channels to grow your company – Once you know which are your most profitable products and customer types, select the marketing techniques that are most suitable for them. These could include direct marketing, direct sales, channel sales, web marketing, social media, etc. Referrals and word of mouth are still the best channels for smaller companies, and word of mouth is now “scalable” thanks to social media.
- Track performance indicators that drive value – Once you know what your value proposition is, then figure out what variables in your company are responsible for driving value, and how to measure them. These are your key performance indicators. They can include many types of factors such as staff utilization, average time to resolve a support incident, and defect rates. Then you’ll need to invest in systems that can track what you want to measure, and train your staff to use the systems.