Today, if you ask an entrepreneur one thing that is required in starting and growing a business, the popular response will be capital. There is no doubt that capital is fundamental to the success of any business, however the business climate is evolving from transactions to relationships. Thus, generating and increasing trust is essential in sustaining growth.
Trust is a hidden capital most businesses do not pay attention to, whereas it is valuable in growing the bottom line and will see you through the difficult times in your business. On the other hand, a lack of trust in you and your business can kill your business in its infancy.
No one can tell you exactly where trust originates or how it develops. The trust process is incomprehensible. You can’t fake it. You can’t go through the motions or pay it lip service. Trust in a business speaks volumes on how a company services and communicates with its customers. In business interactions, customers can intuitively feel when you can or cannot be trusted.
When considering if a company should be called trustworthy, customers are looking for the following:
1. First Impression
First impression matters. A customer has expectations that a company’s product will satisfy their need to purchase it. Therefore, their first approach is to test the waters if indeed your product or service will provide such satisfaction. If it does not, they will walk away. Therefore, do not promise what your product or service cannot do. If you are selling a product with lower quality than the original, do not pass it off as the original. Do not sell a low quality product at the same price as an original one. Do not include hidden charges and fees. Your customers will always find out and you would have effectively ruined any return purchase or recommendation. In essence, ensure product or service integrity.
The more significant a purchase is to a buyer, the more consciously he seeks a trustworthy seller or provider.
One of the things that can quickly destroy trust in your business is lack of competency in the service you are rendering. Do you do what you say? If customers cannot trust what you say or the service you render, they will not patronize you. A dry-cleaning service that does not launder or iron clothes properly will not grow. Also, a laptop repair shop will only get anger and frustration from its customers if the laptops he repairs keep breaking down. Therefore, if you must be in business, ensure that you know how to provide the service you are selling or at least hire someone who does.
3. Work Experience
We know why there is a term in the labour market called ‘Number of Years of Work Experience’. This is because it cannot be over-emphasized. Customers would always relive their past experience with your business for future transaction, the same way a recruiter would scrutinize a candidate’s work experience. Their experience when leaving your business premises must leave no doubt in their mind that your business is where they should go to in the future. If your customers cannot think that about your business, you need to start requesting for feedback to understand their reasons. You also need to start building trust in your business because this means that they cannot trust your business to deliver value in the future based on past experience.
4. Customer Value
To value your customer is to deliver on your promise and acknowledge where you have fallen short.
If you promised the moon, deliver it along with a handful of stars. You want to shine in your customer’s eyes. Every time you follow through on a commitment, small or large, you build trust. And if you go above and beyond, you make an even stronger impression. So, if you say you are going to email prices to your customer today, it should be sitting in their inbox before their close of business (not yours).
In addition, do not to hide or cover up your errors. Address the issue directly, apologize and explain how you will handle it and if possible, share what steps are being taken to prevent the errors from occurring in the future.
5. External Relationship
Staying up to date and compliant with all federal, state and local rules required to keep your business in good standing is essential. Failure to meet the necessary requirements like taxes, pension, insurance etc. can cost you loss of good will. Customers, lenders, potential business partners and investors will check your company’s credit reports. What is your attitude to your financial obligations? Positive credit affords businesses better relationships with partners, vendors, trade sources and the community at large. Do not renege on agreement with vendors or partners.
The first step in your approach to trust-based marketing will be forcing yourself away from rational, logical thought about why your customers would or should trust you. Instead, if you know how they really process you and your business and what forms the basis of their trust you’ll find yourself holding a new key to growing your business.
CTA – One of the things that can quickly destroy trust in your business is lack of competency in the service you are rendering.
As a business owner, what will you consider most important to the survival and growth of your business especially in a tough economy. Is it sales, profit or cash in the bank? While sales is good, profit-making is the reason a lot of us are in business. However, without a steady positive cash flow, the business may close up sooner than it started.
So what’s the difference between sales, profit and cash flow and why should you care? See our differentiation below:
Therefore, a positive cash flow means that;
• you are receiving more money than you are paying out, which is good for your business;
• your business is healthy; and
• your business can deal with unexpected expenses or outgoings that may come up during a month, without the need to rely on credit from suppliers or borrowing.
A positive cash flow also means the business assets are increasing, workers can be paid, debts can be cleared, capital for growth is available and the business is equipped to weather future financial challenges.
There are some simple ways to help you maintain a positive cashflow in your business. We have analysed 3 of these ways below:
1. Improve your receivables
The following techniques will be helpful:
• Offer incentives to clients/customers for early payment.
• Send out your invoices promptly and follow up promptly if payments are slow coming.
• Ask for deposit when customers make orders.
• Encourage a repeat business by using incentives such as discounts and loyalty bonuses to keep your customers coming back.
• Have a C.O.D (cash on delivery) policy for slow-paying customers
• Sell off old or outdated inventory for whatever amount you can get
Mind you at this point, you may have to analyse your customers list and do away with customers that do more harm than good for your business. You must understand that you do not have to service everybody. Master the art of choosing your clients and not them choosing you.
2. Watch your payables
Keep your eyes on your expenses. Any time you see expenses growing faster than sales, examine costs carefully to find places to cut or control them. Here are some tips:
• Ask for credit terms and stay faithful to it. Don’t pay it early or late.
• If you must pay in advance, ask for early payment discount
• Don’t select your vendor solely on basis of lowest price. If you compromise on quality you might pay twice as much to repair the damage.
3. Achieve a balance
• Don’t pile up your bills, it may accumulate so fast and so high
• Pay your taxes promptly and negotiate instalment payments where you can
• Resist the urge to offer ‘unsustainable’ large discount
• Pay yourself first and don’t finance personal expenses from the business purse
• Maintain a culture of cash savings (You can choose to set aside 10% – 20% of cash profit as emergency reserve)
Remember, the objective is to pay out less cash than you collect. Getting this right isn’t easy, but it’s very simple. Get paid as soon as possible, only spend money you have, and only if it will be used to help you make more money.
Start Smart Series – Part 2
Starting a business can be daunting but running the business successfully is the real deal. Running a successful small business starts with the planning stage of deciding what you will sell and where you will locate your business. However, it doesn’t stop there, as everything from your choice of employees to your accounting practices may influence your potential success. If you are smart, you will start right and start smart.
Starting smart begins with understanding “business essentials”, and a major aspect is accounting.
It is said that accounting is the language of business. It simply means that without accounting, no one truly knows what you are doing – even you too. The financial viability of your business is in doubt, business growth cannot be measured, and bankers don’t know if they can take the risk of providing credit to your business. This is aside from the fact that you will lack any probable basis for planning or making major decisions.
Accounting is the process of analyzing and reporting on the financial transactions of a person or an organization. It is therefore an important function of your business.
With a proper accounting system you are able to:
understand the financial health of your business
save money and reduce wastage
secure additional funding/bank loan in the future
make plans and achieve long-term goals
determine accurately how much tax to pay (without being ripped off by the man)
Small business accounting requires an entrepreneur to learn common accounting terminologies. Let’s take a look at the basic accounting reports that every business owner should prepare and review on a regular basis:
This is also known as the Profit or Loss (P/L) statement. It shows how much you made in revenue, how much you spent, and what your profit or loss is over a specific period of time. Are you making or losing money? Are you spending too much on an expense? The P/L statement will tell you.
This provides overview of your business financial health. It shows the worth of your business. That is, a summary of your business assets and liabilities. In simple English, it tells you what you own, what you owe and what is left over.
Cash flow statement
This captures how cash flows in and out of your business over a specific period of time. It captures cash flows in three categories: operations, financing and investing. Operations cash flow refers to money flows from normal business operations. Financing cash flows captures cash inflow and outflows from buying or paying off assets and liabilities the business uses for more than a year. While Investing cash flows captures capital inflows and outflows from investors (that is, from the entrepreneur, bankers, other funding parties)
If you desire to run a successful business, it would be beneficial to have an accounting system in place. This would ensure that you are accountable for the success of your business. It will also demonstrate that you are genuinely interested in growing your business. This will show that you are clearly ready for business!