Whether you are beauty salon owner, a hairdresser, a designer, or operate any other business in the beauty/fashion industry, it’s about the right time you start thinking of yourself as a small business owner.
As a small business owner you are an optimist by fault. You believe in your business model. You are passionate about your product or service and are excited to share it with customers. However, having these things isn’t all that you need to keep your business going. Money is king, but it doesn’t always show up that way in a company’s financials. Grow but not too fast and cut back when you need to, all of these things are key to making your small business make it.
You could be the world’s most ingenious hair designer but if you don’t run your business based on principles laid out in this article, you may find yourself in debt.
Both my husband and I are small business owners, however our businesses are very different. His company is family run and was started by his grandfather in 1950. When he bought the company he inherited a business model, employees, debt, customers and a history of the company.
We also own a franchise business that was a new concept little under a decade ago, a painting class where you can drink. We bought the company because it looked like a fun way to earn a living versus my current career as an accountant. The franchise offered support, suggestions and a business model, but it was up to me to start it and tell our market about our new company.
Finding Your Market
With each business, there are different types of problems that came up. My market was for women over the age of 21 with some expendable income, who would enjoy a ‘Girls Night Out.’ My husbands company was focused on providing security to businesses around the area. Finding the right way to market to our individual markets seemed like a challenge. Originally I launched our business with a HUGE sale event through Groupon, which got our name out there, but we couldn’t be sure we would reach our target market through the launch, but it was a start. It was a shot in the dark, but it looked like our best option to reach masses and see a financial gain immediately.
On the other hand, my husband was able to send a letter to existing clients letting them know the company will remain a family business but under new ownership. He was then able to focus on how to target new customers.
Both of these options worked well, but too many business owners will target a narrower group, which may lead them to lose out on potential customers. Just because someone does not fit your target demographic, does not mean they are not a potential customer. Reaching for a broader audience can help ensure that you reach as many as possible, which some people may brush off your advertising as something they are not interested in, while others may be interested when they never thought they would be.
On the other hand, if you reach for too broad of a customer base you may be spinning your wheels on something that will not turn a profit. Choosing how to market and where is key to success over failure.
Using Facebook as an advertising tool was previously a great way to reach your existing and potential customer base. You could throw a couple bucks into an online boost of your company and it would reach people in their newsfeeds while they scroll through daily. Now advertising on Facebook is more complex and more costly, you spend more and reach fewer customers. If you relied solely on reaching your customers through this means, your sales more the likely decreased over the past few years, while your budget for advertising has gone up. Consider the area where your business is located, do people come from out of town a lot, or is it such a big city that people do not travel outside of their suburbs. Trying to reach everyone is hardly feasible, and can be a costly endeavor.
Too Much or Too Little Inventory
Inventory of any kind is required to make the business function day in and day out. If you are a bar, you need to have booze. If you are a gas station you need to have fuel. Not having something can turn people away from your business and send them to your competition.
When we first launched our franchise we had plenty of inventory, blank canvas for our customers to paint on and take home. We didn’t have a huge inventory of our artist canvas to display as our portfolio. Now 5 years plus later, we have a couple thousand paintings by our artists and are constantly purchasing customer canvas. We have run into a space capacity issue. We need to unload some paintings and have given them away, donated them and we still have too many.
Every canvas that we have that an artist has created a painting on is lost profit as a potential canvas to sell to a customer. With a price per canvas of $2.00 on average, this adds up quickly! This means we have at least $5,000.00 in canvas that is no longer sellable inventory. We cannot sell that canvas to a new customer to paint on, so we have thousands of dollars wrapped up in artwork, this has created a depletion of funds available to purchase new canvas. With lower funds to buy canvas, it also creates a new inventory problem of stocking other supplies. Do we stock a large variety of beverages now? Or do we lower the variety of our drinks to coincide with the inventory management of the canvas and funds associated with it?
For my husbands company the inventory problems are usually ‘staff related’ finding good people to fill the positions that he has available. In the security business there is a pretty high turnover rate of employees. For each employee he has to buy a uniform for them. This means a coat, a shirt, and pants. Not all people are the same shape or size. Since he hires all ages, genders and sizes he has a lot of uniforms that go unused. These uniforms are also impossible to resell or repurpose since they have the company logo stitched on to them. Again, he has thousands of dollars sitting in unused or unusable inventory.
A lot of companies face the same issues with inventory tying up company funds that could be used to help develop new products or services that could otherwise help the company grow and compete. If the company has a lot of funds tied up in other things, like inventory the company may not be able to continue to compete within their industry.
At times, you really need a small short-term inventory loan because you are expecting a certain amount of sales. It’s important to not spend too much time by going through archaic financial institutions and know that there are alternatives on the market. Small business loan providers in Australia can offer funding within 24h as mentioned on this SpotCap review.
As business owners, we experience daily doing all the things for the company that no one else wants to do. If I show up to our studio and no one has taken out the trash or stocked the bar, I am the one who does them. This is not the best use of my time, my time should be used to build the company up and grow it. Having employees that do not finish their jobs is a huge problem. Small business owners will always have a pile of things they need to do and should be doing, but end up doing things that were never on their list of To-Do’s.
Break down and pay someone to do the jobs that you know are not benefiting your company when you do them. If you are mopping the floors after hours, when you could be developing your business and innovating your business, just stop. Too many business owners get tied up in the little things, that they lose sight of the big picture and can fall victim to being too busy to run their own business.
Target your market, not too narrow and not too broad. Manage your inventory, supplies, people, and money. Stay focused and constantly build and reinvent your business, stay relevant.
To see if you are going to fall victim to top reasons small businesses fail read the following: A New Study Reveals the 20 Factors That Predict Startup Failure: Do Any Apply to You?