Customers and cash - nothing else matters!
With so many theories about business bouncing around, it's easy to forget that there are only really two things that matter in your business. Getting and keeping customers and having enough cash left at the end of the day for you. Everything else in business is geared towards these two aims.
The three ways of making money
There are only really three ways of making profits over and above what you could earn as an employee. They are:
- Find a niche
- Provide a better or more reliable service than your competitors
- Pile it high and sell it cheap
If you are in the first, congratulations. Many people will spend their whole lives looking for that elusive niche and never find it. Others stumble across the elusive niche area and are too frightened to make money from it. You can't spend your whole life looking for niches though so you'd better think about the other two.
Many businesses opt to try and sell as much of their product or service as possible believing that this is the only way to make money. But there are many pitfalls and sacrifices to be made and option two is usually the best alternative.
The problem is that everyone thinks they do provide a better or more reliable service than their competitors and of course most businesses don't. Part of the reason is that they don't listen to what the customers want. They have their own fixed idea of how they should deliver their product that is either wrong or out of date. More enlightened competitors will always be more successful.
But spending too much time just thinking about customers and sales will not guarantee to pay the monthly bills. The most spectacular bankruptcies are always businesses led by salesmen who ignored the financial side of things. Understanding the link from the customer through to the bank balance is crucial. Sound policies on pricing, purchasing and working capital are crucial. A sound management information system will be needed if you are to retain control of these areas.
Customers and cash. Get the balance right between the two and your business will succeed.
