How do you run a small business?

Any aspiring entrepreneur tries to learn from others’ mistakes and enters queries into Google’s search bar, such as ‘Where to start a business’, ‘Starting your own business from scratch’, and ‘How to run a small business’. In this article, we aim to highlight key anchor points that will help small businesses grow stronger.

How to run a small business?

An entrepreneur generates income by organising production and labour, taking risks, innovating, and showcasing their personal entrepreneurial skills. The source of this income lies in attracting customers, engaging their interest in a product or service, receiving payment, and, ideally, securing their ongoing loyalty.

It is a well-known truth: the primary focus in business is customers and sales. Understanding who your customers are, how diverse this audience is, how to approach them, and where to find them is crucial. This enables you to target new customers, study their reactions, and work with them effectively to ensure they become loyal and recommend your products or services to others.

Sales are equally vital. Consider the conditions and timing that prompt a customer to make a purchase, whether their decision to transfer money to your account depends on additional services, discounts, delivery terms, your flexibility, or other details specific to your business.

For a small business owner seeking effective operations and steady growth, roughly half of their resources should be dedicated to sales and customer engagement. This should be factored in when drafting a business plan. Sometimes, the entrepreneur personally handles customer interactions to maintain control over this critical area; other times, they delegate tasks to trusted employees. However, it is the manager’s role to plan, set the direction, and define tasks.

Working with customers involves two core areas:

• Attracting new customers through advertising, social media, website optimisation, emails, calls, etc.

• Retaining existing customers through gifts, discounts, personalised treatment, valuing their opinions, and providing information or support.

Loyal customers support the business through challenging times, reduce the need for additional advertising expenditure, and bring in new customers. Retaining stable clients is a critical focus, as regaining a lost customer is far more difficult than keeping them engaged from the start. The business owner must continually devise and test new ways to attract and retain customers.

Another key focus is the sales channel for your products or services. Customers should demonstrate their loyalty by making repeated purchases. Explore ways to boost sales, develop complex sales strategies, create promotions, and identify profitable sales channels. Continuously trial new selling methods and reinforce those that perform well. If your business has a strong customer base and consistent sales, other tasks become significantly easier.

Accounting and reporting processes in a small business

Every business must pay taxes, and if it has employees, it must also make pension and National Insurance contributions and submit reports to various regulatory bodies. A small business owner can manage tax and accounting processes themselves, particularly if they have experience in this area. In such cases, they should consider accounting software (ideally cloud accounting software) to alleviate much of the routine workload and ensure compliance with legal requirements. These tools can help create journals, maintain the General Ledger, remind you when to submit documents to HMRC or Pension Provider or Companies House, and automatically generate reports based on data entered throughout the reporting period.

If the owner is not prepared to handle the company’s documentation personally, they can delegate these tasks to an experienced accountant. Small businesses may not always be able to hire an in-house accountant, and a good alternative is outsourcing accounting services. Remote accounting services are more costly than purchasing software or using a subscription to a cloud software, but they allow the business owner to focus on growing the business. However, the director of the company remains responsible for any potential compliance issues, so it’s very important to choose a reliable accounting firm in London. We have previously outlined the factors you should consider when choosing an accountant.

Foundry Accounting is here to assist you with your bookkeeping and accounting!