My First Year in Business

It has been a year since embarking on this exciting journey and I cannot recommend it any louder than this. The thrill of doing your own thing and working to achieve your dream is as every bit exciting as they say it is. 

I have since started a business with my “soon to be wife”, hopefully she will not see this before the day I propose, and it has brought us such joy and pleasure…or should I say “Net pleasure” (the difference between the hard times and good time), in building our dream. As those who have read my blog will know, my goal has always been to aid the small business person(s) get up and going in their respective activities.  This has been going very well and the businesses I have had the privilege to assist in growing and stabilising their processes, in particular their cash flow have shown growth through this time, but little did I know I would have a first-hand experience in building our business in the same way.

A little on what we do. We are in the travel industry where we provide a service to the corporate traveller, through a pre-paid service with our business partner’s facilitating accommodation and ground transfers on the African continent. This in essence enables the corporate traveler peace of mind in knowing all is taken care of, prior to their arrival, at the point of destination. 

How we have been able to build on our success has been to a large extent due to efficiency in our processes. As we all know, managing these processes throughout Africa is a challenge in itself with the small but gradually growing communication infrastructure and the different language barriers.  These challenges to a large extent have been advantageous in the sense that we have had to learn to adapt and change quickly to enable our efficient processes to accomplish our objectives. This has provided increased awareness of our brand on the continent.

How does this all relate to my mission.  It is imperative as a small business that the processes built within the infrastructure of the business are effective in their outcome. Without these synergies , it would have been difficult to envisage a business growth to where it is today.

More to follow, and for the curious, please see our website at http://www.traderoutes.co.za/

Our Small Business and Business Modelling

It has been several months in running our small business, please excuse my silence and boy it has been eventful. I would like to share with you a small thought that I have come across and its significance in my view, in ensuring continual trading, imperative in any business.  I believe the question of establishing a business model from the onset is extremely relevant in determining revenue creation for a small business, going a long way in keeping the business afloat, especially in the first year.

A business model you ask?

 By my understanding, a business model describes the manner with which the business creates revenue, delivers value (both in service or product) to customers and the includes the process of  enticing the customers, to pay for this value and which in turn converts to profit.

Our business model is based on the same fundamentals that supermarkets thrive on, that is, upfront payment before provision of service. We provide a service to our corporate clients which they only receive after payment. The benefit the customer receives, is an improved rate and quality service. This brief description of our business model has enabled the business to grow exponentially within a very short period of time due to the availability of the revenue prior to service delivery. 

The pit falls of our business model however, large extent, is that the model is based on VALUE.  Pitfall in that, because a customer is willing to part with their hard earned cash prior to receipt of the service, it is imperative that the end product is of high quality. With this in mind its stands to reason that just as quickly as one builds the business on this model , it can dissipate even faster.

Therefore if value becomes the determining factor, it is imperative that the business ensures quality of service in all functions at all times.

Businesses modelling therefore to the small business owner, with the mix of the extensive alternatives available in the market place, has, in my opinion moved up the ladder of importance in  establishing and running a the small business and business owners need to develop more of an understanding of the impact of modelling in their business activities.

The Holiday Season and Your Business

The festive season is fast approaching and this bring with it new obstacles that the small business owner has to navigate. We are all to familiar with the gradual slowdown of trade around this time, and in some instances an increase in trade and it is prudent that the business owner takes steps to manage the cash flow during this period.

For the Majority of business, cash flow is already stretched and as is typical of the festive season this will likely be felt more sharply in the early part of the New Year. Therefore it makes good business sense to make provision to ensure that your business functions are as stable as the period allows.

Firstly, Planning ahead is always a good place to start. However it is all too apparent that the majority of small business owners know this well, but do not practice, strange, given that this event happens every year. In your planning process, it is useful, if the information allows, to review your last trading activities during the previous festive season. This allows for you as the business owner to gauge with some certainty what actions are required at this time. For example if your business has increased activities, hiring additional temp staff may aid your increased sales, whilst keeping your cost low. 

Subsequently if there is a reduction in sales over this period, ensuring an effective collection process will aid in bringing in the required payments into the business to support your cash needs. In planning your cash flow needs through this period, establishing stand-by funding will   provide the added benefit of bulking up your working capital to curb any fluctuations in your cash reserves. 

Secondly, it is importance that your business ensures it can deliver on its promises during this period. With the gradual slowdown in trade, if you have suppliers of  goods/materials, increasing your stock prior to this season will ensure your business is well stocked for your demand. However precaution must be taken to alleviate over-trading and having excessive stock which will limit your cash availability.

Further to the above actions, business payments and receipts due need to have been action prior to the break. With regards to payments, ensure all payments are actioned through electronic transfer or by posting of cheques will alleviate any late payments to suppliers.  For receipt, all invoices for goods supplied or serviced rendered are dispatched early with an encouragement to your customers for prompt payment. For businesses that subsequently do not stop trade over this period, ensuring there are available staff to effect necessary action of payments or receipt.

Ultimately with the reduction on trading over this period (and before your break) use this period to reflect on the year’s trade, with specific emphasis on the fluctuation in your business cash flow and the causes of these fluctuations. This will go a long way to having an insight into the new year and building in processes and facilities to smoothen these periods through the cause of the coming year.

However it is important that you as the business owner take advantage to refreshing yourself and return with enthusiasm in the following year, ready to serve your customers.