To manage your business well, you must meet several challenges related to the activities of your project. Indeed, your goal will be to solve the problems posed by its financing, its growth, the management of the company, the sale of products, despite a number of collaborators sometimes reduced. The role of the entrepreneur is to protect the interests of the company and ensure its sustainability.
HOW TO MANAGE YOUR BUSINESS WELL?
How to manage your business well? Monitoring cash flow is one of the essential management principles. To manage to maintain sufficient cash flow, the entrepreneur must master the WCR related to his activity. What is the working capital requirement (BFR)? The working capital requirement is the sum necessary for the company to finance its activity. Indeed, the functioning of a business often requires having to pay its purchase invoices (raw materials, energy, rental, labor, …) before perceiving the leak of sales made to customers. A good manager will constantly watch over his working capital requirement (BFR) which often tends to slip to avoid financial worries. Here are the key steps for this follow – up:
TAKE CARE OF YOUR CASH
Taking care of your cash flow Monitoring cash flow is important to ensure the sustainability and profitability of the business as well as the development of its activity. The deterioration of the treasury leads to additional costs which can be significant (bank charges, borrowing, etc.) but also a significant loss of time for the administrative teams and managers who have to raise bad debtors and negotiate payment terms with creditors. As the saying goes, “Prevention is better than cure”, it is therefore crucial to monitor variations in its WCR very closely to ensure the good health of the company. Regarding the latter, depending on their WCR, we can notice 2 types of companies. There are those with a negative BRF whose activity generates more resources than the needs and those with a positive BRF whose financial needs are quite significant and which represent the large part of companies. For these companies, active management of working capital helps restore the financial balance of the treasury. Advice: To preserve your cash flow, remember to set up and enforce your general conditions of sale (CGV), to sort your customers by avoiding, even by not working with bad payers anymore, and to set up relevant indicators.
AVOID TOO IMPORTANT FIXED COSTS
Avoid too high fixed costs Fixed costs are a permanent burden which it is difficult to reduce quickly. Running a business requires financial agility, which means being able to adjust your expenses quickly when necessary. For this it is important to limit the fixed costs which are often long and difficult to reduce. This is done in several ways: Favoring variable costs over fixed costs, even if it may cost a little more By avoiding expenses which are not adapted to the means of the company (too important fixed remunerations, too spacious offices, telephones last model,… The expenses of the company must be contained and gradually increase as and when the development of the activity allows. Each expense must be considered and have a goal of reducing costs, improving efficiency or developing the activity.
Advice: Entrepreneur, focus on expenses that are really essential for your business and not on expenses that are useful for the business and that can be realized later.
CALCULATE AND USE ITS COST COSTS Calculate and use its production costs The evolution of the activity may give rise to increases or decreases in the costs linked to the production of the products and / or services marketed by the company. A lack of monitoring of the evolution of these costs, and therefore the costs of returns of the products and services marketed, poses different management risks: If the entrepreneur is not aware of the increase in his cost price, he will not seek to reduce them, Running a business is a constant concern, not being in constant search of cost improvement is tantamount to giving competitors the opportunity to get ahead of the business, Failure to measure and control production costs entails the risk of offering too low sales prices which would not allow the company to ensure its sustainability and development. To avoid these risks, it is essential and essential to anticipate the inevitable variations in cost price, in particular by monitoring: The rising cost of supply The increase in the production price Neglecting the financial health of the business A good analysis of production costs allows your company to remain competitive in front of its competitors, but also to stand out thanks to a more or less aggressive pricing strategy while allowing to make a profit.
CHOOSING THE RIGHT INVESTMENTS
Choosing the right investments It is said that a good investment is a low risk investment, which has an attractive and fast return on investment (ROI). It is also, and above all, the fruit of good choice and good management. Obviously the approach and method used to identify, plan and evaluate the investment greatly contribute to its relevance and performance.
KNOW HOW TO MANAGE RELATIONS WITH CUSTOMERS AND SUPPLIERS
The customer supplier relationship is a concept which highlights that to satisfy both parties, it is necessary to agree on an exchange (formal or informal contract) as clear as possible. Everyone will have to contribute to get the best result. The customer has a duty to express the need with clear information (e.g. description of the need, quantity, deadline, cost). The supplier’s duty is to provide delivery of the service or product in accordance with the needs, respecting the quantity, deadlines and cost. Some important notes: Respect of the payment deadline (cash and working capital control) A good internet organization allows rapid invoicing, which mechanically reduces payment times. Define precise general conditions of sale and set up the monitoring of regulations (automatic reminders, schedule, …). Select customers to avoid bad payers and customers in financial difficulty who pay their bills late or generate unpaid bills. Incentives for customers to pay quickly (price reduction, discount, etc.)
It is essential to empower employees on the quality of service and production because the image of the company depends on it. We will notably mention the first impression left by the company, which is often the one that has the greatest impact on the image that the client of the company has.
CONTROL STOCK MANAGEMENT
Controlling inventory management. Having good inventory management means avoiding over-storage on one side and / or avoiding too low inventory. The 2 extremes are problematic and sometimes cause irreversible consequences: Over-stocking is too much stock and sometimes can be a sign of poor business health. It involves significant risks linked to over-storage: Under-storage, that is to say that the stock of a product is in small quantities, large in relation to consumer demand. It entails a risk of not being able to meet customer demand. It can cause dissatisfaction or even loss of customers and an expensive blockage of the production apparatus. Keep in mind that it is important to follow the movements of stocks so that the business is as profitable as possible. For this it is advisable to: Make regular inventories. Learn to anticipate outages, hence the importance of restocking. Replenishing is making a new purchase to avoid out of stock outright.
Warning: For a young entrepreneur, it is essential to find a good compromise between optimism and realism. Something difficult to master when there is no manager to help you.
HOW TO SET UP AN EFFICIENT BUSINESS
MANAGEMENT IN A YOUNG BUSINESS? How to set up effective business management in a young company? Business management concerns all businesses. Large companies, but also, SMEs, small businesses as well as start-ups and freelancers. Many incubators spend time educating project leaders about the importance of management and the steps to follow to set up a profitable business model. Management is not something to be interested in when the activity is launched and developed. Management is, from the start of the business creation process, linked to the entrepreneurial approach. When setting up a business (sole proprietorship, EURL, SARL, SASU, or SAS), the young manager must, from the start, set up management monitoring (or management control). This approach will allow the creator, or the buyer, to work on the profitability of his business plan taking into account the aspects and constraints related to his market. The young entrepreneur will rely on the elements included in his or her business plan (market study, cash flow plan, balance sheet and forecast profit and loss account, investment plan, etc.) to work on his business model but also for to train in the management of his future business. Creating a business requires acquiring good management reflexes as quickly as possible to limit personal investments (capital deposit, current account, loans, guarantees, etc.) and convince financial partners (bankers, investors, etc.) that the company will be quickly profitable and will generate a good ROI for their investments.