Run your business

Start the show

You should now be satisfied that you have covered almost everything that needs to be finalised before the business doors are opened. Take another final look over your checklist and go through your own personal “to do” list before you sign off to start.

It may be a good time to have final talks with your accountant and other business advisers. It may also be appropriate to have final discussions with your associates and family members. Make sure everyone is happy and excited about the business potential ahead. Finals talks allows everyone the opportunity to raise anything else that may have been missed or voice any existing misgivings or seek more advice on any matter.

Open for business

It is now time to send out all the invitations and make use of all the promotion material that was printed. These should have been sent out a couple of weeks before the planned opening date for the business. Some business owners prefer to have a small informal gathering or party to celebrate and promote the opening of their new venture.

All of this can be a good opportunity for some quick marketing because if the business owner decides to send out a press release or carry out other PR type activities, the business can get a great exposure and benefit. People who are expert in marketing or PR will be able to help you plan for the opening or “the launch” as IT people like to call it.

Finally make the time to complete final adjustments and then go through the steps of putting on the coffee, running the advertising, inspecting the staff, cleaning the windows and putting final touches to the shop or office…then open the doors.

The “start” operating business cycle

It is good for a new business owner to get the big picture of how everything flows in the operating cycle of a business. The big picture will clarify how initial cash is converted into more cash by following through the various stages from cash to manufacturing to sales to debtors and back to cash.

You must never lose sight of the objective of being in business and that is to make profits. Just be aware that having cash in the bank does not necessarily point to the fact that you are making a profit. You may have a lot of cash in the bank at any one time and yet be running at a loss.

This is because there may be other expenses and liabilities that have yet to come out of that bank account but because they have not yet been paid, an inaccurate is conveyed by the balance in the bank account.

Cash that comes into the bank account is converted into profit after all the expenses have been paid out. While generating profits is the main aim of any business, nevertheless cash in the business is also a critical issue because you can run a business for some time without profit but you cannot continue for too long without cash. It is now time for you to look a bit further into the business cycle and see how everything ties in, in the operating phase of your business.

Factors in the operating cycle

Here are some of the factors that are involved in the operating cycle of the typical business.

  1. Capital.
    Capital means that the cash that you have, which is used to pay for the setting up of your business, and the operating of your business in the initial stages. Having adequate capital is essential to the success of your business and therefore you need to ensure that there is sufficient in place to meet the outgoings of the business until profitability is reached and the business starts to generate its own cash to meet its requirements.
  2. Distribution.
    This is the delivery and distribution of the products and services that you have to your customer or client.
  3. Accounting.
    Accounting involves all the financial side of the business including the system and recording of transactions that enable detailed financial statements to be drawn up that will equip the business owner to manage the business properly.
  4. Cash.
    Cash is the most critical of all because without it your business will simply not be able to operate. Cash means the receipt of income that involves the collection of invoices above and will also take into account the cash that is required for expenditure. Cash flow is critical so monitoring this aspect of the business is something that needs to be looked at on a daily basis.
  5. Technology.
    There are few businesses today that can operate without using the technology available such as computers and email and internet etc. There is also a lot of easy to use business software available now that will contribute to the efficiency of the operations of a business.
  6. Selling.
    This involves the promotion and sale of products directly to customers or by way of wholesalers and retailers
  7. Marketing.
    Marketing is to do with letting the market know that you are in business and that you have certain products and services that customers in the market may be interested in.
  8. Manufacturing.
    This involves the making of the various products from the raw materials and other goods purchased for the manufacturing process.
  9. Buying.
    This area involves the buying of the raw materials or finished products that the business requires.

 Other areas involved

  1. Costing and Pricing.
    Costing involves the process of calculating the cost of products so as to arrive at pricing levels a business has to adopt. Pricing can only be adequately completed after referring to the data from the costings.
  2. Staff and Administration.
    Your business will need good staff who should be able to run various areas of the business as well as perform the operating and administrative functions
  3. Sales invoicing.
    This involves the charging out of products that you have sold or services that you have rendered and results in money owing to your business by your customer or client.

The operating process

The diagram below shows the operating cycle that most businesses go through. Familiarise yourself with all aspects of the cycle because it gives a quick overall view of how things move in various stages through the business from the beginning of the process to the end receipt of income by the business.


Operating consists of stages of various activities. The process is to do with the transform of cash into product that develops into a sale and results in a return of cash. Basically, cash is transformed into raw materials after buying in the ingredients. The raw material is transformed into finished product by the manufacturing process.

Finished products are converted into debtors (money owing to us) by a sale to someone, and finally those debtors are transformed back into cash when they (debtors) pay.The whole thing makes  up the cycle which is run smoothly through good administration using such things as computers, office systems, employees, business records, cash flow budgeting and other activities. This cycle runs continually because it is the cycle that all businesses are affected by no matter what the type (retail. manufacture, service etc) and no matter what the size.

Starting with little capital

It is possible for anyone to start a business with a small amount of cash. A lot of people who set up a business from home have done it successfully over the years because often an entrepreneur is a little strapped for capital so they initially start from home and then as the business improves, move into outside premises.

The ideal situation, of course, is to be in a situation where you have enough cash to set up your business and then sufficient in reserve to run the business for 3 – 6 months without having to rely on any funding from the revenue of the business itself. It is good to have sufficient capital available but that should not prevent you from starting your own business if you have a good idea, or good product that you believe needs to be put on the market.

Don’t borrow unless you really have to

The ideal place to be in is where you do not owe any money, to anyone outside of the business. Borrowing money means extra costs and you will be seeking to minimize the bills that you have to pay out, especially in the initial stages of operating your venture. Sometimes however, you will have no choice but to borrow money to keep your business going.

It is of course far better to borrow money then to allow the business to fail. Statistics clearly show that many small businesses close up because of a lack of capital so be prepared to take on a small amount of debt if necessary and then put into place a strategy for clearing that debt as soon as you can.

Consider bringing in an investors if capital and expertise is required

If you do not want to borrow money which can put your business into legal and financial obligations to the lender, or your business cannot sustain the extra costs of borrowing, then another option is to consider bringing in investors. This can simply mean inviting in, one or two people who have capital to invest as well as the skills that the business needs.

They don’t have to be involved full time but can be in a consultancy capacity to the business so that the extra salaries that would have to be paid are avoided. You need to be happy that the investors are people of integrity that you would be able to get along with them, because as investors and therefore part owners, they will have a say in the direction of the business.

Do what you have to do

You need to be prepared to do the things that you know you have to do. This means that you may have to be the Managing Director as well as the person that makes the coffee, as well as the person that empties the rubbish. If you are a small business owner then a lot of your costs can be saved by taking on the responsibilities and tasks yourself. You may not be able to afford a sales representative so attend to the sales and marketing yourself.

If you do not like the idea of selling then the only other option is to bring in a partner or investor who has skills in sales and marketing. Otherwise you will have no choice but to prospect for customers yourself by calling on them or by phoning them to introduce your products and services. Unfortunately if you have no money then you will need to be prepared to carry out those tasks that you would rather not do yourself either because you do not have the necessary skills or because it is a function that you would prefer others looked after.

Be passionate

You will not make it in your business if you do not have the necessary passion. Being in business is not easy – especially if you have limited capital. There will be times that you will be tempted to give up. There will be times that you feel depressed and lonely and you may even lose the will to carry on with your venture. It is at times like these that the passion that you possess inside you to succeed will need to be called on to save you from going under. You will have a greater chance of success if you have a little cash and a lot of passion than if you had a lot of cash and no passion.

If you are passionate in what you do you will find yourself working harder and be prepared to go that extra mile. If you don’t have a lot of capital then you will have to put in more time and effort to make up for that lack. It is your passion that will give you the strength and patience to attend to whatever needs to be done. It will sustain your enthusiasm and give you the energy that is required to get your business up and running and winning. Passion is what sets the “want to be entrepreneur” from the “I can do this entrepreneur”.


Your customers are your business

You may not have the cash to embark on grand marketing strategies and outlay high advertising costs. You therefore have to approach the generating of business and customers in other ways. Offer your customers efficient service as well as good quality products or services. Keep them informed and work closely with them so that they will get the feeling that you are there to help them succeed just as much as you want them to help you succeed.

Whatever you do for your customers that make their lives easier will earn you a lot of points. It will also make your customers come back and they will also recommend you to others. Never lose sight of the fact that your customer is your wealth because your customer is king.

So if you don’t have the money to acquire new business make sure that you look after your existing customers in such a way that they will never go anywhere else and that they will sing your praises up and down the country. As you progress in your business you will find that the customers that come to you because of recommendation from other customers will be your best customers.

Watch your drawings

As the business starts to grow make sure that you don’t spend up all the profits. When you first start in business set yourself a minimum amount that you take out of the business for your own use.

That minimum amount should cover your family needs and even if things are a little bit tough on the amount that you have budgeted for, try not to increase that until such time as the business can really afford it. Too many people fall into the trap of increasing their drawings from the business when they see the bank balance growing.

The fact of the matter is that having a good bank balance at any one time does not necessarily mean that your business is doing well and that you have a lot of money to spend. A lot of cash in the bank may also mean that you have a lot of bills yet to pay and other major costs such as rent or loan repayments etc have not yet come out of the bank account.

Always make sure you retain control over your cash flow and keep your personal wages down to a minimum until such time as the business is strong enough to afford an increase for you. Your business will need all the resources it can retain if it is to reach a level where there is growth and profit. If you can, plough back most of the money that your business is making into your operations – especially if you are wanting to expand and grow the venture.

After the operational stage

You have reached the operational stage of your business where you are ready to open your doors to the world and unleash your products and services onto the market. During your operations you will find that there are a number of stages that you need to go through to transform your capital into product or services and in turn, those products or services will bring in revenue which is a return for your capital.

That is, the capital is transformed into raw materials by purchasing and then those raw materials are transferred into completed products by manufacturing. The completed products are then transformed into sales which are in turn, transformed into debtors (money owing to us) until finally the debtors are transformed back into cash when the customers pay their accounts. The whole operational stage is a cycle that runs quite smoothly and most of the people in business do not give it much thought because it all happens logically.

The operating stage will continue indefinitely so that the circle of business is revolving all the time and this applies whether the business is a manufacturer or a retailer or provides professional services.