10 tips for improving your business

We call any legitimate business the purpose of which is to generate income. "Improving business" is too general a heading for giving any specific advice. Everything depends on what business is planned to develop and in what state it is at the given time. In general, business improvement is the application of complex measures to increase the financial efficiency (profitability) of business, reduce business risks, increase liquidity and create grounds for its further development. For this, the NFE publishes 10 tips for improving its business. So, 10 tips for improving your business.

The main, determining factor in distinguishing one business from another is its owner. The entrepreneur also depends on the approach to his case, and the business itself, and its success. It is the psychological warehouse of the business owner that determines what he likes to do. This refers to the temperament of the entrepreneur and his ability to navigate in the volume of tasks that have to be dealt with in the course of everyday work . From this point of view, business can be divided into active and passive. The difference between them is fundamental. In active business, the entrepreneur decides what and when he should do with his own money. Passive business is connected, as a rule, with investing in projects. The investor transfers the management of his own money to specific people. These people are usually hired workers in the enterprise, although at the same time they can own the shares of the company they manage, that is, they are active businessmen. Another important characteristic of entrepreneurial activity is associated with the psychological portrait. Let's call it a propensity to speculative business or to long-term projects. To speculative business can be attributed all the trade - and goods, and servants, and "air." Speculation assumes high profitability, fast turnover of goods and high risk. Let's start with the speculative business. Its first rule is promptness, immediate response to changing external conditions. The daily (and sometimes even every second) monitoring of the situation in its niche, tracking the demand for goods or services, finding suppliers and buyers, high costs of promotion (in particular for advertising) in most cases cover expenses and bring the desired profit. The second rule - prediction of the situation in the short term. The specialist can and must assume what changes will occur in his market in the near future and take preventive measures to the expected changes. However, the approach to this issue should be very cautious. It is necessary to think in advance what can happen, and already do what others will do before the expected event occurs. At the same time, it is necessary to foresee what will have to be done if the events do not happen at the supposed time, that is, take pre-emptive measures against those changes that he himself started. Of course, protective measures will divert some resources from the already changed business, but without insurance measures, the case may end in the complete collapse of the enterprise. However, if the trend is guessed right - the cream takes off the very first. The third rule is the development of an approach using insider information. Of course, this rule applies to those who have some kind of access to this information. Using insider, you can prepare in advance for changes in the market according to the second rule. Of course, one must remember that the one who uses the third rule, balances on the verge of the law. The third rule can be circumvented if the entrepreneur is an expert in his field. In this case (according to the second rule), he will understand without insider what will happen on the market in the near future, as he understands what is happening now and will take some measures in advance .. The above rules apply to the most risky branch of activity - own business. We are talking about those who are registered as individual entrepreneurs and whose resources are not yet enough to hire a large number of workers, who do without economists, accountants and other professionals in the sectors that are necessary for business. This business belongs to the category of "active" or even "hyperactive", as the entrepreneur is not responsible for authorized capital, but for personal property. The fourth rule - maintaining maximum liquidity - is of paramount importance for individual entrepreneurs. These people have maximum insecurity in front of the environment. Therefore, they are obliged to support their business in the pre-crisis state. This means that the business should be able to be sold at any time with minimal losses in time and in value. Therefore, the production is not suitable for PIs, because in production too long life cycle. Trade and services, better - with 100% prepayment and minimal overhead costs - that's the sector of the individual entrepreneur. Of course, in any rule there are exceptions. The fifth rule applies to those who fall into the exception to the fourth rule. That is to those who are engaged in production. Hyperactivity involves not only prompt management, but also efficiency in mastering the production of new models. Ideally - that on the same equipment produced completely different products. Re-equipment of workplaces should take as little time as possible and require as little money as possible. Ideally, the workshops are of a modular type, where easily reprogrammable CNC machines perform monotonous and complex work. In the Russian version, this rule has a completely different form. Instead of developing or purchasing technological lines, extremely cheap and mostly illegal labor is used. The more powerless the labor is, the cheaper the production. Of course, at the same time the quality suffers. But a product with a low price, even with an even lower quality, will always find its buyer. The following rules apply to passive business. It is completely wrong to think that those who could not survive in a real, rapidly changing environment are working in a "passive mode" and have already retired. This business people are thoughtful, cautious, having a significant life experience. The sixth rule is to maintain the reliability of investments. Diversification of investments and investments in reliable companies or in proven people has a significant "plus" - reducing entrepreneurial risks. The profitability of the passive business is lower in this case. This is due to the fact that reliable companies have significant resources that need to be maintained. The maintenance of a complex system, maintenance of its reliability requires additional costs. The seventh rule is described by Warren Buffett in his Essay on Investments, Corporate Finance and Company Management. He writes: "Investment activities should follow the principles of fundamental analysis of the economic activities of companies." Here we are talking about the principle of real evaluation of the companies under investigation. The basis of the activity of any company is its material and financial assets. They are the "safety cushion", which should work in favor of the investor in case of real problems in the enterprise. It is the "Warren Buffett Principle", that is, the analysis of the company's real assets, that is the basis of the work of the "Independent Financial Expertise". The remaining assets of the "good name" type are of secondary importance. The crisis of 2008 is clearly demonstrated. The eighth rule of "passive business" has already been mentioned earlier. It's about anticipating the development of events on the market. But, if the immediate prospects of the market play the most important role in the operational management of resources, then in the "passive mode" the development tendencies of entire sectors of the economy matter . The macroeconomic system is much more stable than individual enterprises. See the immediate and remote prospects of the system - the most important task of the "passive" investor. It may not require high efficiency, but the professionalism of the highest class is no less important here than in solving operational problems. The ninth rule is the diversification of production or services. It should be borne in mind that parallel production (services) require simultaneous investments. Financing a multidisciplinary business is very costly, although it raises a very important characteristic, which is called "financial stability." The same methods apply to the rule as in the previous case. Diversify can be either expensive equipment, or cheap illegal labor. Moreover, the second method is preferable, although it is not legal. The last rule, the tenth one. It is widely practiced not only in Russian business, but in life in general. It is called an "administrative resource". This is the borderline between the law and "concepts." The author does not call for the use of this rule. But one must clearly realize that this is one of the essential aspects of life in modern Russia, and to keep silent about this means not reflecting the real state of affairs. But you do not need to count on the stability of this resource. In America, the police also took bribes, but these facts have long been in the past, society has managed to cope with this. Russia is no worse.