Some weeks ago I was invited to participate in a BRW round table with Paul Bakker, Amanda Gome, and Grant Johnstone on managing costs in business. My initial reaction was “What would I know about that – I believe that you need to spend money to make money”… then I started to think about how we continue to focus on budgets and performance at RedBalloon – so I convinced myself that perhaps I could add a different view to the other panelists.
The full article can be viewed online. I was surprised to read my words in a pull out column – Naomi Simson’s Tips for Entrepreneurs. I thought I would share them here – in case you missed it.
- Understand the two most important questions in business: What is the cost of acquiring a customer? and what is the lifetime value of a customer?
- Thing about how cash flows through your business. If you’ve got cash flow problems when you’ve got 10 staff, how will it be when you have 100 staff or more? Are there ways to get customer to pay up front for example? Look at the business model
- Build a dashboard that allows you to take the pulse of the business and understand the key levers within it. Make sure the dashboard evolves as the business changes
- Have a culture of review. Every major contract should be reviewed annually to ensure that you’re getting the best deal and access to the best products and services.
- Set policies and procedures from day one so they become embedded in the culture. That way, as the business grows, old staff and new staff will appreciate that’s the way things have always been done.