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How does a small business cope with overnight success?
Last Updated: 01-Mar-2010
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| Although every small business owner dreams of success in his business, the prospect of a small business becoming a hit overnight could haunt the owner. A small business that does not have the infrastructure, capital or workforce to manage a big order or national promotion capacity can face severe hardship when it tastes instant success. |
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| Most small businesses are unprepared to handle that kind of success although they do have a strategic plan worked out for them. Here are 10 things small business owners should take care of to avoid the pitfalls: |
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| Invest wisely: |
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- More sales means that you may have to spend more on for people, materials and overhead, using up the additional income, therefore it is wise to make investments only after proper consideration.
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| Devise a strategy: |
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- Perform a thorough analysis involving number crunching, checking out inventory and human resources. In case of a production company it involves a calculation of the estimated number of units the customer is likely to buy and the costs involved in their manufacture In case of a service company, the estimations involve the number of extra employees to be required to complete the new project.
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| Arrange the money: |
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- It is important to acquire the working capital necessary before starting to recruit or place overseas orders. Neither manufacturers nor employees are prepared to wait till the products are sold and you can afford to pay them, you need to have the capital needed to start right away. If your present business has good credit then you can call your bank for a new credit line or opt for a higher credit policy. In some cases, suppliers may also stretch the investment or credit you require to fulfill the order.
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| Get extra help: |
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- Get all the extra help that you need as however much you work you can’t do everything alone. Existing employees can be asked to work overtime or part timers can be hired to meet targets. It is not wise to hire full timers until you are assured about your company’s success.
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| Forge production partnerships: |
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- You must have a ready partnership with a manufacturer to handle a large order that comes suddenly. The manufacturer can take samples from you and manufacture them in bulk.
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| Create a distribution network: |
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- With growing awareness about your product or service, customers and retailers may start ordering for them. It would be wiser to sell your products or service through manufacturers' reps rather than to hire a national sales manager and open branch offices in big cities Reps frequently have long term relationships with retailers and frequently pay for their stalls at trade shows.
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| Communicate with your customers: |
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- Communication though the key to building long term relationships with customers, becomes much more important when your business starts soaring unexpectedly. It is of utmost importance to inform customers of any delays in manufacturing or shipping before its too late.
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| Leverage your success: |
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- The toughest part of achieving a quick success in a small business is maintaining it. One way to achieve this is to create line extensions while another is to look out for newer markets for your products or find innovative ways to market them.
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| Invest for the future: |
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- Though you might be excited to garner profits obtained from your businesses’ success immediately, it is advisable to plow back some of the profits into your business for the future. It could involve paying back debt, purchasing new machinery, recruiting new workforce or opening another branch. Its much better to invest your own money in your business than to take bank loans or sell equity.
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| Learn from your mistakes: |
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- Evaluate your performance by making a thorough analysis along with your staff so that you can avoid some of the problems you had to face this time and you have a better strategy when you receive the next big order.
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