12 rules for microenterprise success

I picked up this little pamphlet in Cebu, City that can be easily put inside your wallet while on coverage last year. It has little snippets of wisdom that any microenterprise owner can use to improve his business.

Prepared by The Academy for Creating Enterprise, an organization that trains small business owners nationwide, the pamphlet is one of those little wonders that has helped thousands of individuals across the country develop the confidence to step into entrepreneurship.
So here are ACE’s 12 rules for microenterprise success:

1. Practice separate entities
Keep business cash and products that you sell separate from your personal money and family use. No family member or employee should ever take money or goods without paying for them. One good way to make this work is to regularly pay yourself a livable salary.
“Attitude determines altitude.”

2. Start small, think big
Some want to get really big, really fast. Too rapid growth, without experience or money in reserve, can kill a great business faster than almost all other mistakes. Learn from costly mistakes when the business is small, then grow at a sustainable pace.
“Anything the mind of man can conceive, it can achieve.”

3. Differentiate your business
Selling the same product as your neighbor is bad for business as it drives prices down which then hurts everyone. Make your business different by carrying unique products, displaying your products differently and not locating near your competitors.
“The harder I work, the luckier I get.”

4. Buy low, sell high
To make money in business you must sell something for more than you paid for it. The difference between the price you pay and the price you charge for a product is the gross profit or margin. The bigger the difference, the more money you will make. Negotiate with suppliers for lower prices.
“Winners speak in specifics, losers speak in generalities.”

5. Buy on credit, sell for cash
Many owners have this backwards; they buy in cash and sell on credit. If you can get your supplies on credit and collect cash from your customers at the time of sale, you can carry a lot more inventory and possibly turn it faster. You must, however, pay suppliers on time.
“Compete with someone, even if it’s yourself.”

6. Turn your inventory often
If you buy a product for P100 and sell it for P300 you earn P200. If you do this 10 times a week, you earn P2,000 that week. If you do this 10 times a day, you earn P2,000 that day. Small inventory turned everyday is best.
“If you can’t measure it, you can’t manage it.”

6. Turn your inventory oftenIf you buy a product for P100 and sell it for P300 you earn P200. If you do this 10 times a week, you earn P2,000 that week. If you do this 10 times a day, you earn P2,000 that day. Small inventory turned everyday is best.“If you can’t measure it, you can’t manage it.”

7. Keep good recordsOne of the important ways to grow a business is to keep simple records. A small business should keep track of five things everyday: cash-on-hand, money you owe, the amount people owe you, sales for the day and the value of your inventory.“Winners keep track of results, losers keep track of excuses.”

8. Increase sales, decrease costsSmart business owners work hard to increase sales, while carefully watching costs. This requires keeping records so you can track sales and understand costs. Some don’t want to offend customers by being pushy or negotiating with suppliers—better to offend than to starve.“Lots of people confuse bad management with destiny.”

9. Make a profit every day.Ask a business owner if he made a profit today and you might be faced with a blank stare. The goal in business is to make a profit everyday—to do that you must buy right, add value, and do correct pricing. Suggestive selling as a way to increase the size of each sale and leads to increased profits.“Winning is a habit, just like losing.”

10. Value your customers.For many businesses, the most valuable asset they have is their customers. If you can build up a group of loyal and repeat customers, then you can count on that much repeat income. You then must concentrate on keeping them happy, plus attracting new ones.“The purpose of an enterprise is to create and keep customers.”

11. Pay yourself a livable salary.One of the biggest reasons small microenterprise owners fail is they take some of their working capital out of their business almost daily, depending on personal needs, without keeping records. This is not good! We suggest that each owner takes a specific amount out each day or week as salary.“We can’t change the results without changing the behavior.”

12. Don’t “eat” your inventory.Eating, giving away or letting others “borrow” your inventory are all ways to lose money and therefore could cost you or your business. Not selling pershable items fast enough is also a way of “eating” your inventory.
Never let anyone take inventory without paying.“Poverty needs no plan. Success requires one.”

http://blogs.inquirer.net/openforbusiness/2009/01/27/12-rules-for-microenterprise-success-part-1/