Entrepreneurs are naturally passionate about providing a service or product, but many avoid digging into the financial aspects of running a small business — perhaps because they don’t have simple tools that can help them understand their finances.
This avoidance can cost a business dearly, because financial success requires that the owner understand the target customer, how to price a product or service and how to keep track of cash flowing in and out of the business.
It all begins with understanding who — if anyone — wants the product or service the business is selling.
“Businesses can’t take a shotgun approach to marketing,” said Kim Blueher, vice president of lending at WESST — a nonprofit lender and small-business development and training organization with six offices in New Mexico. A marketing strategy needs to be based on “a realistic picture of how many people want their product.”
At WESST, Kim and Amy Lahti teach business clients how to identify that customer. They also introduce clients to simple spreadsheets that help them compute how many products or services the business needs to sell to cover expenses and make a profit.