The Financial Spring Clean
The weather is warming up and Spring is on the way, its great time for you to put some financial processes into action and start to look forward to the year ahead.
Your business plan/budget.
Keep this report in mind certainly every six months, ideally every quarter. Rolling the plan ahead and updating it with new ideas or processes you may have in place. I would also look at having a cashflow projection a year ahead, this will help you plug in cash reserves if there is a shortfall ahead of time. You will be better prepared for any challenges that await, if you see this all ahead of time.
Cash Is King
Keep your creditors and debtors up to date, I see far too many sets of accounts needing either tidying up, or money chasing from several months ago. This will keep you liquid if you are keeping the cash close to your chest. Make sure you have a fully usable process for keeping these up to date. Credit score new Customers if you are giving credit. Don’t be afraid to use outside help if some debts are getting hard to chase. By keeping this professional and not personal you are more likely to get a positive outcome.
Look at your processes
You can never spend enough time in tightening up your processes. Imagine you have moved your business from a couple of hundred thousand turnover to a million pound turnover business. If you havent addressed processes and improved efficiencies you will never cope with the increased demands. Delegate your time appropriately and keep training of your team at the heart of your business. As you grow you will be become more reliant on them, they are your future. Invest in them wisely and see the rewards, just like you would if you were buying equipment or software to run your business more efficiently.
Tracking your Sales
Are you tracking where your sales are coming from? How are businesses finding you? I always recommend you track at least the following
Where people are finding you
Long term customers/vs new business
Product/service segmentation
Average customer spend
Track every item of marketing spend you have, and make sure they are all working well.
Marketing Strategy
When was the last time you prepared a SWOT Analysis, Strengths, Weaknesses, Opportunities and Threats. Your competition will be focused on this subject, you need to be one step ahead of them at all times. Dedicate at least a third of your time to marketing focus. Afterall you cant grow without increasing your new business. Track all of the spending in this area and drop what clearly isn’t working. Don’t ponder, this needs direct action.
Cost of Sales and Overheads.
Keep a close eye on your margins. Always track the service jobs you do, or check margins on the products that you make. It’s a good idea to keep timesheets and compare theses costs to the job originally quoted. This will enable you to quote better, and work on improving your margins, and in turn your profitability.
Overheads, keep a track of these. Some of these costs may be fixed, but that doesn’t mean that you cant make amendments if you need to. By knowing ahead of time it is worthwhile knowing your breakeven point. The point at which your sales match your costs, and any surplus is profit.
I hope you find these easy to follow steps and look forward to hearing from you as you develop your businesses and grow. By managing your business as you grow you will be better prepared and find it easier to cope as the demands on your time increase.
This blog is intended for information purposes only, you may have suggestions of your own. it is not intended to be used to make all of your decisions but as a guide only.
