We are in a brave new world, and you need to be on top of our changing environment.  There are 5 simple tips for running a successful business.

Profit:

The focus in this environment needs to be profit.  This is the one part of your business you CAN do something about and profit means choices.  Setting an annual profit plan gives you a clear focus on what you want to achieve in the new financial year.  Set the target for each month and work on achieving that number.  By following our system of setting a profit plan, completing your accounts monthly and then tracking against your plan using KPIs gives you control.

Margin:
Your margin is what you make after you have paid for your product.  So for example, you buy shoes for $40 and sell them for $70 your margin is $30 or 43% before you cover the overheads of the business such as rent & insurance.  Focus on buying better in this area.  For example,

• Can you get rebates from your suppliers?
• Can you make bulk purchases and get a discount?
• Look at alternate suppliers for cost savings
• Ask for better prices from your suppliers
• Consider raising your sales price just a small amount, maybe $1 or $2 – this will improve your margin.

Overheads:
Similarly this is an area you can easily action.  Look closely to see where you can make significant cost savings, for instance:

• How much are you spending on stationery each month
• Rent – do you need that much space to run your business
• Employees – look at what you need and who you have, do you have the right number of people to run your business, or has a little bit of fat crept in over time
• Also look at salary & bonus packages and commission  
• Printing costs – should more of your marketing now be online – are you paying for printing that’s being thrown out and not read
• Advertising – are you paying for advertising in the wrong place and not taking advantage of “free” forms of advertising
• Motor Vehicles – do you have too many in the business, or are you paying too much in FBT – look at the types of vehicles you have – maybe the wife’s car should be a private vehicle...!

Look at each item in your profit and loss report and think where you can make changes.

Sales:
This is a difficult area to control.  The key to sales is to set a target annually and monthly.  If you have a sales team make their target higher than your budgeted sales.  Be smart about your offer and package of products – be careful about giving away things or your margin will suffer.  Brainstorm with the team what you can do to win more business.  Now is the time to focus on what you do and doing it well.  Delay branching out into new distribution channels or products.  Are you on top of new trends in marketing and selling?  Be aware of what facebook, Linked in, twitter, blogging and a good looking web site,  regularly updated can do for you.  Also remember the sale is not finished until it is paid for.  Keep right on top of your collections, and watch your debtor days.

Be proactive:
Our final tip is don’t sit back to wait and see how these times will affect you.  Get your thinking caps on and think about how you can make your business better – run a brainstorming session with the team, key employees, your advisors or even just with yourself!!  Look for solutions not problems!  

For more information contact Jeni Wilcock on 9526 1211 or jeni@sullivandewing.com.au