Small business owners can certainly prosper in these
tough times, so long as sound business management practices are in
place. Now is the ideal time to step back and finetune your business,
making sure you know its strengths and weaknesses, so that you can take
action where you need to.
To assist you in this process and to help boost the financial
performance of your business, Sullivan Dewing has developed the
“Business Performance Index” focusing on the key business drivers of
Leadership, Strategy, Products, Marketing, Team, Systems & Finances.
It’s a real time check on your business, with a snap shot on where
you are so you can quickly realise your weaknesses & thus your
opportunities. As you stand back and take a look at your business think
about some key drivers of your business such as:
Identifying your Key Financial Drivers:
These are the influencers that really drive results and can have a huge
impact on profit and cash flow. Drivers such as price, sales volume,
direct costs, overheads, inventory turnover, accounts receivable and
accounts payable days. A small change in any one of these can have
surprising results, particularly in tough times. Identify, then measure
Developing a set of Key Performance Indicators (KPIs): KPI’s
record and measure the “heartbeat” of a business over the long term.
They must be specific, quantifiable, and achievable. Finely targeted
KPIs that are aligned with your business goals can help create real
improvements and put you back in control.
Preparing a budget: This is critical to any
well-run business … it is the tool you use to set your desired result
from your business. Then you make it happen. Your budgeting process
should be a bottom up approach. With no budget in place you have no idea
if you are performing well or poorly and you have no plan.
Monitoring cashflow: Every business needs a
cashflow forecast and it needs to be updated every month at the very
least because people will often pay you later than you expect, and you
need to know there’s going to be money there to pay the bills. By
managing your cashflows you will ensure you have the funds to cover any
unexpected costs and capitalise on any opportunities that may arise.
Keeping an eye on margins: The gross profit
margin is one of the key performance indicators of your business and
indicates whether the average mark up on goods or services is sufficient
to cover expenses and make a profit. Don’t go chasing sales for sales
sake, make sure you maintain your margins otherwise you will fall into
the discount trap and your business will suffer.
Weeding out unprofitable customers: It may
be time for a cool-headed assessment of your customers and stop dealing
with the unprofitable ones. You know the ones … they take up your time,
drain your energy and then take forever to pay. Sort them by revenue and
margins, it won’t take long to find out who they are.
The key drivers of a business will vary from business to business.
But by using our Business Performance Index checklist, you will be able
to more accurately assess where your business rates, whether it is a
high performing business, whether you are well positioned to tackle the
tough times or if you are more likely to be trampled in the rush.
Only when you know where you stand can you take action to improve.
Taking the test is easy. Once you have completed the survey, I guarantee
that you will know more about your business than before you started.