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3 ways NOT to go broke in business...

3 Things every business owner should be doing. It doesn’t matter whether you are BHP or the suburban retail shop. The following rules apply to you. It is just the depth of information that differs.

  1. Set a Profit Plan. Every business should have a plan for the profit and cash flow that they expect to generate. If you don’t then you are effectively saying that any results will do, which is clearly not acceptable. Too often we are told that ‘our’ business is different and we can’t predict the results. This is what is called a cop out. Imagine the finance director of Qantas or BHP saying that to their Board of Directors.

  2. Set some KPI’s around your profit plan. Some simple ones are gross or net profit %, sales per customer, average invoice value, debtor’s day’s outstanding and stock turnover. Why? So you can measure them. Only when you know what your KPI’s are can you improve on them. It is not surprising that any business that measures numbers, then improves them. Would you like this to be you? Imagine what you could do if your profit improves!

  3. Regularly review your performance against the profit plan and KPI’s set. Regularly can mean daily, weekly, monthly. But not less than monthly. Then start tweaking your numbers. If you start with the above you will take your first steps to success. Meet with your accountant to discuss the results and how to benefit from the improved performance. It is great to have an external sounding board.

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