Updated: Jun 25, 2020
Small business owners can absolutely prosper in these tough times, so long as sound business management practices are in place.
Now is the ideal time to step back and fine-tune your business, making sure you know its strengths and weaknesses, so that you can take action where you need to.
As you stand back and look at your business, think about some of the key drivers of your business. They will vary from business to business. To assist you in this process, we have developed a list to get you started.
Preparing a Profit Plan:
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 plan in place, you have no idea if you are performing well or poorly. Make sure you have clarity on costs and sales prices when setting your profit plan.
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.
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. You will be surprised by the impact of a small increase in margin on your bottom line.
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.
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. To assist you in this process and to help boost the financial performance of your business, Sullivan Dewing have developed a practical checklist focusing on the key business drivers of Leadership, Strategy, Products, Marketing, Team, Systems & Finances. It’s a real time check on your business, giving you a snap shot on where you are so you can quickly realise your weaknesses & thus your opportunities.
Only when you know where you are and where you plan to be can you take action to improve. When times are uncertain, a plan of action is invaluable to ensure business continuity. It can be the difference between ‘thriving, not just surviving’!
To receive a more comprehensive guide to Thriving, not just Surviving please request here. Any questions or if you would like to discuss your situation, please contact your Client Manager or one of the Sullivan Dewing team.