Do you have a grip on your finances?
Regardless of when your financial year starts, the start of the year should be treated as a fresh start and businesses should take a different approach on the way that they are working.
All small companies must use the first quarter of the year to spring-clean their firm, this is an absolute business fundamental. I have found that it’s often the smaller businesses that hide behind their figures. On a quarterly basis I review all my costs, fixed and variable, to see if I can negotiate a better deal because I’m always looking to reduce cost and increase profit within the business.
It is no good for a company to wait until the end of the quarter for an accountant to produce some quarterly figures for analysis. By the time they’ve done that, it is already six weeks into the next quarter.
Small firms often look at their accountants to provide them their figures, when really they need to get close to their figures and actually understand what they mean and what their costs are.
Without regular reviews of figures, business get to the end of the year and are shocked to find that they have not hit their targets – this is because they are not constantly evaluating the figures.
Small firms often look at their accountants to provide them their figures, when really they need to get close to their figures
One thing every business should ask themselves in the first quarter is what their break-even point is. If they don’t know it then they need to stop and work it out. Out of all the businesses that I’ve been into 70% don’t know their break-even point. They can tell you what their budget is and what their forecasts are, but not one of the most important figures.
The start of a new year is also a great opportunity to review sales targets. A business in the Midlands I’m working with is not doing very well at the moment and what they’re focusing their staff on is last year’s performance.
Every single week they are coming out with staff sales figures, and they are all 30-40% down. The staff are completely de-motivated because of this communication about their performance compared to last year.
I’m also focused on the internal infrastructure of businesses before they go out and generate leads; a lot of businesses fail because they can’t convert their leads. People talk about numbers and figures, but the most important thing is conversion. If you put ten leads in and convert five, then I want to know how we are going to put in ten leads and convert eight. It is vital to make more out of what you’ve got.
Companies can go out and have fancy marketing and a great strategy but it’s no good if potential business comes in and then falls down at the first hurdle.
All businesses must stock-take on where they are in order to progress in 2010, because I think this is the year that businesses are going to recover.
Every business owner took a deep breath on the 2nd of January last year as we walked into the new year, as nobody knew what to expect. This year people need to be more focused, more aggressive and proactive. If they do these three things, applied with common sense and understanding their figures, then they will have growth in 2010.