Self Help for Your Business
IMPROVING YOUR COMPANY'S SUCCESS
Urban Meyer, Ohio State football coach, is fond of saying after a big win where the Buckeyes' seem to play almost flawless football that "There were a number of things we could have done better". That is no different in business. There are always places to improve, things that we could have done better even if you run a very successful business.
Obviously, volumes have been written on every area of business from accounting to taxes to equipment purchase/placement to logistics. All are important, but I want to be brief and simplify by looking at helping yourself manage, and cash flow aids.
Owners, who created their business, spend hours making sure it is what s/he envisioned, have all the liability for a payments, taxes, compliance, complaints, purchases, wages, etc. When beginning and small, s/he may be able to do it all, but with growth comes added responsibility and added time to accomplish those responsibilities. Eventually, you cannot do it all, but since you are still liable for all within the company, there needs to be help, but WITH OVERSIGHT.
To get that help, you can either a) hire an employee to do that task(s); or b) hire a third party to perform that task(s). I am referring to such tasks as payroll, accounting/bookkeeping, trucking companies for delivery, Human Resource, etc. If you hire, make sure the individual can accurately and efficiently complete the task. Nothing is worse than having to redo a job because it was done wrong. Either it eats up your own time to correct, or you have to pay the employee twice for the same job: once when it was done incorrectly and then again to do it the right way. But, if the individual is good, it not only saves you time, it may give you an additional employee to answer phones, help with customer service, or other side tasks to help your business be more efficient and relieve stress from your schedule.
If you get an outside company, third-party, to complete the task, make sure that it will complete as you need deem necessary, within reason of course. Just because a company does it cheap does not mean it will be completed correctly or timely (often you get what you paid for!). On the flip side, just because a company charges a very high premium, does not guarantee that it will be completed correctly or timely either. Every individual looking for a job, and every company who wants your business, will say that they will do what you want. The proof comes with actions. Can they give you examples of performing the task the way you want it completed from prior employers, or for companies, from current clients/customers. If it has never been done that way before, how do you know it will be done your way? Because of the lack of history, that will not automatically disqualify that person or contractor, but will cause you to track the process more closely until it becomes habit, and you can be assured it is being completed correct.
Next, make sure you ask advice for situations that are new or beyond your scope. Maybe even ask if you believe you already know the answer in case there is another, better, way to do it. This typically means talking to your lawyer, CPA, payroll provider, financial planner, banker, etc, to make sure you are on the correct track. You can still do whatever you want since you own your business, but to know the pitfalls or advantages is critical. Most of these professionals are glad to advise you since that is their business, plus have spent years becoming an expert. One who does not call you back or cuts you off while talking is a professional that is not interested in you, so find a new one.
The other area that causes consternation often is cash flow. To protect cash flow you need to budget, forecast, and plan. The business that wants to grow and does not do this, more often than not, is doomed to failure. Let us briefly look at each one.
Planning is writing down your goals for the next year to 5 years AND HOW YOU EXPECT TO GET THERE. Some plan a month or a quarter at a time. Winning teams usually write down their goals and the steps in achieving them, then post them where it is seen daily so there is a constant reminder of what is needed each day to get to the longer term goal. Without being reminded constantly, there is a tendency to fall back to what is "easy" rather than what is "necessary" to accomplish it. The goal to lose 25 pounds that is not constantly remembered is forgotten. More importantly, the 10 steps to achieve the goal give you small concrete direction on attaining the goal. The goal without the procedure will fail 99% of the time.
Budgeting is important because it is a basis of a financial goal. Typically it is based on the past year(s) with a projection of where you want to be each month of this year. It proposes growth based on what you know and want, as well as keeps expenses and payments in check. If your business is cyclical, it can adapt to that reality, meaning if a certain month has low sales volume, you can make the growth based on the lower amount, and in the good sales months, the growth can be more. What you do not want is "un-reality": for example only, dividing $120,000 per year sales by 12 months ($10,000 per month) and expecting that amount in a month that is historically way under that. Maybe the best you have ever done in January is $5000. Doubling it to $10,000 is almost unattainable and will be depressing. Maybe make it $7000 which will make you work hard, but is still reasonable. Make up the difference in a month that is historically a more active month. In other words, make each month stand on its own.
Finally, forecasting can be very valuable. Forecasting is short term and is done to tweak the budget to near term reality. The budget was prepared in the prior year. Forecasting is prepared now for the next month or quarter. You have a much better idea of the current state of the business now than you did a year ago. It is also very helpful with a new potential situation, meaning if a large project may be in the company's future shortly, what will it do to you? You are so excited about the additional revenue/sales, as you should be. Sales will increase dramatically, but what about payroll? Insurance? Inventory? Space? What about your time? Can you oversee the growth and still do what you are doing now? How long to train new employees? Find new employees? Is there enough cash to sustain you?
The cash flow measurements, budgeting/forecasting/planning, can be the difference between surviving and growing. That new customer will bring in an additional $10,000 per month in revenue, but their terms are paying you in 30 or 60 days. Can you negotiate it to 15 days? If not, how do you pay employees, inventory, and all the other expenses every week when you have to wait 30 or 60 days to get your money-assuming they keep the payment terms? You had better know the amount of cash needed during those 60 days and a way to finance it, be it from a line of credit, working capital loan, bringing in another partner, a bond, putting expenses on a business credit card, or your own person/business money.
Albeit brief, hopefully you have a couple of ideas about being more successful. Though much more can be said about the above, at least it should give you some "food for thought" in your business. If you already do these things, great! You have a wonderful start on your competition. If not, it is not too late to start!