You do want to improve your sales, profits, cash flow, don’t you?
Being able to plan for success would be great, wouldn’t it?
Seeing your numbers in a clearer light would help you sleep better at night, I’m sure.
In essence Plan, Do, Review and Change or Carry on
By getting under the skin of your business’s numbers you will be in an informed position to quickly make clearer decisions. Due to these swift choices the results can be responded to fast. If you need to make further changes they again can be identified, done and reviewed within a short space of time.
It really is important that all business data is shared with the management team in real time to enable them to manage the business effectively. This can be done very efficiently with integrated cloud based software. By understanding your actual historic financial results, it is easier to identify the gap between where you are now and where you want to be. Think about plotting out a journey before you get in the car, you know where to start and finish, there is rarely a wrong route just different experiences.
Planning and budgeting/forecasting for the future allows you to constantly monitor your results and then, if needed, proactively respond to unexpected changes in the business or market. If you are not comfortable with spreadsheets and rows of numbers getting your trends presented pictorially will give you the same information, key differences can then be drilled into to tell you what the data represents.
Here are a few suggestions that could help you on your success journey.
Forecasting for success
- Know where your prospects are coming from and quantify this
- Frequently check that you are still forecasting for profits
- Regularly update your cash flow and know how it will react to different conditions
- A forecasted profit can be used in the business (e.g. new machine or staff bonus)
- A forecasted loss highlights a need for change (e.g. new product or staff training)
Profitability of products or services
- Identify your profitable lines, stop offering unprofitable ones
- If lossmaking lines are high sellers increase the price (some fall in sales at a profit is better)
- Know what price the customers will buy at, don’t leave any profit on the negotiation table
- Make sure you buy your raw materials or services at the lowest possible price
- These are specific benchmarks for your business, they motivate your team to take action
- They summarise what good looks like for you and should be shared with the team weekly
- They can be monetary (e.g. profit per sale) and non-monetary (e.g. debtor days)
- Remember just because you can measure it doesn’t mean you should, pick a few carefully
We are all very good at own business discipline whatever that may be. When it comes to the numbers in business it makes complete sense to short circuit the technical jargon and get down to understanding what is important for your specific circumstances. Get your numbers in the format for you. Failure to plan is planning to fail.