You know what you want from your business; it’s time to plan how to get it. Start by deciding what you want personally from your business. For example, if you need $100,000 a year to cover your living costs and a family holiday, and your overheads are $100,000, then your profit from your business needs to be $200,000. If your current profit margin on your sales income is 50%, then… Read more
Defining exactly where you are now is crucial to building a better business. This step is often overlooked, but you must know your starting point to create the best road to success. It sounds so obvious, but many business owners plan for the future without knowing where they are now. Answer the following questions honestly to help define where you are now (warts and all): 1. How aligned are the owners and… Read more
Its amazing what we, as humans, don’t even know that we don’t know. Being open to change and new learning is a crucial step to building a better business. New learning opportunities are everywhere, and in this digital world, there’s simply no excuse not to learn. Consider how many new things a five-year-old learns each day. Children enthusiastically embrace the world of possibility and the desire to learn.… Read more
What does a better business look like to you? Before you can start building a better business, you need to define success. Be clear on exactly what you want from your business. Remember, your business is there to serve you, not the other way around. Life is too short to be stuck doing things we don’t enjoy. The average person spends 40,000 hours at work over their lifetime. Make the… Read more
Hiring new employees can be extremely time-consuming, but it’s important if you want to grow your business. If you get the process right, you’ll ensure you hire the right people. And if you look after your employees, they’ll stay with you longer and your business will perform better. Here are 12 steps to follow before you hire your next employee: Create a clear job description Determine who will be interviewing… Read more
Bringing on another pair of hands? It can be a big decision to commit to having a new member on the team but the right person will bring in the skills you need to grow the business and give you more time to achieve your goals, even if that is to get more balance back in your life and spend some time with family. Before advertising the role, spend some… Read more
The fourth cause of poor cashflow – Your debt or capital structure Often a reduction in your bank interest expense as well as significant cashflow improvements can be achieved with a regular review of your existing debt. A good place to start is to list all your bank loans, mortgages, finance company loans, hire purchases, credit card debts, and any other debts (don’t include amounts owed to suppliers in this… Read more
The third cause of poor cashflow – Your stock turn Carrying stock for too long means full shelves but an empty bank account. Similarly, if you’re a service provider and are taking forever to invoice your services, then you’re carrying too much stock in the form of work in progress (WIP). Consider that work in progress as a form of virtual stock. You can calculate your ‘stock turn’ by taking… Read more
The second cause of poor cashflow – Your accounts payable process The second cause of poor cashflow relates to when and how money is spent in your business, including your terms of trade with suppliers. Do you have spending budgets in place? It’s best practice to prepare a budget every year, usually before the start of a new financial year. It’s also best practice to make sure that team members… Read more
The first cause of poor cashflow – Your cash lockup There’s a massive difference between profit and cashflow. Profit increases when you create an invoice for work you’ve done or goods you’ve sold; cashflow only increases when you actually bank the money. Your lockup equals the cash that isn’t in your bank account because it’s either in work in progress (you’ve done some work but you haven’t yet billed for… Read more
Cashflow Freedom – The 7 causes of Poor Cashflow Cash is King in any business. In fact, even profitable businesses can fail because of poor cash flow. What’s important is that you understand your key cashflow drivers. Improving cashflow is often all about changing your business processes. Processes such as how and when you order stock and pay for it, when you bill for your products and services, and how… Read more
Steady, reliable cash flow is crucial for the survival of any business – so taking steps to ensure your customers pay promptly should be a key priority. When your customers consistently pay on time, you’ll avoid the dreaded “feast or famine” cycle. You’ll be able to pay your suppliers and employees on time – and not least of all, yourself. Implement these ten tips now to start getting paid without… Read more
The power of cash flow forecasts At some point in its lifetime, every small business suffers from cash flow problems. The trick is to think ahead and figure out when these problems are going to arise, so you don’t have to unexpectedly postpone a purchase or hurriedly seek out additional finance. This is where cash flow forecasts come in. To effectively manage your cash flow, all you have to essentially… Read more
What exactly is profit in a business? Here’s how to avoid three common profit mistakes that can seriously affect the success of your business. 1. Sales are NOT profit The biggest beginner mistake is assuming that sales are profit. People new to business can easily confuse sales with profit, but there is a very clear distinction between them. As the saying goes, ‘sales are vanity, profit is sanity’. Let’s assume… Read more