We’re half way through the year! Here are six ideas to help you get a jump start on making financial improvements on your business so you can proactively plan for the remainder of this year.
1. Understand your cash flow. At the end of the day, you need enough cash to pay your vendors and your employees. If you run a seasonal business, you already understand this challenge. The high season sales harvest needs to be ample enough to support you during the slow non-seasonal periods. The goal is to look for ways to improve your cash flow forecast and make this exercise one that gives you ideas to improve your situation.
Recommendation: Create a 12-month rolling forecast of revenue and expenses to help understand your cash needs. Every month, add a new month to your forecast using current information. Identify months of cash challenges and get your plan together now to address them before they arrive.
2. Know your pressure points. When looking at your business, there are typically a few big items that drive your business success. Do you know the top four drivers of your financial success or failure? Try to stay focused on the key drivers of your business, as there will be numerous temptations to be buried in non-important tasks.
Recommendation: Look at last year’s tax return to identify the key financial drivers of your business. Do the same thing with your day-to-day operations and staffing.
3. Inventory matters. You need a good inventory management system if your business sells physical products. This system doesn’t have to be complex, it just needs to help you keep control of your inventory. Cash turned into inventory that becomes stuck as inventory can create a major cash flow problem.
Recommendation: Develop an inventory system with periodic counts to ensure you don’t have shrink or theft issues. This can also help identify when you need to take action to liquidate old inventory.
4. Know your customers. Who are your current customers? Are there enough of them? Where can you get more of them? How loyal are they? Are they happy? Several large customers can drive your company’s growth or create tremendous risk should they take their business to a competitor.
Recommendation: Know who your target audience is, then cater your business toward them and what they are looking for in your product or service offerings.
5. Know your point of difference. Once you know who your target customer is, understand why they buy your product or service. What makes you different from other businesses selling a similar item?
Recommendation: If you don’t know what makes your business better than others, ask your key customers. They will tell you. Then take advantage of this information to generate new customers.
6. Develop a great support team. Successful small business owners know they cannot do it all themselves. Do you have a good group of support professionals helping you? This includes accounting, tax, legal, insurance, and employment help, along with your traditional suppliers.
Recommendation: Conduct an annual review of your resources. Be prepared to review your suppliers and make improvements when necessary.
Focusing on a few basic ideas like these can help improve your business’s outlook. Book a call here if you wish to discuss your situation.