2014 has arrived and it looks like being a good year. Business confidence is up, property prices are on the increase, we have a new federal government, and everyone is keen to shake off the shackles of the GFC and its aftermath. Here at MGC we’re excited to see what the new year brings, and we’re sure that other small business owners are too. Here are five action items that we think will really help kickstart 2014, and which we are personally doing in our business.
Update your business plan
The process of creating strategies and goals, and writing these into a business plan, is the single most important thing a business can do to help it succeed. But most business people don’t do it. Why? I hear people give these excuses time and time again:
- “It takes too much time”
- “I know roughly what I want to do this year”
- “I’ve been in business long enough, so I don’t need to do a business plan”
- “I don’t know how to write a business plan”
I’m here to tell you that none of these excuses are good enough. It’s like having a wedding without planning in advance – sure planning takes time, and everyone has been to enough weddings to know roughly what goes on. But I can guarantee if you try and skip the planning process, your wedding is probably going to be an absolute, unmitigated disaster – or at the very least not nearly as good as it could otherwise have been.
It’s the same with business. Having a plan helps you and your staff to understand the direction in which you want to head, and you will find your day-to-day actions start to reflect that. So do yourself a favour; take a half-day out of your schedule to think about where you’ve come from, where you are right now, and where you want to be in 12 months, and then write your thoughts into a Business Plan. You’ll be amazed at how useful the process is, and how much better your business becomes.
2. Create a financial forecast
I know, I know – it’s not the most exciting way to spend your time. I can practically hear you snoring. But I’ve seen so many businesses run out of cash, particularly as they’re growing, because they didn’t put any time into thinking about how changes in their business would affect their cash flow. This can have some serious consequences – in extreme cases it can cause your business to fail, but at the very least it will stretch friendships with creditors and lenders.
The key thing to remember, and the main reason why forecasting is so important, is that profit does not equal cash. Why? There are many reasons and they vary significantly between businesses, but consider for example the case of a growing business who sells widgets to other businesses. In order to grow, you will probably have to increase your inventory levels. You will have to hold more accounts receivable, which are sales made but not yet collected. You may even have to purchase new equipment. None of these items are captured in the profit figure, but all of them are a drain on cash, and it is critical to your planning process that you consider them. A financial forecast will allow you to assess their impact and take a proactive approach to addressing them.
3. Reach out to your network
It’s the new year and confidence is higher than it has been for some time. It’s timely, therefore, to go and speak to as many people in your network as possible, to start building your pipeline and keep your business top of mind with potential clients or referrers. I’ve seen many instances, both in my own business and in others, where a well-timed meeting or phone call can result in substantial additional business flowing your way.
It’s not difficult; start by going through your LinkedIn contacts, your phone, your emails, or your business card holder and write a list of people you can contact. Then over the course of a week, call each one and try to schedule a meeting over coffee or lunch. You may be surprised what falls out the bottom.
4. Review your advertising and marketing
Your business plan should cover off on this to a degree, but in this day and age of varied marketing and advertising choices it is important you analyse this aspect of your business in depth, to make sure you’re not just doing the same things over and over again without considering the alternatives.
Back in the day, a typical business might have done direct mail leaflets, newspaper advertising, an advertisement in the Yellow Pages, and attended trade shows. Some of these strategies may still work for some businesses, however there are now many other choices that may work better. In particular, the digital world has revolutionised advertising and marketing; from Google Adwords, to sponsored updates on Facebook, to Mailchimp marketing campaigns and many more. Often these forms of advertising and marketing are far more targeted and can achieve far better results at lower cost than traditional activities.
If you don’t know what these are, or haven’t considered using them, do yourself a favour and undertake some research.
5. Plan your next reward
As a business owner, life can get pretty stressful. Most business owners are on the clock almost all the time, even at nights and on weekends, and although the work is generally interesting and fulfilling, the sheer volume and scope of your responsibilities can be daunting.
To combat this, and to allow yourself to maintain focus, it is important to remind yourself why you come to work every day – and a big part of this is planning to reward yourself. The concept of reward is different for everyone; for some it may be a fishing trip, for others it may be a new car, for others it might be a trip around the world.
Whatever your idea of reward, start planning it now, and tie it to a specific achievement or goal. Say to yourself “if I achieve x in my business, I will reward myself with y”. If it helps you to visualise it, print a picture of whatever your reward is and put it up in your office. That way, when things get overwhelming, you’ve only got to look at the picture to motivate yourself to push through.