Time for a Business Audit?
The first quarter of a new financial year is the perfect time to conduct an ‘audit’ on your business to assess what is working in the business and what needs working on.
While the term audit conjures up some pretty negative thoughts for most business owners, I’m not talking about double checking your bookkeeping entries, I’m suggesting you take a step back and review the direction of your business and your financial goals.
Let me ask you this question - Where do see your business at June 30, 2014 in terms of revenue, profit, staff and business value? To illustrate some areas of your business that could be under the microscope we have put these 5 items on the agenda.
1. Business Planning & Goal Setting
As mentioned above, what are your financial goals for the year in terms of sales and profit? If you plan to grow your sales in the 2013/14 financial year what marketing and business strategies do you plan to use? What tools, equipment, software and systems do you need to help you achieve those targets?
Remember, if you keep doing things the same way you can’t expect significantly better results. Identify the big impact items you need to address and create a list. Identify who is responsible for each item and set time lines for implementation. If you document the goals and create a list of action steps to achieve those goals you can measure and monitor your progress.
Is your website driving new business? Is it your silent salesman open 24/7 or just a billboard that lists the who, what and where of your business? Maybe you need to review your website and ramp up the search engine optimization on the site. You might need to create a database of customers and start an email marketing campaign or get more regular newsletters to your customers. For others, the focus might need to be on your social media strategy or branding.
2. Budget and Cashflow Projections
Now that you have set the goals for the business what does that mean financially? Basically we recommend you create a cash flow budget to track the financial impact. How much will each of these strategies cost and what is the timing of the expenditure? We can help you do some financial modelling based on different prices and assumptions but it is important to quantify the financial outcomes and then measure these against actual performance. We have a simple cash flow budget tool available and most accounting software programs like Cashflow Manager have a budget and variance feature built in.
You need to identify what extra resources you might need including stock and staffing. Will you need to get funding and when? Is it time to extend the overdraft or finance a van or equipment by lease or chattel mortgage? In this environment you need to plan your funding needs in advance because banks don’t take too kindly to last minute funding requests.
3. Cost Review
While most accountants will tell you to cut costs we always look to increase revenue with some smart marketing. Having said that, you should also look to identify any costs you might be able to slash. Start with your biggest 6 expenses on your profit and loss statement bearing in mind they probably include rent and wages. Maybe you could save on utilities and explore a cheaper phone plan and internet deal. Some costs might be superfluous to your needs and maybe you could drop some subscriptions or negotiate a better pricing deal from your major suppliers. In business, if you don’t ask you don’t receive.
4. Increase Prices
If suppliers have pushed up their costs then you need to think about passing them on to maintain your profit margins. Inflationary pressures are a fact of life and what would a 3% increase in prices do to your bottom line? Your rent and payroll costs probably both went up by 3% but have you adjusted your prices accordingly?
What have your competitors done with their pricing in the last 12 months? Maybe it’s time to get a mystery shopper to do some ‘research’ for you. If you go down this pathway, how do you plan to notify your customers and will you announce that prices will rise on October 1 so they have some advance warning.
5. Marketing Moves
What are you doing to get more customers? How do you plan to get your customers back more often and spend more each time? Marketing is a vital ingredient in your growth plans and you need to map out your marketing moves. I mentioned your website earlier and maybe it’s time for a facelift? Maybe your branding is old and tired and in need of a makeover particularly if you want to appeal to Gen X and Y customers.
Does your website have an opt-in box where you give away a valuable, informative e-booklet in exchange for an email address? Do you have a customer database and how often do you market to these customers? Is it time to produce a regular newsletter and special offer? Is it time to embrace social media because your target market engages with those channels? Should you start producing videos and increase your online spending at the expense of off-line media?
Again, you need to measure and monitor what is working with your marketing and if you need any help with your business planning or marketing contact us today.