As small business owners, we have access to a vast amount of data that we can use to assess our performance.
We can easily gather masses of information with a few clicks; from the hours we’ve worked on a particular project, to the number of people who liked our tweet, to the value of our outstanding invoices.
With so much data to hand, is it really likely that any of us will be in the dark about our businesses?
The answer is ‘Yes’. With so many metrics available, we may not be gathering the right information, or perhaps we’re gathering stacks of data but not properly reviewing it.
Here are five signs that you are actually in the dark:
1) You don’t have a business plan – or it’s out of date
In an earlier article, I talked about the importance of creating a business plan to keep your long term goals and priorities in the forefront of your mind.
This business plan should include a budget.
Without this budget you will be completely in the dark from a financial point of view and will be unable to create a realistic action plan for your business.
Your budget also needs to be updated regularly to help you maintain the direction of your business.
If you don’t have an up-to-date business plan, then you need to address this immediately. A quick Internet search will give you numerous templates to work with.
Remember that your business plan is a living document for you to refer to, review and update regularly.
2) You don’t know who your best customer is
The obvious answer is that it’s the customer who spends the most money with you.
But perhaps they always expect a discount, or never pay their invoices on time?
Maybe you have a customer who spends less, but frequently praises your company on social media and recommends you to others?
It’s important to recognise the different types of customers that you have, what behaviours are important to you, and to then identify who you need to focus your resources on.
Decide on the criteria for your best customer and identify which of your current ones are the closest matches. You should be looking at behavioural aspects as well as the financial ones.
Once you know this, you can focus on engaging with them to ensure that you keep them, and you can also work on identifying and targeting similar prospects.
3) You can’t identity your most profitable product or service
Again, this seems like it will have an obvious answer, after all:
‘Total Product/Service Revenue – Total Cost to Sell Product/Service = Profit’
But are you factoring in all of the associated costs?
Calculating the direct costs is fairly simple, but indirect ones such as marketing, your own time, and any shared overheads are harder to calculate and assign correctly.
While reviewing these figures, you may discover that something you thought was profitable is in fact making a loss.
For example, perhaps you took out an expensive industry membership/registration in order to offer a particular service and you charge clients a higher rate for this service.
If there’s not enough uptake, you’re likely to be losing money, even though your hourly rate is higher than usual.
Take the time to carefully review every single cost associated with each product or service that you offer.
Once you have this information you can determine if any products/services should be expanded, altered, or eliminated.
You can also refine your marketing strategies for the most profitable products and services.
4) You’re not ‘friends’ with your competitors
You probably identified your competitors prior to launching your business, but do you review this information regularly?
Your business is constantly evolving, but so is theirs. A competitor that didn’t seem to pose much of a threat six months ago may have developed a new service that now gives them an edge over you.
Keep up to date with your competitors, follow them on social media, visit their websites and join their mailing lists.
It’s valuable to develop relationships based on collaboration rather than competition and, by sharing insights and industry knowledge, you will both become stronger.
In addition, even competitors will often have a slightly different target market, so there is the opportunity to pass on details of relevant opportunities to each other and build goodwill.
5) You haven’t heard about GDPR
Of course you know about GDPR, it’s huge. But that’s just an example. As small business owners we have a responsibility to act on any changes to legislation that are relevant to our businesses.
Many of us will have signed up to receive email updates from organisations such as HMRC, The ICO, The HSE, and our appropriate industry bodies.
But are you taking the time to read these updates and are you confident that your business is fully compliant with the law?
Keeping current and compliant on legislation is important, and ultimately it is your responsibility to keep yourself informed.
You should be regularly reviewing your corporate manuals, policies and procedures to keep them updated.
If you don’t feel confident that you are compliant, you can also engage a professional, particularly in the areas of finance and health & safety, who will be able to audit your business and advise as needed.
As business owners, we have many demands on our time and resources. We have so many tools and so much data available to us that it’s often difficult to know what areas we should be focusing on.
It can be beneficial to gain an outsider’s perspective to help us to ‘see the light’.
An experienced finance professional can evaluate your business data, helping you to plan for the future. At Horus Consulting we help businesses like yours in all aspects of financial reporting, planning and analysis.
Together we can grow your business.
About Michael Ware and Horus Consulting
UK-based SMEs seeking professional, proven, practical financial support on a truly flexible basis choose me.
4 Ways I Help You
- Interim Finance Director
- Non Executive Director/NED
- Part-Time Finance Director
- Consultant/Business Partner.
How I can Help You
With a proven track record in improving growth and profitability, my services include:
- Turnaround and Restructuring
- Business Improvement
- Balance Sheet Control
- Due Diligence of Agents & Distributors inc. Establishing Credit Limits
- Interim Management
- International Tax Planning
- Cash Flow & Treasury Management
- Risk Management
- Mergers & Acquisitions
- Managing Teams in Times of Uncertainty and Change.
See the experience section in my LinkedIn profile for my full skill set, the A to Z of sectors my experience spans and client recommendations.
How I’ve Helped Others
- Strengthened financial reserves by 10%, whilst significantly reducing debtors
- Finance department transformed into a cohesive team within just xx months
- Debtor days reduced from 66 to 50, scrap rates fell and working capital increased.
“Michael did a great job leading our statutory accounts and audit process in the absence of the permanent finance lead. He rebuilt our accounts model, worked collaboratively with the permanent finance team, and managed the process with the audit team, while providing assurance to me so I could report to the board. His work and recommendations have provided us with a robust platform for future development.” Claire Montague, Chief Operating Officer at Royal Trinity Hospice
What to do Next
If you’re seeking an experienced and senior finance professional with broad sector experience, then we could be the right fit for each other.
For an exploratory conversation, call 07947 810 036 or email firstname.lastname@example.org or of course message me via LinkedIn.
Specialities: Interim Finance Director Available Now, Non-Exec Director, NED, P-T Finance Director, Consultant, Business Partner
For an initial chat, call 07947 810 036 or email email@example.com.