The end of the year is fast approaching. For small business owners, that can be a very busy time. Meeting with clients to finish projects before the holidays, finishing up tax items, not to mention all the “normal” day-to-day activities we have to keep up with. This Friday, many will be out shopping and trying to take advantage of big savings, don’t be fooled. The sales aren’t that great. Instead, I urge you to take back Black Friday, and use it to do two things:
First, look back at 2014 and see what worked in your business and what didn’t. Review your financials: sales, expenses, margins, etc.
You should be asking yourself questions like:
- Where did you spend too much money?
- What numbers are you not happy with?
- Do you have all the information?
- Are you tracking your numbers? Are they accurate?
- Can you justify what you spent? Meaning did the things you spent money on bring your business value?
- Where did you spend marketing dollars? Were they effective?
Another good thing to keep in mind when doing this is to use the 80/20 rule, which says 20% of our efforts usually bring in 80% of our revenue. Therefore, are there things you are doing in that 80% that you can stop doing, or stop spending money on? AND, what 20% of your activities are producing the best results? Can you do more of those things? If we are not brutally honest in this area, you can not change, and will most likely do the same things you have been doing, and get the same or similar results that you have been getting. This is a time to be honest and tough on yourself.
Next, you need to take that information that you have learned, and create a budget and a plan for 2015.
Asking yourself these questions:
- What is my revenue goal?
- What is my profit goal?
- What expenses will I incur in order to achieve this?
- What additional revenue must I attain to cover any additional costs?
- How many staff will I need to achieve these numbers? And when will I need to hire them?
- What other investments do I need to make in order to achieve this, either in myself or in my team?
For many, the date just is not accurate and available to look at to make good decisions. Last year I hired a part-time CFO (Chief Financial Officer). I knew that I was not good at tracking our finances but I knew it was important to have accurate financial data; not only for accounting and tax purposes, but for planning. If you struggle in this area, I highly recommend you hire someone to help you.
Planning and budgeting is a huge opportunity to identify where we want to go and create a plan to get there. Many small business owners are so wrapped up in their business to take the time to do this on a consistent basis, but for the business owner that does this, has the ability to shape their own future. We can create whatever kind of business we want, what do YOU want to create?
To hear stories of success, check out smallbusinessNAKED.com and listen each week as we talk business with real business owners.