A study reported by Global Business Camps shows that 88% of business failure was due to reasons within the control of the owners or directors. Most worrying, is that the number one reason reported is a lack of regular reporting and financial management. Have you ever wondered why larger businesses post “half yearly results”, “quarterly results” and “monthly results”? Does it really matter to anyone? Who uses these “results”? Many small business owners only get their results to keep the tax man happy – sometimes up to nine months after the end of the financial year. Effectively, the information being reviewed can be up to twenty one months old. So what does all this mean and how does this impact on small business?
The underlying reason why successful businesses have regular reporting systems is to assist managers to operate a more efficient business and leaders to make more effective decisions. Posting regular results allows business owners and managers to review the performance of their business more often and make any necessary adjustments in a timely fashion. A 2% reduction in the Gross Profit Margin of a retail business can lead to a huge reduction in the cash position and net profit of the business over twelve months. However if this is detected in a more timely manner (whether it be monthly or quarterly) the business owners and managers can take immediate action to remedy this issue.
The review of businesses over many years shows that each and every business has both good and poor periods. The better businesses merely detect the poor periods sooner and take quick decisive action. This means that their poor periods are shorter and their good periods are extended. There’s no genius in this – there’s just consistency and discipline from the business owners who commit to reviewing business performance regularly.
Many successful business owners only take a cursory view of the financial accounts prepared on a regular basis. Rather they look at the underlying Critical Drivers that impact business results. To reach this point the business owners must create and develop a rigorous and trustworthy financial reporting system – allowing them to view summary reports with confidence in the supporting information.
Creating these systems is not difficult and most accounting packages, when used correctly, can provide much of the information business owner’s desire. The key is to work out what information will assist the owners and managers in operating a successful business. It is generally worthwhile to contact your accountant or advisor to ensure that the information being provided by your accounting software is reliable and assists you in achieving your business objectives.
If you would like to further discuss your business performance and the reporting procedures currently used to make your business decisions you can contact Tim McCarthy at McMahon Osborne Group via email email@example.com or phone 03 9744 7144. Tim currently works with a range of small to medium businesses and their owners and can provide a one hour free needs assessment to identify how you can get more from your business.
Whether you’re a single person operation or leading a large corporate entity, the name of the game is constant improvement. The natural state of both your business and the world in general is to grow so unless you are constantly improving you are going backwards relative to your competition. Making improvements to make your business better is a conscious choice and within the control of the business leaders and owners. Business owners and leaders only have a limited amount of “choice time”. These 10 tips should help you focus on the areas of business offering the biggest return on the choice time you invest in your business.
- Know Yourself: Every successful business owner, even Bill Gates, has a clear idea of their abilities and limitations. By truly discovering yourself, you can deliver on your strengths and find support in areas of weakness.
- Master Concise Presentations: A powerful business presentation can help improve your small business by leaps and bounds. Learning the essentials of how to deliver a knockout business presentation in a concise way can reap many rewards.
- Keep Score Regularly: The number of small and medium businesses that have no or little idea of the daily, weekly, and monthly numbers and financial trends in the organisation is worrying. Dedicate a regular time keeping up to date on cash flow and business trends. If you lack the financial skills to obtain this information on a regular basis invest in some external or internal support.
- Set Goals & Targets: Like keeping score, setting goals and objectives is an essential part of business success. Without the goals it’s possible that you’re comparing your actual results against the wrong targets.
- Don’t Reinvent the Wheel: Every industry has its own best practices or ways of doing things that are tried and true. Don’t waste money and time reinventing the wheel. Unless you are producing a new innovation to the industry make use of the resources already out there.
- Know the External Market: Sadly for business owners, business doesn’t operate in a vacuum. The events and changes in the world impact your business. Create a regular review system that allows you to keep up to date with the events beyond your four walls.
- Smart Marketing: It’s easy to waste money on ineffective or expensive marketing campaigns and programs. Learn how to use cost effective high impact marketing to improve your small business.
- Sharpen Selling Skills: The sales function can be daunting for many business owners who are experts in their service or product but not necessarily selling that service or product. Whether you’re selling to big companies or managing a sales team keep looking to improve your selling skills.
- Motivate Team: Start by having a team rather than staff. Talented and motivated team members can bring on big improvements in business. Learn what motivates your team and watch them perform at their optimal level.
- Sharpen the Saw: Running a small business is hard work – that’s one of the key reasons why everyone doesn’t jump into their own business. Stephen Covey (author of The 7 Habits of Highly Effective People) recognises that the seventh habit is to sharpen the saw. That can be in the form of vacations or development outside your core skills.
If you can master each of these 10 tips you’re well on the way to growing your business beyond that of your competition.
If you’d like to learn more about opportunities to improve your business contact the team at McMahon Osborne Group on 03 9744 7144 or via email firstname.lastname@example.org For up to date information on McMahon Osborne Group events and workshops to improve your business and financial position you can follow Tim McCarthy on twitter via twitter.com/tmccarthy31