We have now almost finished the first week of the new financial year, and now is the time to consider if you have not already, what you are going to do differently in the new financial year to improve and grow your business, or whether you are happy with the direction and everything you are doing and just going to keep doing the same as you are doing now.
One thing you can be doing now, well once your previous financial year Account system is bought up to date, you are in a position now to look at the budget, and look at your actual income V expenses and work out where the differences were. Were the differences in your favor or not, e.g. were the actual expenses lower or higher than you budgeted for, and was your income higher or lower than you forecasted when doing your budget. With knowing this information you can adjust your budget now if required.
Understanding your finances and your Financial position is important.
Now your budget is done, you can now consider what your bottom line, profit margin will look like if you continue on budget for the next 12 months, and if you notice you will have a low-Profit margin if any by the end of the financial year, anything under 30% could be seen as poor performing, you can now consider your pricing structure and consider what room you have to adjust your prices. The other aspect of this part you can consider is where can you reduce your expenses, e.g. can you produce a product any cheaper than you are currently, how can you provide a service cheaper than you are currently doing.
Traditionally the larger companies when they consider reducing costs, will look at reducing Security costs- although then losing on the protection of their assets, Cleaning costs- which affect the professional look of the business premises, Stationery costs- which can affect morale of the staff or staff providing their own materials to work with, However sometimes by finding another supplier for stationery can reduce costs with the same outcomes. Some of these items may not be applicable for smaller companies/ business owners and we need to look into other areas of the business where savings can be made, e.g. reducing insurance costs, hopefully without altering the coverage applicable to the business. Marketing costs we may reduce, however, this may cost us money. Please be careful when reducing any expenses and consider how it will affect the operations of your business in the future.
Sometimes we may be already working to the lower expenses we can for the business operations, although maybe if we speak to a Mentor, Coach, or Accountant to review our expenses and Business Operations, someone may be able to see a better option than we can see within our own Business especially when we are emotionally attached to the way we do things.
Sometimes we may need to realize that we can not reduce our costs at all, and the only way we can increase our profit margin is with increasing of sales, or more clients, and we need to look at how we do this. We need to consider options, Is there a new product or service I can introduce, Is my website doing what I want it to do be doing, or should I review this or ask someone else to review my website, Should I engage my clients and survey my clients on what else they need, or how I can help them, How can I contact my previous clients and offer them a viable offer to ensure they purchase from me again. The other question is how well do I know my clients, potential clients, what do they expect from me within my product and/or service.
In summary, now is the time to review your business, your figures and everything you do and see which needs changing. Remember there is always plenty of help out there, whether you are looking for free help or happy to pay for it. Always remember to ask the right questions to ensure the paid help you are requesting is from the right qualified person in either qualifications, knowledge, experience, industry-related etc, and ensure the Mentor, coach, advisor, accountant take the time to understand your business, the way you work and what issues you are having, taking answers from Facebook groups, Google or other public areas, is not always the best thing to do, as they don’t always get to know your business and therefore their responses are always generic and may or may not help your business when you need it most.