Make Money in Your Business
Business is there to make money. Likewise not only is that a good thing, but it’s your primary responsibility. Money means profit.
It doesn’t make any difference whether your business is a private business, social enterprise or charity. Some headline reasons for making profits include
- No profits then you are not going to be around to make an impact
- You won’t get sufficiently rewarded
- Suppliers get let down
- Staff will leave
- There is a good chance that you have to get a paid job.
- How you make those profits, how much profit you want to make, and your value system, that’s important. However, if making profit is not in your plans then you have a hobby on your hands.
So if you want your business to make money and to take it forward, you need to ADD (Attitude, Digital, Decision Making)
First of all making money in your business is about having the right attitude. Similarly this influences how you will react and cope as your business journey unfolds. Therefore your attitude is normally thought of in terms of a fixed or growth mindset. These are minimal risk taking, collaboration and less acceptance of failure. A fixed mindset describes doing things the same way. This is often seen as detrimental to your business, but it has its place.
Hence a fixed mindset has its place and is important for things such as
- Having systems and procedures
- Due diligence
- Paying taxes on time
- Keeping an eye on the numbers
A growth mindset is about your attitude to risk, opportunities, innovation, markets, and setbacks. You need this to help you see opportunities and potential, in contrast to accept managed failure.
How do you view and run your business?
Typically, this is about
- The business disciplines you adopt
- Willingness to invest and spend money to make money
- An element of realism in terms of how long things take
- Not expecting things to be handed to you on a plate
- Recognising the need to invest time, energy and sweat to get that equity.
Knowing your numbers is vital in the managing and growing your business. Most noteworthy they tell you about levels of cash, income, costs, debt and monies owing. They also help track expenditure and income from a project.
Digital, or Cloud Accounting gives you that up-to-date financial information. Logging into the system, you are greeted by an adaptable dashboard showing you what’s important. For example, you can quickly see bank balances, money owed to you and by you, income earned by type, and key costs such as staff and supplier costs.
Digital Accounting has an in-built suite of default reports – income and expenditure against various yardsticks such as budget, previous years and at project level via a tracking option.
Cloud accounting software can greatly improve credit control, the lifeline of a business, no cash, no business.
With Cloud Accounting you can:
- Keep track of how much money is owed and when payments are due
- See what invoices are outstanding via a reports section
- Set reminders to send out at the intervals required
- Easily record financial transactions
Productivity and efficiency gains are made by automating processes and procedures. For example,
- Set up automated bank feeds
- Establish bank rules to suggest coding for these transactions.
- Reconciling transactions is so much faster
- Use your mobile phone to scan in receipts, record the data no need to keep the original receipt.
By utilising cloud accounting you can integrate with other business systems such as your website, sales and CRM systems. Open application programming interfaces (APIs) exist that are easy for developers to connect with. Therefore other solutions can be adapted to talk to the accounting systems. This enables data to flow between the two solutions.
Certainly smartphone and tablet apps give you information on the move wherever you are. Software housed in the cloud can be accessed wherever there is a connection, anytime and from pretty much any device.
Above all this involves interpreting and acting based on what your financial information tells you.
An area often neglected is being able to take control of your business numbers and implement three key ingredients of managing your business, Planning, Control and Decision Making (PCD).
A plan is essentially your future business activity expressed in numbers. Likewise control is about understanding and managing your income, costs and profitability.
One constant is that effective planning is vital to help you navigate an uncertain business landscape and reduce the risk of business failure. Planning is a continual activity; it is not the end document(s) produced such as a business plan, budget or cash flow. These documents capture in words and numbers the results of clear thinking and likely outcomes of our business journey.
One of the primary purposes of planning is to demonstrate that you have considered and have tried to understand the risks involved in your business journey. Furthermore that you have considered how you may deal with those risks.
Most importantly looking at your business performance helps you see
• How you are doing overall and in detail?
• The strengths and weaknesses of your business?
• How will the business perform in the future?
• Necessary management actions needed?
Making decisions needs a yardstick, making judgements on how you are doing. Those judgements need to be made against what you thought would happen, i.e. your plan.
For example, put together a 12-month plan. This represents what your aspirations and are, and how see the future unfolding.
Planning can be broken down into a number of steps.
Firstly, Planning has to be based on solid foundations, the start point is our mission statement, your calling card to the outside world.
Consequently, your mission statement helps generate critical success factors (CSFs). Every business has Critical Success Factors (CSFs). CSFs are the cause of your success, the areas you need to do well in.
For example, CSFs for a retailer would typically be the right product mix, product availability, effective marketing to attract customers and correct pricing.
Objectives are normally described as SMART. This means Specific, Measurable, Achievable, Realistic and Timely. For instance, Objectives could be: “Growing turnover by 10% next year”, “Break-even sales £5,000 per month”
Secondly, consider your marketing plan. If you want to upset a marketer, then tell them that marketing is just about advertising and social media. Once they recover, they will tell you that marketing is more than that.
Above all, before finalising your marketing plan, some analytical work has to be done.
Do your Market Research
You need to decide what your current and future client needs are. Identify trends, customer pain points, and potential products and services.
Monitor competitor analysis
Who are your competitors? Assess their strengths and weaknesses, and identify any potential “collaborations”.
Create your marketing plan
This will include your marketing objectives, product and service offerings, pricing strategies, promotion, time scale and what resources are needed to make it work.
Thirdly, translate your plan into what that means in financial terms. Those financial outcomes are typically expressed through three key financial statements.
The three statements measure financial performance, financial strength, and liquidity. They are the profit and loss statement; balance sheet and cash flow. When preparing these statements your need to stress test them, subject to them what-if scenarios and sensitivity analysis.
Most importantly, put the plan into practice, check and react to its progress.
This shows how your business will
- meet its objectives
- time scales involved
- who does what and any identified risks
- how you will manage those risks
Have a monitoring system in place
Milestones tell you how you are progressing on your journey. Most importantly, Key Performance Indicators (KPIs) help you monitor.
That is to say, judge how you are doing, how the plan is going. KPIs should normally be a blend of numbers (quantitative) and non-numbers (qualitative). Targets can be set for these KPIs, and progress measured against these targets. Variations against these targets prompts investigation and ultimately action taken to fix the situation.
To clarify you need to Make Money in Your Business. Firstly plug into your numbers, grab hold of those numbers, and tell your business story. Plan and monitor your business story. As a result it will make your business story become reality.
If you are serious about your business, then take it seriously! Don’t play at it, don’t expect it to happen just because you think it.
Finally- don’t forget the saying: Fail to Plan, Plan to Fail.
Contact us today to see how we can help you and your business make more money!