We are always looking for quality talent in our business, so we make it a point to regularly track talent in our region and develop great programs and benefits for retaining talent. You need to have a strategy for recruiting and retaining talent. Had they gotten rid of those product lines, they would have only made about $13 million in revenue, but over $1 million in actual profits. It turns out when they dug into the business they had multiple product lines that were dragging down the profits due to terrible margins. In a $20 million business they were only making about $110,000 in profits. The owners were shocked and dismayed to realize how little the business was actually worth-because their profit margins were so dismally small. It was a business doing $20 million in revenue per year that had been around for 20 years.
I recently talked to a small business commercial banker who was trying to help a client get their business ready to sell.
I have worked with a lot of small businesses that only understand their bottom line, and not how individual products and or services and their profit margin contribute (or take away) from the bottom line. You need to understand your margins on all your products and services. LivePlan’s Dashboard is an easy-to-use planning and financial tracking tool that we use to do Lean Planning and it integrates with a business’s QuickBooks account to make the tracking piece easy and automated.Ĥ. Maybe you thought you were going to get paid promptly every 30 days.īy engaging in ongoing planning and then tracking the actual results of your business compared to your plans you can quickly figure out if in reality you are getting paid every 45 days (instead of every 30 days), and if so, you can quickly and appropriately increase your credit line, and keep you business cash healthy-before you get into trouble. Planning is an ongoing tool that should be used to understand assumptions you have about your business, and whether those assumptions are correct, or whether you might have to make adjustments and change your assumptions.Ħ0 percent of the small businesses that fail in America fail due to lack of cash, not lack of profits-using Lean Planning you can quickly understand if you have missed assumptions about your financials that will ultimately have an adverse effect on your cash. It’s important to develop a strategic and financial plan and track it on a regular basis, as opposed to a doing a long written document that you use once and stick in a drawer. Tracking key performance indicators (KPI’s) for your business, and understanding why they go up or down, can help you make decisions that will grow you business and keep you on track. Business always requires some “gut feel” decisions but better to inform your gut as much as possible with all the information you can get. The more you can track data and use data to make business decisions, the better your decisions will be. You need to develop a data-based culture.
#Business todo series
There are a series of “levers” in your business that will affect your cash position. You need to do good cash planning, and really understand the levers in your business that can affect your cash.ĭo you depend on supplies that vary in price due to market conditions (fuel for instance)? The number one reason small businesses go bankrupt is lack of c ash, not lack of profits. If you are thinking of starting a small business, make sure you follow these ten important rules for small businesses: 1. Like any good coach has said at some point: The fundamentals get you to the top. Most of the challenges in starting a business relate back to doing the little things right.
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