Small-business owners need to “eat their vegetables” by ensuring their business is set up to make a profit first and foremost. While it might sound like common sense, in my experience too many small businesses are so focused on sales in their early years, they don’t know how much those sales are costing them.
They’re so focused, in fact, they’re willing to spend almost anything to make sure those sales happen. I’ve come across so many SME owners who spend money on mostly needless expenses that might make them look successful, rather than being successful. Then at the end of the financial year, they head off to their accountant, hand over their sales and expenses and hope there’s something left over.
Part of the problem is that doing budgets and crunching the numbers isn’t exciting or glamorous, which meant many SME owners ignore it or don’t give it their full attention, preferring to focus on the sugar rush of making a sale. Just like eating your vegetables, though, making sure you give plenty of attention to your budget might take a bit of effort and discipline, but it will pay off in the long run.
The problem almost always exists at the beginning – you have an idea, you’re excited to make sales – it’s natural to think that you’ll worry about the numbers later. But that’s putting a lot down to chance. By putting profit at the centre of your budget rather than sales, you’ll set yourself up for success in any climate.
Here are some tips for anyone in the early stages of running their own business to ensure they set themselves up for success:
The other point to consider is that if you take a good hard look at your budget, you might find that your business isn’t sustainable. It may simply cost too much to deliver what you’re getting in sales. But even if that’s the case, you need to establish it as early as possible. Burying your head in the sand and hoping things improve is a recipe for disaster.
By making profit the centre of your operation, rather than sales, you can ensure your business is sustainable for the good times as well as the hard times.
Jamie Cunningham, Business Coach
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