As the year comes to an end many small-businesses owners are counting down the days until they can shut up shop and take a well-earned break over the festive season. However, while you take time to enjoy good food, Aussie beach holidays, the company of family and friends, spending time reflecting on the past 12 months and planning for a successful 2019 will pay dividends.
Often, we are so busy working in our business servicing clients and customers that we don’t set aside time to actually work on our business. However, creating a successful business for the long-term takes a lot of careful strategy and planning which owners often overlook.
Figures show around 45 per cent of small businesses fail within the first five years of operation and sadly we’ve seen our share of some great Australian businesses close this year. So, here are my five tips for ensuring your business will be off to a solid start 2019.
1. Set future goals
As business owners, we need to consider where we want to be in the next six months, 12 months, three, five and even 10 years then put systems and processes in place to achieve our goals. Don’t be afraid to honestly look if you are on track with your goals and take the time to work on and not just in your business.
2. Improve your systems and processes
Ensure your business is operating like a well-oiled machine with great efficiency to save time and money. Systems and processes are essential building blocks of our business. Every aspect of your business is part of a system that can be improved. Get help implementing projects to improve efficiencies and streamline processes.
3. Know your figures
You don’t need to have a degree in accounting but having some financial literacy is essential for any business owner. You need the ability to understand how money works in your business. How do you make and spend funds to grow your business and become profitable? Become familiar with important financial terminology in business. Can you explain the difference for example between gross and net profit? Do you understand the relationship between a Profit & Loss (P&L) and balance sheet? Not understanding your true financial position can lead to poor decisions. Ensure your business stay in the black (as opposed to the red) and become financially literate.
4. Be aware of cashflow
Even the most profitable of businesses can get into difficulty by mismanaging cashflow. You need sufficient funds to pay staff, suppliers, tax and running costs. If clients don’t pay invoices on time or if there is a lag between supplying a product or service and payment or business is slow money will become a problem. Ensure you are aware and track your cashflow to prevent not being able to pay the essential operating costs.
5. Have a plan for sustainable growth
Once your business starts going well, naturally you may want to expand and grow. However, before going out and renting new offices or hiring more staff ensure you have a plan to manage growth long-term. Many businesses have found themselves in financial turmoil by growing too quickly, relying for example on a big client only to lose that client and associated revenue.
Being a business owner is hard so make sure you’re surrounded by a team of professionals to nurture you through the good times along with the rough patches. As the old saying goes, “It takes a village to raise a child” – the same adage can be applied to a business. May 2019 be a happy year for you and your business.
Tracy Simpson, Managing Director, WD Nicholls