Financial Measures

Keep your eye on these financial yardsticks

 

 

Good financial management is essential to allow business owners to make proper decisions through the year as business conditions change. Periodic quarterly or annual reviews are not adequate.

Performance should be reviewed monthly against goals established for the year.

Key indicators to review include:

·       Revenue Growth: are sales increasing year over year and meeting targets?

·       Profitability: is the business making adequate profit compared to goals. Are profit margins improving?

·       Liquidity: are short term obligations covered?

·       Cash Flow: are you generating sufficient cash to operate? Is bank financing required to help fund growth?

 

Sometimes businesses can measure their performance against competition within the industry. That may help highlight areas where improvement may be needed.

These were just a few considerations. Please let me hear your thoughts.

Gerry@polarisgroupmc.com

 

Stress Management Tips

Almost by definition as a small business owner you face a variety of tasks daily that pull you in many directions simultaneously. At times it seems you may buckle under the pressure of impossible demands but this good news is these anxiety attacks are temporary.

Here are a few things you might do to keep stress down:

1.     Think Positive. Often stress starts with negative thoughts. Thinking positive weeds out the bad thoughts. That doesn’t mean wearing rose coloured glasses and ignoring issues it just means dealing with problems and emphasizing the positive.

2.     Let it go. Many things are beyond our control. Accept whatever your limitations are and don’t worry about factors over which you have no control.

3.     Stay Fit. Learn to relax, stretch and find some quiet time to ward off anxiety. Find the time to exercise regularly; being in shape helps deflect stress. A well balanced diet also improves fitness levels. Finally, get enough sleep to allow the body to restore itself. Deadlines may be more flexible than you think.

4.     Say no. As owner you become a jack of all trades and get stuck doing it all. Sometimes the hat just doesn’t fit so you have to say no and get someone with the appropriate skillset to do the task.

5.     Manage your time. Find a method that works well for you. Tools are available on line to manage daily workflow. Strengthen your skills for delegating, communicating and using the team.

 

Those are some of my thoughts for keeping the fun in the job and reducing stress. Let me know what you think.

gerry@polarisgroupmc.com

 

Business Planning

Benefits of a Business Plan

This is a continuation of last week’s discussion and provides insight into some of the benefits derived from developing a business plan.

 

·       A business plan can be used to set targets for new alliances and selected portions of the plan may be shared with key partners.

·       A plan is a useful document to share with professionals that support your business. Sharing your plan with your lawyer, accountant and others may allow them to provide stronger support because they better understand the business through the plan.

·       Planning to sell? A plan helps buyers understand the business, what it is, what it’s worth and why they want to buy.

·       Valuation. A plan facilitates valuation of the business for formal transactions such as divorce, inheritance, estate planning and tax issues.

·       A business plan is needed when starting a new business or if you are looking to create a new business or expand your existing business.

·       Exit Strategy. Finally, if you are planning to exit the business to retire or to change business interest a plan is a vital element for success.

 

As part of my role in the business community I have shared many ideas with owners and facilitating business plan development has been one of those functions for which business owners have contacted me.

 

Business Planning

Why do I need a Business Plan?

 

 

 

 

A business plan is an essential ingredient to executing your business strategy.

Benefits include:

·       It provides owners with a current assessment of the business and a roadmap for the future.

·       It is necessary to secure financing for growth.

·       It is a process that requires you to think through every part of your business and may prevent serious mistakes.

·       It allows owners to oversee the business and measure performance against goals.

Own it

For a business plan to be effective those who have to implement it should own it. Good management requires setting objectives and managers must participate in goal setting. The strategic planning process can be an exciting way to engage key managers and contribute to strong team building and thus ownership of the plan.

Share the Process

It is critical for owners to share their ambitions and goals with managers. Business objectives should be explained with the management team, employees and new hires. Parts of the plan can be shared with new employees as part of introduction and training in the business.

The next blog will provide additional insights into the benefits derived from having a business plan.

Keys to Success

Keys to Business Success

 

 

 

Too many business owners focus solely on their profit-and-loss statements. "It's critical to focus more on the business assets, what's going to allow you to expand your reach and grow your company?" You should find ways to grow your client base, new employees, systems, and partnerships. Planning and execution is what will grow your client base, thus your company.

Mission Statement: Most businesses either don't have a mission statement or it so general that it has no meaning. Think about what you're trying to achieve and include that big vision in your mission statement.

SWOT Analysis: a comprehensive SWOT analysis (assessing company strengths, weaknesses, market opportunities and market threats) is critical to assess your opportunities, generate ideas and create a focused approach.

Marketing Strategies: Take a good look at your current marketing strategies. Spread out your marketing dollars and try new channels; by the end of the year you will have another valuable business asset: proven knowledge of which marketing tactics work and those that don't.

Company Goals" Set goals for a five-year target point. What income level do you plan on achieving in that time? Will you sell the company, remain at the helm, or go public? Plot your course, and then break down your goals and strategies into a one-year plan. Which opportunities are best to execute this year in order to achieve your five year goals?

Competitive Analysis: It is important to be prepared for the inevitable—competitive challenges. Take a good look at your competition and define what steps they could take that would really frighten you and ask yourself if you could deal with it or if your business would be massively hampered. The next step is to determine what you could do under your current circumstances to pre-empt the worst case scenario.

If your competition acquires another company as a part of their growth strategy, for instance, what can you do now to control the impact of such a move?

Define your team: "Even solopreneurs should have a team. Don't try to do it all on your own. Consider your virtual assistants and other outside contractors, or employees if you need to have them. Where do you want to be one year from now? What skills will you have to acquire? Who do need to grow your company? How can you get those resources in place?

Operations Plan: Finally, consider the importance of an operations plan. Looking at your five-year plan and what you want to accomplish, define your marketing strategies, any additional services or products to offer, and all of your key initiatives for the year. You may need chart so that you have a visual for each project.

 

Those are some thoughts on keys to Business Success. What do you think?

 

 

Key Growth Strategies

Key Growth Strategies

 

Turning a small business into a big one is never easy. The statistics are grim. In other words, most businesses start small and stay there.

But if that's not good enough for you—or if you recognize that staying small doesn't necessarily guarantee your business's survival what follows are some options that can help you create a growth strategy of your own.

v Internal Growth

·       Market Penetration. This is the least risky option of selling more products to current customers. Find new ways for customers to use your products.

·       Market Development. Develop ways to sell product to an adjacent market by expanding to another city or province.

·       New Distribution Channel. You may expand by offering product on line.

·       Product Development. The classic growth strategy offers new products to existing and new customers.

v Integration

·       Horizontal. This strategy would involve buying a competitor. This not only adds to growth of your business but eliminates a competitor.

·       Backward. This involves buying a supplier and in addition to growth provides increased control of the supply chain.

·       Forward. If appropriate you could buy a component of your supply or distribution chain. This provides increased overall margin through profits at each level of product sales.

v Diversification

·       This involves growing the company by buying another company in a sector unrelated to your business. This can be risky and certainly requires an understanding of the new market place.

 

Growth strategies are never pursued in a vacuum, and a company needs to be willing to change course in response to feedback from the market. Too often, companies take a year to develop a strategy and, by the time they're ready to implement it, the market has changed on them.

The marketplace generally rewards those with agility, decisiveness and ability to capitalize when opportunities are presented.

 

 

 

Business Management

 Why not Hire the Best?

 

 

In many businesses the most important asset is the employees going through the doors every day. These individuals impact your business in many ways with their actions and decisions. As leader the owner controls one of the most important decisions for the organization and the hiring process can be critical to the overall success achieved.

Here are a few pointers to consider when hiring:

Ø  Develop a precise plan

Identify the key skills a candidate must have to succeed. Also define the important attitudes that enable the candidate to excel at the job. Stick to the plan.

Ø  Be diligent in selecting a candidate

A thorough interview process is important in choosing top candidates. This is particularly important with senior management positions. Take the time to test for qualifications; a vague, wandering conversation of informal questioning will at best be a hit and miss approach. Results will be equally inconsistent.

Ø  Share the Process

To improve results, involve others to gain a different perspective. Choose peers that the candidate would work with and perhaps even involve key customers if you enjoy their confidence. These contacts will bring additional insights into the personality and style of the candidate and add a point of view of the person’s ability to integrate into the organization.

 

 

The more perspectives you bring to the process the greater the chance of success in hiring great people in the organization.