I’m back from the beach, and raring to getting writing my blog again! Over the summer, I read scores of stories about (mainly female) entrepreneurs who’ve started their business from the kitchen table, and overcome the challenges we all face, to set up successful businesses on their terms.
I read these stories because in October, I’m launching a podcast show, in which I’ll be interviewing business friends. But I also wanted to uncover new stories of how budding entrepreneurs have turned their pipe dream into a thriving start-up and going concern. My hope is that by sharing these stories, this will inspire you during those moments of doubt when we wonder ‘will it happen?’ and help you believe in your ability to ‘make it happen.’
One of the questions I am frequently asked is ‘how do I know whether or not I can afford to hire a new employee?’ In the early days of running a business, taking on a new employee can feel like a really big step, especially when cash flow is tight.
But being short-staffed does more than just increase the workload and stress for you and your team. It can limit your business growth potential as you are forced to turn away business opportunities because you physically cannot take on more work. It can also eat into your profits if you and your too-busy employees make costly mistakes, cut corners to keep up with their workloads and skimp on customer service.
Every entrepreneur goes through periods when business is slow, especially in the early days. Perhaps you’re a start-up struggling to get those first crucial sales. Or your marketing plan does not include enough of the right activities to guarantee a consistent sales pipeline. Or there’s an economic downturn. Or your business is subject to seasonal variations. Or maybe you’ve been so caught up looking after customers that you’ve neglected your regular marketing activities.
The danger when business is slow is that we get down-hearted, and our anxiety levels rise. Our body’s stress reactions start to kick in triggering either a fight or flight response. A flight response can trigger a downward spiral – partly triggered by our body’s own physiology – where we start to lose confidence and give up hope. This is the time when it’s most important for us to be focused and take consistent action.
This is the last in this series of articles about how to prepare your business budget for 2017 that began with Understanding Business Growth Strategy. Your business budget is one of your most important financial statements, and should be prepared with care. If planned well, it will enable you to both forecast and monitor the financial impact of your business decisions and operational plans.
I remember the first time I sat down to prepare a business budget as a new CEO. The quality of the financial information I inherited was poor, and didn’t contain the level of detail I needed to understand the true costs of running our services. I crossed my fingers and hoped what I’d put together was good enough. It wasn’t brilliant, but my first business budget provided me with a good enough roadmap. The next year when I came to put together my second business budget, the task was made much easier because I had 12 month’s of accurate historical data to work with.
In this fifth in a series of articles about how to put together your business plan for 2017, we’re going to pause and focus on 5 strategies that will help you to get to your breakeven point quicker. As I explained in my last article, Why Hitting Breakeven Point Is Critical To Business Success, businesses are in a race against time. If we don’t hit breakeven point as quickly as possible, our expenses will sink our business before we’ve made enough net revenue to catch up.
I’m currently working with three businesses in turnaround, one of which came to me recently on life support. Every month expenses far exceed net revenue to the point that the owner hit a cash flow crunch. The only way this business will survive is if it keeps expenses as low as possible, for as long as possible, whilst dramatically making itself more profitable. Fast. In this instance, we’ve been able to reduce the losses by 50% by taking immediate, targeted action. And as sales are picking up, this trend will continue. This business is in no way out of the woods. But we’ve started to stem the tide.
This is the fourth in a series of articles about how to put together your business and financial plan for 2017 which started with Understanding Business Growth Strategy. In this article, I’m going to focus on a key point in the life of a small business that most entrepreneurs neglect. The breakeven or ‘sleep easy at night’ point.
Breakeven point is your first key marker on the road to profitability and financial success. Achieving this means that your business is self-sufficient, a major feat for most small businesses. But too many businesses fail to reach breakeven point, and then have to shut up shop.