2017 in review: 5 questions to ask of your business6 Jan 2018
Businesses are more likely to plan the future than evaluate the past. But how can you fix something when you don't know it's broken? Or how will you celebrate achievements when you don't realise how significant they are to the big picture?
If you do not conduct a year-end review of your business, it's likely you'll begin the new year with the same troubled systems, processes, and problems. Even if you’ve just had a great year, it’s fair to assume every business wants to continue to it’s success. Understanding your success and failure is the key to consistent growth.
By establishing what did and did not work for you in 2017, you'll create a more powerful plan to support your growth in 2018. That’s where our business consultants in London can help you!
At Accounts and Legal, we specialise in helping businesses analyse their performance beyond the figures printed on the annual accounts. In doing so, we help can help the business plan for the future, and give them the perfect platform to achieve success.
Were you profitable?
The overall goal of any business is to make money, so it’s best to start with the biggest target on your business plan and break it down from there. Did your business turn a profit?
This will start with analysing your sales, and depending on the nature of your business, the profitability of individual products and services.
If you’re a business who offer five services, but only two of them are profitable, you must assess if it’s worth cutting off the three unprofitable services and instead hedge your resources in the services which work.
Alternatively, look for ways to cut costs. Look for ways to increase profits. Look for areas where you are leaving money on the table. Go into the new year with a commitment to being profitable.
Ideally, we should all be looking at our profit and loss statements monthly. And in addition, it's recommended you schedule an additional year-end financial review where you really comb through your statements.
Cash is king
The most common cause of small business fatality is poor cashflow management. No business ever sank due to a lack of profitability, but many have faltered from a lack of cash. Did you have the right approach to cashflow management this year?
Most businesses start with a small amount of cash from the proprietor. As they build up the business, they leave sufficient funds in the business to cover the bills.
Problems often start when they offer credit to customers, buy on credit themselves, or take on an employee or a sub-contractor who requires regular payment. Suddenly cash flow – payment from customers and payment of supplies bought on credit – becomes an issue.
It’s at this point that your business must get a grip and establish some good cashflow habits.
Start by making sure the business accurately and regularly writes up the accounting records. We recommend using online accounting software as it makes the management of your cashflow extremely efficient and accessible throughout the year.
The essential point is that the accounting records allow the business to instantly find out what monies are owed from customers and the amounts unpaid to suppliers.
Did your system provide the basis for preparing a cash flow forecast? You should be able to start with what is already owed or owing and known commitments such as payroll, rent and leasing or hire purchase payments.
You then build in predictions of receipts and payments from future sales and purchases over the forecast period.
Cash flow forecasts should be a key tool in the management toolkit. Cash flow forecasts can highlight when the business might run low on cash and can be the basis for an action plan to remedy the situation before it happens.
Improve yours ahead of 2018 and prepare to reap the rewards.
How did your business model perform?
Your business model is not something we would recommend changing all together without serious consideration. However, adjustments can be critical to your success, both in the short and long-term.
For example, you might be a personal trainer who wants to diversify into a product-driven sales stream, so you add a line of healthy teas to your service offering in a bid to boost sales and business performance. An existing service model will now add on a product sales model.
Alternatively, perhaps you’ve been a volume business and want to shift into more of a boutique model working with fewer high clients, focusing more on the high-end part of your target market.
Adjustments to the business model are healthy. This is one of the areas that you can really craft the experience you have while running the company and channel last year’s lessons into next year’s successes.
Just be forewarned, any changes or shifts to the business model are a big deal and it should be overseen by professional business consultants.
Importance of good HR
Now that you have a clearer picture of “what” needs to change, you can shift into looking at “who” needs to change.
Business owners love innovation. Employees tend to love consistency. As a business grows, sometimes the owners vision outgrows the ability or desire of the team member.
You may have someone who has been on your team forever, and while they were a fantastic fit three years ago, they may be holding back your ability to grow because they fight against change.
Check in with your team members and make sure you communicate the direction of the company in the new year. Either get them on board with your vision, or replace them with someone that can support the goals.
Another question you should ask is are your employees generating enough revenue? Many employers will go through their business lives without ever knowing how much their employees should be generating in terms of revenue, and more importantly, if they are generating any at all!
We’ve recently bolstered our services to ensure you have the best HR advice available, thanks to our new HR Specialist. Get in touch before January 1st and 20% off your HR fee.
Today, customers are not only listening, they are also talking back and amongst themselves.
It is therefore important for companies to not only hear what the customers are telling them, but listen to what customers are saying about the company not just to their friends, family but to the whole world.
Instead of focusing on a few 'touch points' during the marketing and sales process, companies must utilise these new communication channels to form meaningful, ongoing relationships.
Customer engagement is no longer a series of one-off experiences - it is an ongoing dialogue. And it can happen anywhere, anytime, because we are living in an 'always-on' world.
The relationship between the company and its customers is now more equal, and companies should formulate their communications to reflect this.
Adapting to the new reality is not easy - companies must unlearn many old ideas and relearn new ones. But it is worth your while to do this-customers who engage with a brand online report spending 20% to 40% more on that brand, or on that company's products.
Did you know:
- 25 percent rank customer interaction as their top priority
- 54 percent rate it as a top-five initiative
- 70 percent expect that investments in customer interaction technology will grow over the next 12 months
So, are you interacting with your clients in the most productive way?
Want to get ahead of the curve going into the New Year? Get in touch with one of our business consultants or try our interactive Instant Quote tool and one of our team will be in touch with you shortly.