Business owners seldom allocate time to work on the business. A little time invested in this direction will pay big dividends down the track.
Business transformation
In the new financial year business owners need to consider whether they are still selling the right products/services (in demand) from the right place (where the demand is) and at the right price (profitable)?
This business paradigm is about quality of our thought and spending time exploring possibilities for profit improvement, cash flow improvement and business sustainability and/or growth, as well as planning for business exit.
Explore opportunities, understand your strengths and be mindful of risks and weaknesses. Get your business model right!
• Know your market positioning.
• Know your customers.
• Understand why people should come to you or buy from you.
• Know how to be competitive and remain competitive.
• Ascertain profitable and sustainable growth strategy.
By exploring opportunities and being creative in your business solutions, business owners are able to transform/improve their business exponentially and most importantly being a sustainable business of “today” and “tomorrow” and not a business of yesterday”.
A mere two to three per cent growth is only at par with inflation and worst still if it has a negative impact on your cash flow you might eventually, just like a Titanic hit an iceberg and sink.
Show me the money
A clear growth strategy is only useful once you can quantify the strategy into a budget showing the immediate 12-month likely results in term of revenues, margins, overheads and, very importantly, profits and cash flow as well as three years projection of the same.
As a business owner it is only worthwhile to pursue the established growth strategy if it will earn you profits with manageable cash flow and an increase in business value.
Budget is critical as a tool to manage your business, comparing actual versus budget and understanding why they differ, and, most importantly, to formulate corrective actions that improve the business.
Effective management systems
One of the key ingredients to business transformation/improvement is to invest in systems to free yourself and make life easier for staff as well as yourself to manage and run a business.
Getting the knowledge out of your head and into a secure and easily accessible format that management and staff can understand and follow is a great step forward.
You need to identify what the most critical actions in your business are, who is responsible for them and how they should be done. By sharing this information with others you can do less of them yourself and still produce the desired results with consistency.
Management and staff need to be trained and monitored in these actions, and a little time invested in this direction will pay big dividends down the track.
Another benefit of having systems in place is added value to your business. If you wish to one day sell your business and retire, having systems is much more attractive to a buyer than a business that runs from inside the owners’ head.
Business exit
A desirable business exit might differ for different business owners, depending to their aspirations, requirements, industry and market condition.
Therefore, it is a good practise to plan ahead and formulate a business exit strategy and implement the required actions, which might take two to three years to deliver the desired outcomes.
Some of the most common challenges include improving the business profit and cash flow to realise a better exit price, systemise the business to be saleable, as well as find the right avenues to exit the business, which might include management/staff buyout.
Business transformation/improvement/exit ready does not need to be overly difficult if you gain the assistance of an experienced expert.
If you would like to learn contact Eric at erict@cadpartners.biz .Eric Tjoeng is the joint CEO and senior practising partner at CAD Partners CFO On-Call (www.cfooncall.com.au).
