It feels like Christmas was only yesterday, but with April and Easter almost upon us it is a startling reminder as to how quickly 2014 is progressing. The magical date of 1 July will be here before we know it, and to ensure you stay ahead of the competition it is vital that you start the new financial year off with a planned budget strategy.
For many small and medium-sized businesses the mere thought of strategy planning and budgeting is overwhelming – but that is no excuse not to do it! We’ve included an number of key tips to help you with your budget and to alleviate the pain, and as you consider these points you will see that your business would actually be more overwhelming come 1 July if you hadn’t developed a sound strategy.
Review and analyse the numbers
Don’t ever plan blindly – numbers may not be the most exciting part of a business (unless you are an accountant!), but they should form the basis for your strategy planning and ongoing business development. We’ve all heard the saying ‘there’s no use flogging a dead horse’ – the same is true in business. You could be spending a small fortune of a part of your business that is driving little, if any, income.
Spend some time looking at how you have tracked over both your current and previous financial year. Without knowing the numbers and working to a budget strategy, you may continue to invest – and continue to lose.
Plan where you want to go
You know the numbers.
You know your top products.
You know your top clients.
You know where you are bleeding, and you know where you are firing.
Now, you need to work out where you want to go over the next 12 months, and how you want to get there. Again, it can come down to the numbers.
Do you want to double your profit margins? If so, the numbers should give you an indication of growth areas and potential areas of cost saving.
Do you want to increase your product range? The numbers should give you an indication of those product areas that are in demand.
Do you want to expand? The numbers should tell you where your clients see the greatest value in your business.
Plan how you want to get there
Often our love for business means that many business owners take a scattergun approach to business development. Rather than strategically develop a plan based on budgetary evidence, they react to the latest trend, or run a marketing campaign because their competitor is doing it rather than because it is good businesses planning.
Don’t pull ideas out of your head – look at what the numbers are telling you.
- Where does your greatest source of income come from? Many business owners aren’t aware of their top 10 clients or their top ten products, but knowing this is vital! Investing in an area of your business to develop that is producing less than optimum sales can form part of a plan to further develop that product or service, but it needs to be done with the right strategy in mind.
- How much (as a percentage) of your marketing budget goes towards selling your best-performing product or service? Without any idea of the main products or services that entice clients to buy from you (and that deliver the greatest financial return), your marketing budget may not deliver you with a sound return. Spending 75% of your marketing budget on an area of your business that is delivering you 10% of sales doesn’t equate. Once you know your key performers, support them!
- Have you targeted the right audience to maximise your sales? Many business owners agree to take out a newspaper advertisement when their local representative calls, or are happy to invest in the Yellow Pages print edition, but unless they know their target audience, then this could be money badly spent. If you are targeting local and international 18-35 year olds for a tourism business, would the Yellow Pages or local newspaper provide you with the leads you are after?
Don’t lose valuable income (and sleep!) from second-guessing.
Review the numbers, know where you are going and how you want to get there, and plan strategically.
And do it now – before the new financial year – to ensure you have a sound business strategy and budget, and kick off 1 July with a bang!