Most small business owners are confronted by a huge array of responsibilities: sales, customer management, recruitment, admin, cash flow and more.
Sometimes it’s hard to focus on the bottom line – making money!
You know what’s in your bank and what’s coming in and going out – but is that enough?
Imagine you had an extra $500 a month? What would you do with it? Or an extra $1,000?
This actually well within the range of most small businesses – it just needs more attention!
Here are some of Beany’s suggestions for bringing more money into your business.
Set a Goal
That sounds easy, doesn’t it?
Actually, many people make the mistake of not knowing exactly where they are starting from, which makes getting anywhere difficult, so first work out exactly where you are at.
If you use Xero, here is the best report to take a look at:
Click on Reports
Select ‘Profit and Loss Report’
Boom – there’s your profit, or loss, for the current period and your year to date information.
Look at the information from the top (income) right down to the bottom looking at each account (expenses) in turn.
Don’t necessarily look at the current month as not all expenses may be in, look back at earlier months and get a feel for the pattern of your income and expenses. Are there any expense accounts that look unusual?
Click on them. This will take you through to the detailed information and you can see what is in that account.
Extra Tip: Right click to open a new tab for each account.
Spend 30 minutes on this exercise and make notes about expenses that are unexpectedly high, or you realise you can reduce.
From these notes, set yourself a target of savings or income improvement, for example,
- Increase sales by $200
- Reduce subscriptions by $100 by removing an old subscription you don’t use
- Call the bank and negotiate a better credit card/bank fees rate – saves $50
- Call a key supplier to get a better rate – $250
Set goal of improving profit by $600 per month
Once you have your goal, diarise a task a week for the next 4 weeks so you can tick off your to-do list.
You can choose more challenging goals than our example above – but be realistic about how long it takes to implement tough change.
Monitor the Difference
It is very important that you keep an eye on how your actions have changed things. This creates motivation for more change.
You can monitor the improvement in different ways so consider what will work for you.
You can diarise an hour a month to sit down with your Xero file and review each goal and see what has worked. To do this requires a certain amount of self-discipline, particularly when life gets busy.
You can ‘appoint’ an advisory board of people you trust who can hold you to account. Business Mentors NZ offer a fantastic service of virtually free business support and your mentor can form the backbone of your advisory team. You can also enlist other professionals like your accountant, someone from your industry or professional association. However, beware of advice from the un-qualified. Choosing your advisors takes some skill, and trial and error can be the only way to find the best ones for you. There might be someone better than the guy at the pub!
You can appoint an actual Board of Directors. This can seem daunting for small and medium sized business owners – but is worth considering. A fellow director has a great deal of responsibility and it can be good to share the load.
However you do it, the key thing is to do it regularly, be honest about the results and keep up a process of improvement. Once you’ve achieved some change, think of it as the start of more, rather than the end.
And finally, be smart about what you do with any extra cash in the bank. Make a plan about this as well.
- Pay down debt
- Use it to be more productive by buying new machinery, or on training for and your team
- Invest more for your future in Kiwisaver
- Treat yourself (occasionally!)
Whatever you do with the surplus, do it consciously and prepare for your future.
If you want to talk about how to do this in your business, or learn about how to work smarter with your software, contact firstname.lastname@example.org.