A healthcheck for your business
11 Oct 2017
Is your business in the best possible shape? Are you making the most of the opportunities available to you? Here are five things to think about:
1. Evaluate your business plan
Your business plan (assuming you have one) should be a living plan, reviewed on a regular basis and not just written when you first started your business and then quietly put in a drawer. If you haven’t even got a plan, now’s the time to prepare one.
A business plan will help you to focus on the key priorities on your business and set out targets against progress. It’s also a good time to look at contingency planning around what will happen to your business if certain factors change (for example, if the price of vital commodities or services increase, how would this affect your business?)
A solid business plan may also help you with raising finance. Banks or business angels will want to see your business plan before they invest, or offer a loan or an extended line of credit.
2. Analyse the numbers
Review the fundamental numbers that can make or break your business. You may think this is just for the accountants, but every business owner should be able to track their important numbers.
If you don’t have any key indicators in place, now’s the time to set them - for example, how many products do you need to make and at what price do you need to sell them to cover your costs on a weekly / monthly basis?
These can include indicators such as value per customer or conversion rates on marketing activity, or mark-up per product type. They should certainly include key financial ratios such as profit margins, sales forecasts, cost of sales; you should also be reviewing your expenses to see if these can be reduced. How do your actual numbers compare to your budget?
Perhaps the main area to focus on is cashflow management. This is essential to any business and is a major reason why businesses get into difficulty, yet it’s an area that’s often neglected by business owners. Understanding the numbers that are relevant to your business gives you the chance to grow and prosper. Use technology: cloud-based accounting software such as Xero or SageOne will help you easily track revenue, expenses and bad debt. If unsure, ask your accountant for assistance.
3. Check your sales and marketing plans
Do you know how effective all areas of your marketing are? Linked to understanding your financials, most companies will have limited marketing budgets, so knowing which aspects of your sales and marketing activities are working and which aren’t will help you to prioritise and make the most of your budget.
For example, if you have a website, do you know where your customers are coming from and do you have a process to contact them? Social media can be very cost effective, so are you making the most of Facebook, Twitter and LinkedIn and tracking responses? Review your branding: if you want to be viewed in a particular way, does your branding reflect that?
Do you export? If not, is it something to consider? The favourable exchange rates for exporters may make this an opportunity that wasn’t possible before. The demand for certain UK goods and services overseas continues each year, so look at exporting as an option.
4. Plan your growth.
Don’t just say ‘we want to grow’ this year. Put a specific number down (whether it’s 10% or 70%) and work out a way of getting there, looking at new customers, new products and new promotional activity. For example, if you’re in the brewing industry, research shows that more people want to drink craft beer in restaurants; could this be an opportunity for you?
You may need investment to do this, so think about where you may raise money: banks, angels or crowdfunding. Each of these needs a specific approach so work out how much time will be needed. And don’t forget, you’ll need a business plan to show any potential investors.
5. Enjoy yourself
Remember why you set up your business and make sure you allocate some time for yourself. Running a business can be a tiring experience, so make sure it works for you across your whole lifestyle. Get support from industry bodies, professional advisors and peers to get the best advice you can to ensure your business grows the right way.
James Sleight is a Director at Geoffrey Martin & Co.
Geoffrey Martin & Co provides practical advice concerning growth, financial issues, exit and contingency planning, and insolvency to a business’s directors, owners, investors and financiers at all stages of its life cycle.
We work with companies, individuals, partnerships, and lenders across the whole of the UK, with experience in many sectors including Bars, Restaurants, Media & Marketing, and Technology.
For a free, informal chat about any aspects of your business, please call our Leeds team on 0113 244 5141