Every New Year, many business owners take the time to sit down and undertake a Business Review, to make sure that they’ll be able to keep their company on the right track. Also, to check that the business has the necessary tools and understands the necessary activities to ensure its goals will be met.
We at Bubble Towers recognise this need and mirror this ourselves, so I thought it worthwhile to impart a little advice that I’ve gleaned over the last few years of undertaking our annual Business Review. The advice will focus on 3 basic areas:
• Sales
• Marketing
• Financial
Sales
Every Business Review should focus firstly on customers, not only to ensure they are happy with the product or service you are delivering, but also to ensure that all your customers are commercially viable to the business and paying a profitable rate.
The beginning of the year is as good a time as any to review your customers. The Business Review can help you make plans to tweak (or maybe even drop) the least profitable ones and ensure your marketing activity focuses on the more desirable / profitable.
Here are some questions to consider :
• Are your customers the most profitable
• Can you cross sell products
• Can you up sell products
• Are there time wasters that you need to cull?
• What is your conversion rates from enquiry to close? Can these be improved
• Is additional training required?
• Can you improve your profit margins?
Marketing
Every business owner should review their marketing activity to make sure their business goals are being met and to see if there is anything different that can be done. Here are some questions to consider:
• What are your goals for the coming year?
• Who is your ideal customer?
• What kind of buyers are they?
• What do they buy and when?
• Why do they buy from you?
• Is your pricing correct? Is it competitive?
• What activities do you do that reach out to your customers?
• How will you achieve your goals?
• How are you measuring the results?
Remember – the best direct marketing activities are those which deliver the right message to the right person at the right time.
Whilst we review our activity on an ongoing basis throughout the year, I find that it’s worth reviewing your whole last year’s activity as this can help you to see where it went right (and vice versa) such that you can mirror or tweak this year’s activities so that you maximise your return on investment.
• Is your current activity delivering a good return on investment?
• Are the sales meeting your goals?
• What new activities can you be doing?
• What budgets do you have / need to allocate?
Financial
There are many areas that can be reviewed when looking at finances and it’s your responsibility to do this. Don’t fall into the trap of thinking that your accountant knows all about your business. It’s you that knows your business inside out, not the accountant. So it’s often a good thing to check on some specific areas of your finances. That way, nothing will come out of the blue. Here are a few areas within Financial for consideration when undertaking your Business Review:
Expenses
Keeping track of expenses is without a doubt the best way to ensure that a company’s finances stay under control. Expenses affect the bottom line, so a review of all the expenses are a good way of ensuring that money isn’t wasted and is allocated correctly. Here are a few things to consider:
• Does the business have the requirement for this expense?
• Are there other existing suppliers? If so, how do costs and time scales compare?
• Does the company have the cash in hand or will the money need to come from future cash flow?
Suppliers
Every business owner should periodically review their suppliers to make certain that they are giving the service at the competitive rates. Here are some questions to consider:
• Are current suppliers competitive?
• Are current suppliers providing a good service?
• Do they provide Service Level Agreements and are they being met?
• Are they able to adapt to meet your business needs?
• Has your usage changed over the last year (i.e. if you take more supplies, can you negotiate a better rate?)
And what about potential new or alternative suppliers? Do you have a contingency plan, just in case your normal supplier can’t deliver? It may be worth considering new areas of possibilities within your Business Review:
• Are there any other suppliers who may be able to meet your requirements?
• Could you obtain a quote or even test them with a small order?
• Can they provide additional products / services that allow you to expand your own offering?
Trying out a new supplier may also provide you with a bargaining tool when dealing with your existing supplier. Loyalty is unfortunately an old fashioned concept in the world of business.
By asking these questions, you will be able to assess whether or not you are getting good deals from your suppliers. Getting the best deals enable the business to keep its costs low, which improves the bottom line.
Equipment
A lot of companies depend on equipment to operate i.e. Computers, phones, machinery etc. However, many business owners get so caught up in the day-to-day running of the business that they sometimes forget to check the equipment or only replace items when they break.
The New Year Business Review is a good time to evaluate the company’s needs and to see if any investment is likely to be needed at any point during the year. Identifying the business’s equipment needs early on in the year can help you plan the business’s cash flow.
Here are some questions to consider:
• Does the business have the equipment necessary to succeed for the coming year?
• Will the existing equipment last another year or will new equipment be needed? If so, what will be the cost and when will the equipment be needed?
• Does the company have the cash in hand or will the money need to come from future cash flow?
Whilst this list is far from exhaustive, there’s a lot to take in here, particularly this early into the year. However, it’s all good advice and whether you take it all on board or only some, I hope you find it useful.
