Working with various different business owners we often hear them say that the business is not earning enough and the owners are putting the hours in without the business earning the desired profits. Often the problem is that the business owner is too busy working in the business to stand back and work on the business.
As a business owner, to achieve your desired profits you need to understand the costs involved in running your business. Keeping monthly management figures can help you do this as well as helping to budget for future periods. Comparing costs to previous periods can help to keep track of expenditure and highlight where costs are increasing….. is there scope to reduce or cut costs?
Once you understand the costs that your business incurs you now need to set sales targets. These need to be at a level to cover costs as well as generating the profit required. The targets will need to be SMART (Specific, Measurable, Awesome, Realistic and Timed) to motivate you to achieve them. After setting a sales target you may need to re-evaluate where you target your products or services. Would you benefit from attracting a different type of client? Do you need to increase the costs of your hourly rate or unit rate? Who are your most profitable clients and could you target similar clients in other businesses or industries? All of these decisions need careful consideration as they will have other implications and may need you to change the way in which you work.
It is all about making smarter business decisions to improve the profitability of the company. If you don’t want any nasty surprises from the tax man, it is always worthwhile keeping money aside for your tax bill, especially for growing businesses.
At Green and co we offer a service to help clients understand their business finances and help them set targets to achieve their goals. We offer a service that provides clients with quarterly meetings to look at their figures to date and advise them on achieving targets.