Akia Garnett offers some valuable tips for small businesses in testing times
If your financial year parallels our annual calendar, then you made it through the first quarter or as you may formally call it, the first quarter. Perhaps you're feeling optimistic about the goals you'll accomplish this year, or are concerned about your revenue goals for the second quarter. It's best to look at where you've been to figure out a great strategy for where you are going next. Here are four things you can immediately do to make the most of the remaining three quarters of this year in your small business.
1. Stick to your budget
Not only do you need to stick to your budget, but you need to track your budget against what you actually spend each quarter. It is so important to prevent cost overruns before they occur. In fact, you should ask yourself Why three times, before making a purchase that is not in your budget. Keeping the numbers in your head is easy when you have one project, but not when you have many. Invoicing and accounts payable can easily become overwhelming. If you're seeing success then add a stretch goal to your budget. A good stretch goal to consider is five percent of your figures.
2. Track Your Business Development Time
If you're like most movers and shakers in small business, then you've spent a great deal of time this fiscal year building relationships, following up on leads, and hopefully winning business and gaining sales. Remember to add up the time you're spending on business development and use that number as a projection in your budget. Keep a daily timesheet to help you record how you're spending your time on this critical marketing activity. Over the next three quarters, think about how much work you can actually complete in addition to your business development activities.
3. Track in Black, Red…. And Grey
Not only must you review your budget for revenue and expenses, but also, you must track the actual numbers. If you're using a basic spreadsheet, include an actuals column next to your budget column so that you can record what you're really spending versus what you budgeted as the year progresses. Be sure not to overlook the obvious growing pains associated with any business such as processing errors, emergency breakdowns of equipment, etc. In the area of marketing, remember that you have to spend to create opportunities to sell. This means that there should be monthly spending activity for marketing.
Your time will often be a direct cost expense. Track your expenses closely and to think about what it takes to create and deliver specific products and services to your clients. You will also need to track your indirect costs, which support the entire business as a whole including admin, marketing and your professional services like accounting and legal support. Likewise, be sure you understand the difference between fixed and variable costs so that as you grow, you know how to budget expenses that will increase and decrease with scale.
4. Do Your Homework
If you're new to budgeting, or are jumping back into business, the first place to start is within your own network. Begin creating trusting relationships with other professionals in your industry. This will allow you to talk with them about how they budget without revealing what you might consider trade secrets. You need the right answers, and ones that are based on data to manage your business. You need to know the following:
How much your products or services cost in the competitive marketplace?
How much companies like yours pay in expenses on average to operate weekly, monthly and annually?
What is the standard timeline for delivering similar products and services?
How much each supply chain component costs in similar companies in time and money?
What is the standard profit margin?
5. Unless You're A Magician, Leave the Rabbit Tricks Alone
Moving into the second quarter of your fiscal year can be a bit scary if you didn't start off with a budget. The opportunity is now for getting your arms around your company's financial performance. You'll need to plan for revenues and expenses to better understand what opportunities to pursue this year. You'll want to know how to price them, and most importantly you'll get clear about how many opportunities you must win to turn a profit. When setting objectives, there is no magic wand to earn greater profits. Through consistent efforts you'll do three things; increase revenue, fulfill your company's mission and move closer to making a profit.
Akia T. Garnett, MBA is a speaker, columnist for Minority Business Entrepreneur Magazine and CEO of Brandbuilder. She is an adjunct professor of business, marketing and consumer behavior at Trinity University of Washington, DC, and Co-Author of Seen and Sustained: Best Practices in Communication that Increase the Visibility of Small and Diverse Businesses. Akia helps small business owners create, cast and complete vision and mission mapping exercises for their professional and personal brands. Learn more at http://www.BestPracticesforSmallBusinesses.com
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