If you know where you're going...
Have you considered your finances?
And what you'll need to get there?
With the Sales & Marketing loop in our Business Jet Engine improved, you should have more customers coming through the business, having a great experience and recommending you. At this point, many business owners find they're working really hard to service their new clients - but with no additional money in the bank.
The next part of our story looks at the fuel in your engine, which we liken to the cash in your business. Without which, you simply can't operate.
Too many business owners assume that if they work hard, they’ll make money. After all the effort so far, you’d hope this would be true. Unfortunately, even a business running at full capacity, with a high turnover, doesn't mean it's making profit and could fail without a proper financial plan.
Imagine a pilot flying London to New York; one of the very first questions they would be asking is, "Do I have enough fuel to get where I’m planning to go?"
Without proper consideration of the fuel requirements, this flight would clearly be foolhardy. Yet so many business owners are flying around without a financial plan to take them where they're hoping to go. Resulting in working hard but making no money.
You cannot run a business without a financial plan.
These statistics from Jessie Hagen of U.S. Bank, as stated on www.score.org, prove the point.
How small businesses fail:
- 82% – Poor cash flow management skills/poor understanding of cash flow
- 79% – Starting out with too little money
- 78% – Lack of well-developed business plan, including insufficient research on the business before starting it
- 77% – Not pricing properly or failure to include all necessary items when setting prices
- 73% – Being overly optimistic about achievable sales, money required, and about what needs to be done to be successful
Regardless of your size, you need a plan and reports to improve your financial performance. Some of this you may do yourself, some you may outsource. Either way, you need to ensure that sufficient funds are available at every stage in order to meet your financial obligations and ambitions.
Over the next 4 months we will be taking you through the 4 key elements required for thinking through the fuel of your business - finances.
Do you have a financial plan - however simple?
Do you produce timely reports to measure progress?
Do you analyse your results?
Do you adapt your plans to improve financial performance?
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