Entrepreneur tips for small business owners.
Confidence among Australian small businesses slumped in 2014, according to CPA Australia’s annual Asia-Pacific Small Business Survey
Nevertheless, for small business owners the start of the year is a great time to take stock.
Below are 11 resolutions to help jump-start a successful 2015.
Revisit your strategic plan and adjust if necessary
Use the start of the year to reflect on the lessons learned from your business in the previous year and to identify opportunities and challenges.
The lessons, both negative and positive, should be incorporated into your strategic plan and business processes. You should also include any steps to take advantage of new opportunities and to address challenges.
Do a financial health-check of your business
The start of the year is a good time to check on the financial health of your business. Reviewing your most recent financial statements will help you identify key areas of weakness or potential threats.
Using financial ratios such as liquidity ratios, solvency ratios, profitability ratios and return on investment ratios, and comparing these with prior year figures and similar businesses in your industry, will ensure that you can focus on the areas most in need of business improvement.
Review your budget
One of the most important aspects to a budget is regular monitoring against actual results. It is therefore wise to allocate time to review actual versus budgeted figures to ensure that your strategic objectives are being met and make adjustments if necessary.
Revisit your marketing plan
While it may seem obvious, it is important to have your marketing plan focused on achieving key objectives, particularly improving cash flow.
Marketing ideas to improve cash position include:
- Focus promotional activity on sales that have a high margin and bring in cash quickly
- Reward staff for sales of products with a higher margin
- Only pay staff commissions when payment is received
- Focus on encouraging customers to pay at the point of purchase or to pay as early as possible.
Consider entering new markets
The Asia-Pacific Small Business Survey revealed that only 18 per cent of Australian small businesses entered new markets in 2014. Given that only 34 per cent of Australian small businesses reported growing last year, it is surprising that more businesses aren’t seeking growth in other markets.
Consider setting aside some time to research potential new markets. Think about what it would take to enter those markets and how ready your business is for such expansion.
Review your risk management strategies
Re-evaluate risks and how you are managing or not managing them.
Important risks to be aware of include:
- Relying too heavily on a small number of major customers. Reduce the risk by increasing the number of customers and helping smaller ones to grow.
- Relying too heavily on one supplier. Identify potential alternative suppliers.
- Selling on credit. Undertake credit checks on potential customers, limiting the amount of available credit, follow up on payment before the due date and stop supplying late-paying customers.
- Fraud. Manage through internal controls in high-risk areas such as cash handling, and make sure those internal controls are enforced and breaches acted upon promptly.
Review or write up your policy manual
The start of the year may give you time to review your existing policies or write them up. A well thought-out policy manual will assist in running the business and can add value should you wish to sell.
Consult your staff to make sure new policies are workable and therefore more likely to be followed.
Consider using social media in your business
The Asia-Pacific Small Business Survey showed that 54 per cent of Australian small businesses do not use social media. Given its increasing importance in the lives of customers, take time to reflect on how best to use it in your business.
Social media should be seen as an important tool to promote your business, communicate with customers, learn about customer behaviours and receive and monitor customer feedback.
Consider making more of your sales online
The survey also showed that 65 per cent of Australian small businesses do not make any sales online. Investing in a web presence that allows customers to purchase products and services is increasingly important to business success.
Take advantage of opportunities
Don’t turn a blind eye to new opportunities that are consistent with your strategic direction and can be properly funded.
The start of the year may be your slow period or your busiest period – either way, it is important to have some fun.
For further tips on improving how you run your business, have a look at CPA Australia’s Good Practice Checklist for Small Business.