For small/medium business owners (this includes you, farmers!), the stress of returning to work in the New Year is usually quite overwhelming - so many emails to answer and things to do! It is no surprise that planning for a successful 2016 is far in the back of your mind. However, the most successful business I have worked with taught me one critical lesson for business profitability - "Failing to plan is planning to fail".
Put simply, PLANNING IS THE SINGLE MOST IMPORTANT THING YOU CAN DO FOR THE ONGOING SUCCESS OF YOUR BUSINESS. Furthermore, planning is something that locally owned businesses and farmers are notoriously known not to do – when was the last time you set targets for each category of expenses in your business and checked in to make sure you were on target? Do you know how much other businesses similar to yours spend on the same sorts of things?
In Swan Hill I have heard many people talk about big business "taking over" - so why do they have a competitive advantage over the small guy? With a few exceptions (Dick Smith!), the fundamental reason is that they are exquisite planners. This involves precise daily, weekly, monthly, quarterly and annual planning and consistent and ruthless follow up.
Whilst managing at a national retailer, I recall blunt, non-negotiating calls with head office regarding a 1% overspend in budgeted weekly costs (it was less than $100, and EVERYTHING had a budget). Strict budgeting across all the expense areas improved the profitability of that individual business site by at least 20%-25% per annum.
So how does this affect you? In a break-even business with sales turnover of $500,000, a 1% improvement in expenses adds $5,000 to your bottom line. A 5% improvement (very achievable) could generate $25,000 – and as the owner, this money goes in your pocket. It is small improvements across lots of expense areas that add up very rapidly.
A couple of quick ideas to get you started in 2016:
· Get a formal, written plan for what you want to achieve this year. Be very specific!
· Phone around for better rates – on interest, electricity, gas
· Check-in with your employees
· Update your technology
· Most importantly - Ask your accountant for help! Our range of knowledge – including but not limited to industry benchmarks, planning strategies and great ways to improve your profit - are sure to help you plan to succeed. Call us today – (03) 50329422!