Understanding Your Financials
It’s unfortunate that so many business owners are unfamiliar with their finances. Most will hire an accountant to deal with this aspect of the business, which is okay. However, as a business owner, it is crucial to understand the state of your finances. Keeping a record of your business’s financials is a great way to keep track of its value.
Read on for some guidelines to help you ensure your business is viable for the long run.
Strategy and foresight
Is your business growing? If so, have you set in place long-term strategies to ensure growth, or are you relying on luck?
Think about where you want your business to be in five or ten years. Then, plan how you will get to that stage — what strategies must you develop to reach your long-term goals?
Don’t Rely Too Heavily On Individuals
If your business relies too much on one person, such as a manager, an employee or even a supplier, then what happens if they walk away for any reason? As the saying goes, you can’t keep all your eggs in one basket.
To be sustainable in the long run, you need to be able to rely equally on different employees and entities. The way around this is to invest in all your employees through training, making them equally productive and useful to your business.
Using multiple suppliers and having an established process that is simple to follow will ensure that, if one supplier pulls out or changes their prices, the business won’t be significantly affected.
Reliable Revenue Streams
We all know where revenue comes from and that’s sales. If your sales are one-off jobs, then the future could be unclear — i.e., where will your next job come from, and when?
For example, a hairdresser might average a thousand appointments per month. Meanwhile, a house builder might have two projects one month and then go a month with no customers. Then, they might get 20 inquiries around Christmas time and be unable to fulfil them all. The hairdresser can accurately forecast business sustainability, whereas the builder is forced to live month-to-month not knowing what’s going to happen.
If you find that your sales are not as regular as you’d like them – perhaps your industry dips over the winter months – it’s crucial to think ahead and prepare your business. You may consider investing a bit more into marketing during typically quieter times.
How Satisfied Are Your Employees?
Obviously, we want our customers to be satisfied. Though we cannot forget about those who are on the front line, earning money for the business — our employees. Passionate, talented and hard-working people are not easy to replace.
So, how do we ensure they are satisfied? For an unbiased response, you can ask employees to fill out anonymous questionnaires. Employees will be less frightened to say what they think is wrong if their boss doesn’t know who said it.
Doing this will show you how satisfied your employees are and allow you to make any appropriate changes. This ensures that everyone is satisfied — and in the long run, it keeps your business sustainable.
Implementing an Advisory Board
Another common saying applies to creating long-term sustainability for your business — two heads are better than one.
Creating an advisory board combines the brainpower of several people to make the best decisions for the business. This reduces the chance of bad ideas coming to fruition and harming the sustainability of the company.
If you are to implement this, have advisors that aren’t all from the same working background. Have people experienced in management practices, people who know finance, those who know marketing and others who know the industry. Fleshing out ideas from a range of perspectives will help your choices be sound ones.