Have you thought about your businessdreams lately? Your vision for yourcompany and where you thought it wouldbe now? To realize those dreams, youlikely need some degree of success. Youalso probably define success by at leastconsidering your profit.
Why is it that some business ownersmanagershit their profit target more oftenthan others? They do it because they keeptheir operation pointed in that direction.They never lose sight of the goal – to finishthe year with a profit.
A beginner rarely hits a homerun,throws a touchdown pass or hits a hole inone. Similarly, in business, year–end profitcomes to the owner–manager who strivesfor top notch performance. You achieve itby knowing your operation, by practicingthe art of making timely, balanceddecisions, and by controlling the company’sactivities. Notice I said controlling thecompany’s activities and not letting thecompany control your activities.
Know Your Business
The often used cliché “knowledge ispower” is especially pertinent to theowner–manager of a small or mediumsizedbusiness. To keep your companypointed toward profitability, you must keepyourself well informed about it. You mustknow what the company is really doingbefore you can improve its operation andyou must know its weak points before youcan strengthen them.
The profit and loss statement (or incomestatement) prepared regularly each monthor each quarter by your accountant isone of the most vital indicators of yourbusiness’ worth and health. It is a goodidea to have your profit and loss statementprepared so that is shows each item for thecurrent period, for the same period lastyear, and for the current year–to–date. It isimportant here to know what the numbersare really telling you. Sales, for example,may be on the rise but if expenses areon the rise at the same pace or even at agreater pace, it will spell disaster. Knowyour sales, know your costs, know yourprofits and know them regularly.Predict Your Future
Don’t use a crystal ball to make forecastsof your business. By carefully analyzingthe historic trends you can comfortablyforecast the year ahead. Your record ofsales, your experience in the market, andyour general knowledge of the economyshould enable you to forecast a sales figure for thenext year.
Now that you are armed with this financialdata, use it. Make timely decisions to driveyour business towards that profit. Control yourbusiness and motivate your key people to get theresults planned within the cost and time limitsallowed.Manage Your People
Most businesses find that their largest expenseis labor. Yet many owner–managers do not payenough attention to direct and indirect laborcosts. They tend to think of these costs in termsof individuals (personal relationships) rather thenrelate them to profit in terms of dollars and cents.It is vitally important to pay close attention to yourlabor costs. There are some great solutions to helpowner–managers reduce these costs and can oftengo a long way to improve profitability.
Control Your Money
It is a good policy to handle your cashand checks as through they were perishablecommodities. They are. Financial controls arevery important. I can’t tell you the number oftimes I have heard business owners from small ormedium–size companies tell me of the losses theyhave faced because of a lack of financial controls.They faced these losses at the hands of someonethey trusted. With financial controls in place,these losses would either have not happened orwould have been identified long before hundredsof thousands of dollars disappeared.
Get Help
It is a good practice to use your outside advisorsto assist you. A good accountant can save youmoney on your taxes. A good attorney can protectyour assets. A good business advisor can help youand your organization focus on profitability andidentify waste. He or she should be able to identifymeasures to reduce labor costs or put in placefinancial controls, as well as assist with personnel,management, process, sales and marketing,and technology. They should assist you inunderstanding your financial reports and use themas a tool to guide your organization. In short, yourbusiness advisor should be adding to your profit.
So rekindle those dreams that you had whenyou first started your business. Consider the ideasand thoughts about where you are and where youwant to be. Stoke the fires of your vision – andkeep your eyes on the prize.
