Hidden Oil In Small Business - You Need To Drill More Than One Hole!

INTRODUCTION:

Through my role both as a small business accountant and business advisors, I often come across businesses that have potential but for various reasons are not performing to their full potential. There is no single magic bullet. Like anything it takes work but also commitment to make a change whether it be fix cash flow or improve profitability or both.

Effecting change is a bit like wanting to write a book. Every single one of us have something and there could be oil under the hood but you need to want it and sometimes you need to drill more than one hole! This is where the term 'test and measure' comes in.

So here is a simple road map to get your business back onto the path of redemption.

Figure 1: James Dean eventually found the oil he was after and so can you!

1. Make A Decision

Nobody can fix your business unless you make a decision to seek help and become to committed to following a plan. Getting up each day lamenting that business is tough, staff aren't working out, customers are difficult etc. will not actually sort themselves out.

Leaders Act!  If you really want to make things better, improve cash flow, get higher revenues or profitability so you can do the things you would like both personally and professionally, you must make a decision to commit to correcting the situation.

Quite frankly, if you can't decide to take action and make a commitment to follow this through then nobody can help you. Taking that first step is often the hardest but once you do you will start to feel more liberated and relieved that you are actually doing something about a problem. 

2. Run A Business Diagnostic

Sit down with your small business accountant and ask them to run some business diagnostics about your numbers. These days there are many tools that can quickly hone in and diagnose where you are falling short. Benchmarking is also a good way to see whether something is amiss.

Key performance indicators for business such as:

• debtor days;
• supplier days;
• inventory turnover;
• quick ratio;
• current ratio;
• interest cover.

are just some of the things that should be measured when assessing just how your business stacks up.

3. Develop An Implementation Plan

Break down the areas where improvement is clearly needed and within those areas develop some key actions that will be needed to correct them, who by and when. Run some three way budgets (including cash flow forecasts) to see what difference should occur should you implement. This will give you more motivation to make things happen.

Rome wasn't built in a day but by nipping away at the task in hand over a period of time will allow you to see change.

Figure 2: Black gold can be within your business. You just need to be persistent.

4. Focus on Completing Tasks

This is where you need to be completely focused and determined to mark these tasks off one by one until complete.

The level of success is directly proportional to the level of completed tasks.

Completing tasks in the right areas = business turnaround (much more quickly!).

Keep your eye on the prize at all times.

5. Monitor With Your Small Business Accountant

Having somebody to check your progress will be often be through your small business accountants Sydney and Dubbo.

Seek to have monthly or quarterly meetings with them to make sure you stay on the right track.

Figure 3: Does your business have Texas Tea?

CONCLUSION:

Stop dreaming about a wonderful business and do something about it. Chances are you know that it can become very successful because that's why you probably started it in the first place.

If you find that your business is not performing at a level you would like it, ask yourself whether you have truly followed the above tips recently.

If the answer's 'no', it's time to start drilling!