That Ain't Workin'- Seekers Or Dire Straits Small Business Accountant?

INTRODUCTION:

"Now look at them yo-yo's that's the way you do it
You play the guitar on the MTV" Mark Knopfler Dire Straits

The journey in small business is not always rosy. Any business that can have smooth sailing from day one until the end would be very rare.

The biggest problem I often see as a small business accountant is that people wait until it is too late to make change. Many keep doing the same things hoping business will turnaround.

It doesn't work that way!

Dire Straits sang about those that recognise opportunity and ride the wave as opposed to those that did the usual.

If something is not working, you need to change things up. Often you might not be able to see the forest for the trees so that getting help from an outsider is usually a good idea. Sometimes though you need to do some trial and error.

Figure 1: The journey is rarely smooth! Trial and error is often a great strategy. Photo courtesy Getty Images.

1. Recognise The Signs

If you've sat down and worked out your key performance indicators and three way budgets to manage cash flow, you'll soon know if things are going according to plan (including time to get the business off the ground) or whether you need to make changes.

Common symptoms that can be compared to the timings in your cash flow forecasts are:

• poor cash flow;
• lack of sales;
• margins lower than anticipated;
• overheads blowing out;
• too much debt.

2. Establish Why Targets Are Not Being Met

"Close the doors, light the lights.
We're stayin' home tonight,
far away from the bustle and the bright city lights.
Let them all fade away.
Just leave us alone.
And we'll live in a world of our own." The Seekers

Naturally if things aren't going to the original plan you need to find out why. Were your sales targets unrealistic or was your marketing plan not effective or implemented correctly?

Could it be your sales team is not communicating value or has a competitor dropped their prices?

You should talk to:

• your sales team (discuss number of leads, to quotes to conversion - do you know your growth equation?);
• those that did not buy (find out why);
• your existing customers (ask them to be honest about their experience);
• your small business accountant Sydney and Dubbo.

Figure 2: Check your targets and change if they aren't  being met.

3. Revise Strategy

Once you have worked out the main problems it's time to change your strategy and business plan. Very often problems occur due to:

• no accountability of the sales team (reporting of activity and results not enforced);
• attitude of being an 'order taker' not an 'order maker' (i.e. waiting for phones to ring);
• target market misunderstood - the product or service is not solving a problem for those we are targeting so we need to find the right audience and where they are in abundance;
• more sales training required;
• no point of difference;
• a lack of awareness of the competition activities;
• ineffective advertising - again spending money in areas outside of our ideal demographic;
• loose spending - poor control over staff spending or not asking suppliers for a better deal or the getting of quotes;
• inefficient sales follow up including unnecessary travel instead of 'killing 2 birds with one stone' type mentality;
• luxury travel by staff and lack of control of the company credit card;
• customers not being kept to within trading terms or worse still not being invoiced at all!;
• wrong business location;
• inaccurate costings leading to under quoting;
• no website or digital strategy;
• lack of control over stock and cash (in some cases theft);
• poor accounting systems or the lack of reconciling ensuring the numbers make sense.

4. Cross Check Numbers Via New Forecasts

Having identified changes that need to be made, revise your three way budgets and forecasts. Update your accounting system with the new targets so you can easily identify the warning signs.

5. Stay In Touch With Your Advisors

Hopefully you have a good relationship with your business advisors or small business accountants Sydney so that you can bounce some ideas off them or help you understand the numbers.

Monthly or quarterly meetings work best.

CONCLUSION:

It might seem obvious when business is not going well. The sad part is that it's sometimes easier to have a 'stick your head in the sand' mentality than try something different.

Don't just sit there - do something about it!

Your business survival depends on it.