In business and life, people struggle to understand where money comes from and where it goes; they confuse profit with cash and often spend money because they think they should, rather than whether it is based on revenue, hard facts, Profit margins, return on investment and whether it is even needed to be spent in the first place.
In our personal lives we do the same often confusing what we should buy because we “feel” we should buy it. We think the expenditure will profit us when in fact it is the reverse, it creates some sort of loss and we lose track of the money flow.
In most businesses, owners rarely have anything like a 90 Days’ Cash Flow Forecast, let alone a Destination or Business Plan to get there and so, do not even know where they would be in three months’ time or how much money is left over?
If they don’t know where their business is going to be in three months’ time, and they don’t know how much money is left, they need to get a Cash Flow Forecast together fast. And more importantly, if they don’t know where their business will be they won’t know where they will be, naturally.
These questions and the lack of answers would surely make most people wonder exactly just how on top of finances they are as business owners and how on top of life they are as people. Where does the money go and how did it go are questions that require very clear answers?
The whole thing about any sort of money control, and the way forward involves, at its most fundamental, knowing your figures, knowing your expenditure and knowing your cash flow; the other stuff like precise goals required, short term, medium term and long term goals are also needed but first assess exactly where you or your business is at financially this very moment.
Later on, through proper testing and monitoring of everything, watching advertising dollars, wages, costs of sales and making sure your salary cap is acceptable before you put on more staff, business owners can begin to regain that sense of certainty and security. This will flow on to their personal lives where they will begin to feel in control for the first time; control of their business and control of their personal life and their time.
Now, what business owners do with their time is so important it bears mentioning because this lack of Time Management is usually the first item on the agenda for business owners wanting their time and their life back; helping them control their time far more efficiently is urgently required. In reality it is not Time Management so much as a much more careful management of themselves.
Because business owners are always thinking they need to get more sales, they usually spend unnecessary money trying to get those sales without first having the processes in place to properly handle them efficiently even if they got them. It is clear that most business owners do not even understand what a sales process is; they think they only need to talk to people, be nice to them and they will buy.
There are many things to put in place when a business owner embarks on the journey of working ON the business and these are just a few. In fact there is a methodology around getting your business firing and the best way is to ask someone who has done it.
Alternatively, there are a myriad of business books and seminars and this is a great start however in my experience these books usually make more sense once you already have a few business essentials in place.
Cheers
Chris Borrett
Image Credit: FreeImages.com/Jess Lis
If by chance, you have not encountered my previous posts outside this blog, one of my favourites is about “A Woman’s Labour of Love”. You have the luxury of reading it by clicking here.