Running a small business is no small feat. The journey can be a roller coaster of ups and downs, and sometimes sound business advice can be tricky to come by.
As the holiday season fast approaches, it’s a great time to reflect on the year that has been and establish your business priorities for FY24.
Richard Poole from Co-Pilot Business Advisory, is a business advisor and coach with over 25 years experience in running his own businesses. Working alongside business owners and leaders, Richard focuses on helping ‘do business better together’, bringing sound business strategy to life while also focusing on his clients’ wellbeing.
I spoke to Richard about his best advice for small business owners, including the importance of having a business plan, knowing your numbers, and remembering to celebrate the wins throughout the journey.
Here are Richard’s top five tips for small businesses to kickstart the New Year:
1. Define what success is, for you
In order to feel like you are achieving your goals, every business owner needs to know what they’re aiming for with their revenue and ultimate profitability. This is very different for everyone.
Set realistic financial KPIs. Ensure that targets are feasible given time, resources, capability and the market economy. Start with sales targets by month and year. Think about how many hours you want to work and how much you want to earn within that time.
2. Know your numbers
Love your accounts receivable. Remember that revenue isn’t truly revenue, until it’s money in the bank, so ensure that you have a clear process to confidently get what’s owed to you, deposited on time. Have a plan that includes an email reminder to your customer a few days before payment date.
Operate a ‘no surprises’ policy with your cash flow. Ensure that you have an accurate sense of your cash position at all times. Cash flow forecasts are ideal however if this is too much to maintain, have an overarching view of what your expected cash movements (in and out) are at all times.
You can set automated invoice email reminders and short term cash flow forecasts with Xero Starter, Standard, Premium, and Ultimate plans.
3. Prioritise must-do’s over to-do’s: say no to procrastination
Make a conscious effort to prioritise tasks in order of urgency, and differentiate the ‘must-do’s’ from the ‘to-do’s. For example, blocking out time to analyse your true profit margin by product vs simply spending more on your monthly advertising. Use a physical action plan (whether on paper or digitised using something like Trello.com) to focus on those urgent or important tasks that will move you closer to your vision and objectives, sooner and with greater success. Go to Co-Pilot to download a free business action plan template.
4. Celebrate the wins
Congratulate yourself no matter how small or large the win is. Just getting through these past few years is a huge win! Whether this is related specifically to business or personal, it’s important to celebrate with family, staff and others who you value. It’s often said that we tend to overestimate how much we can achieve in a day, however underestimate how much we can achieve in a year.
5. Seek independent feedback and guidance
It pays to have someone independent to ‘stress test’ your vision, business strategy, capability, reports and analysis. Utilise your accountant and/or an independent, qualified advisor. It’s tough to do it alone and it’s certainly not a sign of weakness to ask for help.