The first ten years of business survival

A new business starting today has less than 30 per cent chance of being around in a decade. ¹

To reach the 10-year mark relatively unscathed, we recommend that business owners and entrepreneurs consider the following 4 Quadrants of a Business:

1. Systems

Making your processes as efficient as possible, from standardising IT infrastructure and programs right through to optimising your business processes and operations, generates several benefits and breathes new life into a business as it grows, including:

• Enhancing customer service. Customer service is the foundation of any business – without them you’d have no purpose for being. Having the necessary structures to prevent any important tasks from slipping through the cracks and ensuring consistency in approach is key.
• Increasing autonomy. Not only has autonomy been proven to increase employee engagement, but it also allows the business owners to step away from the business without having their hard work come undone. The only true way to increase autonomy is by establishing and training staff on a set series of procedures and ensuring proper quality control processes are in place to achieve consistency.
• Improving financial performance. Gained through improved efficiencies.

In this century, the question isn’t how much can technology improve your business but is it possible to conduct business without relying heavily on technology?

2. Marketing

Statistics from 2018 stated that 93% of consumers use reviews to determine if a local business is good or bad ² and 92% of consumers now read online reviews in 2018 vs 88% in 2014 ³.

Irrespective of whether you are a grower of fresh produce, real estate agent or a restaurateur, it’s important to have at least some idea about your online space. Don’t kid yourself that new customers won’t look for you or research your business online. The same goes for potential new team members and suppliers.

3. People

2018’s State of the Workplace study said that the bulk of Australian employees (some 60%) are “not engaged”, meaning they lack motivation and are unlikely to invest discretionary effort in organisational goals or outcomes. On top of that, when you drill down into that 60% figure, 16% of those not engaged staff members are in fact “actively disengaged”, indicating they are unhappy and unproductive at work and liable to spread negativity to co-workers. Only 24% of staff, on average, are “engaged” and only 16% are “actively engaged” – being staff who want the best for the business and are willing to put in extra effort to get the business to reach its goals. ⁴

Put into perspective, that means if your workforce is “typical”, less than one-quarter of your employees are actively engaged and over 16% of staff on payroll are actively working against you!

4. Finances

The old mantra “Cash is King” and therefore cash management is the key to business success and it is something business owners still commonly misunderstand.

Most businesses should prepare monthly cash budgets – it’s a given rather than an exception these days. Done properly, your cash flow forecast can consider “what if” by testing different possible future scenarios and sensitivity analysis, as well as:

• Negotiating longer supplier payment terms and shorter customer payment terms
• Opportunity cost of inventory (stock) on hand
• ‘Receivable factoring’ to sell debtors’ invoices at a discount in return for quicker payment

Understanding costings and cost drivers is critical. Many business start-ups come into the market costing their product or service offering in line with the market price, rather than what it costs them and hope they can make a dollar out of it.

Notably, businesses that use technology to manage their accounting experience less anxiety and more confidence around knowing their financial position, especially cash flow which they can see in real time on any device, anywhere. This helps them work towards achieving their overriding financial goals.

Is your business giving you freedom? Or is it taking up all your spare time?

In business, every day you make decisions that influence how your business and your team perform. To make the best decisions, it is essential that you get the right advice; advice that is tailored to your circumstances and is explained in everyday language.

At Carrick Aland our experienced team can assist you in the everyday financial decisions in your business. Read more about how we do that here or call our CAConnect team in Dalby, Toowoomba or Chinchilla on 07 4669 9800.

Source: Worrells