The Two Most Important Things You Need To Do For Your Business Today
It sounds simple doesn't it? Only 2 important things to do for your business today! How about get more clients? No. How about purchase new equipment? No. Well, how about moving to an office? No, none of the above. There are only 2 tasks that if neglected can make or break your business today. Now I know you are really scratching your head wondering what those can be.
So here we go:
1. Task for the new year: KNOW WHERE YOU ARE.
The key to your success is knowing the financial strength of your business. Getting new clients, adding new equipment, perhaps even thinking of moving into a "real" office are all fun things to do that will enhance your image, grow your revenue and even make you feel great about your successes. But are they really successes? What does your bottom line look like? Are you in a healthy financial condition or does your business need an emergency transfusion?
I spoke with a business owner recently who told me that he "thought" he had a profitable year in 2009. When I asked for a little more clarity on the word "thought," he revealed that he never knows if he has made a profit during the year until after his accountant completes the year-end records. Imagine my surprise when I discovered that more than one business owner operates in the dark about his business profitability throughout the year. It's like coming into work with blinders on and expecting to function as a profitable, successful business.
To get a handle on the financial health of your business, my first recommendation to business owners who wait all year for an accountant's report is to TAKE CONTROL today. As soon as you receive your most recent P & L statements, sit down and take a good long look. Here is what to look for:
Sales (revenue from cleaning). Is this number where you anticipated your business would be? Did you plan for growth or decline in sales revenue last year? Did it just happen and you don't know why? Did you have other sources of revenue from perhaps sales of supplies to clients? Was there anything particular to your area that might have caused a decrease or increase in revenue?
Expenses:
- Labor being the highest expense, was your annual labor cost under 50% of revenue? Was labor out of control with costs approaching 60% or higher? Did these figures include travel time? Meeting time? Other time eaters?
- Supply costs? Were they between 3-4% of revenue?
- Marketing and Advertising. Were these costs under 10% of revenue? Exactly what did you spend money on in advertising last year and what was the return on that investment? Where did your advertising dollars work, where didn't they work? On what did you spend a lot of money and get 0 return?
- Overhead: Office expense if any, vehicle expense, insurance, uniforms, taxes? Did these total between 15-20% of revenue?
2. Important Task for the New Year: KNOW WHERE YOU ARE GOING.
Taking the time to set a budget for the coming year is next in line for business success. You know where you were last year and now you need the road map for your journey in the New Year. Your 2010 budget is the place to start. The old saying “when you fail to plan, you plan to fail” is never more relevant than at the start of a New Year. Planning your budget is simple and can be done quickly with many of the software programs available. One of the most common is QuickBooks, but there are many industry specific products that will help formulate a budget.
- Forecast your anticipated sales by the month allowing for a reasonable increase in revenue depending on your market. If business is booming in your area, make the increases a bit healthier.
- Overhead numbers will stay constant unless you anticipate changes in office locations, purchasing large equipment or vehicles and receiving a larger than expected insurance cost.
- Labor costs are controlled by you or your managers/supervisors. If you pay by %, the control is easier to maintain. If you pay by the hour, the control happens only when you put into place a firm budget for each account and enforce the budget of time allowed.
- Marketing and Advertising expenses should be mapped out in a marketing plan and a dollar amount allocated monthly for this category.
Sharon L. Cowan is the former President and CEO of a multimillion dollar regional commercial and residential cleaning company. She has a passion for helping fellow business owners reach their potential and realize their dreams. Sharon is a popular speaker and workshop leader. She has been a guest speaker and seminar leader for BSCAI and ARCSI and twice won marketing awards from the BSCAI. Sharon holds workshops throughout the country teaching cleaning business owners how to maximize profits and grow their businesses. Sharon can be reached at 772-563-7320 or www.cleaningbusinessconsultinggroup.com
