Category: Financial Performance

How to Create a Balanced Business Budget

Posted on | by Jessica Weston | Leave a Comment on How to Create a Balanced Business Budget

Creating a balanced business budget can seem like a daunting task, but it doesn’t have to be. There are a few simple steps that you can take to make sure that your budget is both realistic and achievable. We’ve put together a step-by-step guide to creating a balanced business budget so that you can take the guesswork out of the process.

Step 1 – Calculate Your Income

The first step toward creating a balanced business budget is to calculate your income. This may seem like a no-brainer, but it’s important to be as accurate as possible when estimating your income. After all, your budget can only be as balanced as the income that you’re bringing in. To get started, take a look at your past few months of financial statements and try to come up with an average monthly income.

If you’re just starting out, it’s important to be realistic about the amount of income that you can realistically expect to bring in. Don’t forget to account for seasonal fluctuations in your business’ income.

It’s also important to consider all of your streams of revenue. If you’re selling products, be sure to include both the cost of goods sold as well as any shipping and handling fees.

After you’ve calculated your income, it’s time to move on to expenses.

Step 2 – Fixed Costs

In order to create a balanced budget, you need to figure out what your business’s fixed costs are.

Fixed costs are those expenses that stay the same each month, such as rent, utilities, and loan payments. These are non-negotiable expenses that you have to pay no matter what.

Step 3 – Variable Costs

Variable costs are those expenses that fluctuate from month to month, such as inventory, shipping, and marketing.

The key to creating a balanced budget is to make sure that your variable costs don’t exceed your income. This can be a challenge, but it’s important to keep an eye on your spending in order to stay within your budget.

Your variable costs will increase along with volume of production. So if you sell more, you’ll send more. It is important to track your variable costs closely as your business grows.

Accounting software can help you track your income and expenses so that you can see where your money is going each month. This information can be helpful in creating a realistic and achievable budget.

Step 4 – One-Off Costs

There are always going to be one-time costs associated with running a business. These costs can include things like equipment purchases, website development, and trade show fees.

When budgeting for one-off costs, it’s important to consider both the short-term and long-term impact of the expense. For example, a new piece of equipment may be a large upfront cost, but it could save you money in the long run by increasing efficiency.

Step 5 – Consider Your Cash Flow

Another important factor to consider when creating a budget is your business’s cash flow. Cash flow is the amount of money that is coming in and out of your business each month.

It’s important to have a positive cash flow in order to maintain a healthy budget. If your expenses are higher than your income, you’ll need to find ways to cut costs or increase revenue.

There are a number of ways to improve your cash flow, such as offering discounts for early payment, setting up automatic payments, or offering payment plans.

Step 6 – Putting It All Together

Now that you’ve calculated your income, expenses, and cash flow, it’s time to put it all together to create a balanced business budget.

However, you can’t just create a budget and then set it aside. You need to revisit and review it regularly to make sure that it’s still accurate and on track.

As your business grows and changes, your budget will need to change too. Be sure to review it at least once a month to make sure that it’s still in line with your current situation.

Creating a balanced business budget is an important part of running a successful business. By taking the time to calculate your income and expenses, you can ensure that your business is on track for long-term success.

Things You Didn’t Know Your Accountant Could Do

Posted on | by Jessica Weston | Leave a Comment on Things You Didn’t Know Your Accountant Could Do

Did you know that your accountant could do more than just help you with your taxes? In fact, accountants can help you with a variety of tasks, including bookkeeping, financial planning, and even business consulting. If you’re not taking advantage of all the services your accountant has to offer, you’re missing out on valuable assistance and wasting money. 

Let’s take a look at six things that your accountant can do for you that you may not have considered until now.

#1 – Strategise

One of the most important things your accountant can do for you is help you plan for your business’ future. They can help you set financial goals, identify key performance indicators (KPIs) and create a strategy to improve the financial health of your business.

This is especially important if you’re thinking of expanding your business or making any major changes. Your accountant will be able to advise you on the best course of action to take and create a plan of action to ensure your success.

#2 – Cash Flow Management

Another important task your accountant can help you with is managing your business’s cash flow. They can help you track where your money is coming in and going out, identify any areas where you may be overspending, and provide advice on how to improve your cash flow situation.

This is vital for all businesses, but especially small businesses who may have limited resources. By keeping a close eye on your cash flow, you can avoid any financial problems down the road.

#3 – Debt Management

Not all debt is bad. In fact, some debt can be used to help your business grow. But it’s important to know how to manage your debt so that it doesn’t become a burden. That’s where your accountant comes in.

Your accountant can help you understand the different types of debt and their pros and cons, as well as develop a plan to pay off any debt you may have. They can also negotiate with creditors on your behalf and help you get better terms.

If you’re struggling with debt, your accountant can be a valuable ally.

#4 – Help with Loan Applications

If you’re thinking of applying for a loan, your accountant can help you with the process.

They can advise you on what type of loan would be best for your business and put together a package of financial statements and other documentation that lenders will require.

They can also help you understand the different terms and conditions of loans so that you can make the best decision for your business.

Applying for a loan can be a complicated and stressful process, but with the help of your accountant, it doesn’t have to be. A great accountant will prepare a strong pitch for your business to maximise your chances of success and help you to negotiate the best rates and terms possible, whilst ensuring that you understand exactly what you’re signing up for.

#5 – Increase Efficiency

Your accountant can help you to streamline your business operations and increase efficiency. They will take a close look at your current systems and procedures and make recommendations for improvements. This could include automating tasks, eliminating redundant processes, or improving communication between departments. In addition, they can help you to implement new technologies that will save you time and money.

By increasing efficiency, you can free up time and resources to focus on other areas of your business. This not only makes your business more profitable, but also more enjoyable to run.

#6 – Support You

Accountants are often thought of as primarily being number crunchers, but first and foremost, they’re actually great listeners who take the time to understand their clients’ individual pain points. This allows them to provide targeted support and advice that is tailored to each client’s specific needs.

In addition to providing expert advice, your accountant can also be a great sounding board for your ideas. They can help you to flesh out your plans, identify potential problems, and find creative solutions. And when things get tough, they’ll be there to lend a supportive ear.

Final Thoughts

At the end of the day, your accountant is more than just someone who does your taxes. They’re a valuable business partner who can help you to overcome challenges, grow your business, and achieve your goals. If you’re not taking advantage of all the services your accountant has to offer, you’re missing out on valuable assistance and support.

Hiring your first employee – things worth knowing

Posted on | by Jessica Weston | Leave a Comment on Hiring your first employee – things worth knowing

Hiring your first employee is a big step as a business owner. It’s great that you’re ready to grow your business and delegate some responsibility in order to narrow your focus, but it’s also natural to be nervous about the process. We’ve compiled a list of the most important things to bear in mind when hiring your first employee so that you can prepare and make the right decision for your business.

#1 – Payroll

When you hire an employee, you need to put a payroll system in place to make sure that employees get paid the right amount at the right time. Otherwise, your staff won’t be with you for very long.

You will need to submit National Insurance contributions and PAYE tax where applicable. And may also need to set up a Pension Scheme.

#2 – Contracts

It’s important to have a written contract in place with all employees. This document should outline the employee’s job duties, hours of work, pay rate, and benefits. It’s also a good idea to include an exit clause in case the relationship between employer and employee doesn’t work out.

#3 – A Code of Conduct

When you’re operating solo, you don’t really need a code of conduct – you know how to behave. However, when you have employees, it’s important to have a code of conduct in place that everyone is expected to follow. 

This document should outline the company’s expectations for employee behaviour, both on and off the job. It should also include disciplinary procedures for employees who violate the code of conduct.

#4 – Management Skills

If you’re not used to managing people, it’s important to learn the basics of good management before hiring your first employee. This includes setting expectations, providing feedback, and creating a positive work environment.

This is an important part of your growth as an entrepreneur. Learning great management skills as early on in your journey as possible will set you up for success.  Especially as your business grows and you add even more employees to your organisation.

#5 – Hire Based on Attitude

You can teach new skills and provide experience, but you can’t change a bad attitude.

That’s why it’s important to take attitude into account when hiring your first employee. 

Look for someone who is positive and enthusiastic about their work, even if they don’t have a lot of experience. Employees who are keen to grow and develop their skills will prove immensely valuable to you and your company.

Of course, you may well be keen to hire an experienced employee, but still be sure to screen candidates carefully and pay close attention to their attitude.

#6 – Ensure That You’re Financially Ready

Hiring employees is a great way to grow your business, but you need to make sure that the timing is right.

In other words, make sure that you’ve got enough money in the bank before making this big decision. Once you have an employee on board, it’s important not to let them down by being unable to pay their wages on time.

If you’re not sure whether your business is ready for its first employee, consult with your accountant or financial advisor to get their opinion.

Final Thoughts

When it comes to hiring your first employee, there are a few things you need to keep in mind. The most important of these is getting everything set up so that they get paid correctly and on time. You’ll also need contracts for both the employer and the employee, as well as a code of conduct for all staff members who work with you.

If you’re not sure whether or not your company is ready for its first employee, consult with an accountant or financial advisor who can help guide you through the process of hiring employees, managing all their associated responsibilities and ensuring that your operations remain cost-effective.

How to Use Profitability Ratios to Grow Your Small Business

Posted on | by Jessica Weston | Leave a Comment on How to Use Profitability Ratios to Grow Your Small Business

If you’re looking to grow your small business, you need to understand profitability ratios. These ratios help you measure how efficiently your business is using its assets and generating revenue. There are three main types of profitability ratios: operating, asset use, and contribution. In this blog post, we’ll discuss what each one is and how to use them to make smart decisions for your business.

What is a Profitability Ratio?

A profitability ratio measures how efficiently your business is using its assets and generating revenue. Profitability ratios are used by lenders, investors, and profit-seeking businesses to evaluate a company’s ability to generate profit relative to sales, assets, or equity.

Profitability ratios can be calculated on an annual basis or over any period you choose. For example, if you’re evaluating your company’s profitability ratio based on the sales of widgets in a specific month, you could calculate each ratio using that period.

Operating Profitability Ratio

The operating profitability ratio measures how much profit your business generates from its operations compared to the revenue it earns. To understand this better, let’s look at an example.

Let’s say you own a company called Widget Co., which manufactures widgets and sells them to retailers for $100 each. In one month, your business produced 100,000 widgets and sold 70,000 of them at $100 each. The operating profitability ratio would be calculated as follows:

First, we calculate the gross profit by subtracting the cost of goods sold from the revenue. This gives us $700,000 (70,000 x $100 – 100,000 x $60).

Next, we divide the gross profit by the revenue to get the operating profitability ratio. This gives us 0.70 (700,000 / 1000000).

This tells us that for every dollar in revenue Widget Co. generates, it earns 70 cents in gross profit.

Asset Use Profitability Ratio

The asset use profitability ratio measures how much profit your business makes from the use of its assets, minus the cost of those assets. This ratio is helpful for businesses that have a lot of fixed assets, such as property and equipment.

Let’s use the same example as above to calculate asset use profitability ratio. In this scenario, Widget Co.’s fixed assets are worth $200,000 and its total revenue is $100,000 (70,000 units sold at $100 each). We’ll also assume that the company has no debt or other liabilities.

First, we calculate the net profit by subtracting all expenses from revenue. This gives us $300,000 (100,000 x 100 – 70,000 x 60).

Next, we divide the net profit by fixed assets to get the asset use profitability ratio. This gives us 0.15 ($300,000 / 2000000).

This tells us that for every dollar in fixed assets Widget Co. owns, it earns 15 cents in net profit.

Contribution Profitability Ratio

The contribution profitability ratio measures how much money your business makes from each sale after deducting variable expenses such as material costs and labour. It’s also known as the gross margin percentage because it is calculated by dividing the gross margin by sales.

Let’s use the same example as above, but this time we’ll assume that Widget Co. has a contribution margin of $40 per widget (meaning it costs the company $60 to produce each widget, but it sells them for $100).

First, we calculate the gross margin by subtracting the cost of goods sold from the revenue. This gives us $600,000 (100,000 x $100 – 100,000 x $60).

Next, we divide the gross margin by sales to get the contribution profitability ratio. This gives us 0.60 (600,000 / 1000000).

This tells us that for every dollar in sales Widget Co. generates, it earns 60 cents in gross profit.

This figure can help you to understand how effective your marketing efforts are and whether you’re pricing your products correctly.

How to Use Profitability Ratios

Profitability ratios are helpful when used alongside other financial metrics because they can help you make sense of your business’s overall profitability and identify areas where you can improve performance. For example, if your company’s asset use profitability ratio is low, you might consider investing in more fixed assets to increase profits.

Likewise, if your contribution profitability ratio is high, you might be able to reduce the cost of goods sold by finding a cheaper supplier or streamlining production.

Final Thoughts

Keeping track of your company’s profitability ratios can help you make informed decisions about how to improve profitability, reduce expenses and grow your business. A more profitable company is better positioned to earn more revenue, hire new employees, and reinvest.

How to Use Social Proof to Drive Sales

Posted on | by Jessica Weston | Leave a Comment on How to Use Social Proof to Drive Sales

As an business owner, you probably already know that social proof is an important factor in generating leads and sales. However, the vast majority of businesses I speak to, aren’t using enough reviews and testimonials as part of their marketing efforts.

Your clients love you and the value that you provide, but often, you’re afraid to ask them for a testimonial because you’re afraid it will seem unprofessional and don’t want to hassle them.

The truth is, most of your clients are more than happy to sing your praises if you give them the opportunity.

When you learn how to leverage social proof properly, it can have a significant impact on your sales funnel and help you to close those high value clients that you really want.

With that in mind, let’s take a look at how you can use reviews and testimonials to drive sales for your business.

Website Testimonials

It’s important to include plenty of  testimonials on your website. It’s a good idea to have a dedicated testimonial page, but you should also include them in the sidebar and in other strategic locations throughout the site to maximise their effectiveness.

When adding  client testimonials to your website, make sure that:

  • They are featured prominently
  • Concise and easy to understand – new leads don’t want to read an entire novel
  • Include specific details about how you solved the client’s problem
  • Feature the client’s full name, business name and a photograph 

Social Media Testimonials

Your social media accounts are a great place to showcase reviews and testimonials from happy clients.

It’s a good idea to create social media graphics that you can share across a variety of platforms. This is also a clever way around Twitter’s character limit!

Your graphics should all align with your brand, using your colours, fonts and style.

YouTube

Video testimonials are  a great way to add social proof. They are more convincing than  text testimonials and can be effective at building trust with a new lead. It’s easy to write a fake review, but video testimonials are hard to fabricate.

Just like social media graphics, you can  use these videos  across multiple platforms and also add them to your website.

Facebook Reviews

Using the Facebook reviews feature, you can encourage clients to leave a review on your business profile that will then show up in search results when someone is looking for an accountant or bookkeeper in your area. This helps build trust and encourages new leads to get in touch.

When someone leaves a review on your Facebook page, make sure to respond and thank them. This also helps to show that you’re engaged with your clients and care about their experience.

Case Studies

Client case studies are  a more in-depth look at  how you solved a specific problem for a client. They can be very helpful in convincing someone to become a  client, as they show that you have the experience and expertise to help them too.

Case studies should be well written, easy to understand and visually appealing. You can include images, infographics and videos to make them more engaging.

A typical case study format would  include:

  • What was the client’s problem?
  • How did you solve it for them?
  • What were the results and outcomes? 

Google Reviews

Google Reviews are crucial in building trust with your audience.  They are one of the first things that people look at when they’re considering working with a new business and can be the deciding factor for some.

As discussed, it’s fairly easy to fake a testimonial on your website, but Google requires users to have a verified account  in order to leave a review. This makes them much more trustworthy.

Make sure you ask your clients for a Google Review after they’ve had a positive experience working with you and make it easy for them to do so.

The more reviews your business has, the more trustworthy you will appear.

Awards and Affiliations

Showing that your practice is a member of a professional association or has been recognised for its achievements through awards can help to add credibility and build trust.

If you have any awards, consider creating badges that you can display on your website and social media accounts. 

Press Features

If you’ve been featured in the press, make sure to include a screenshot on your website and share it on social media.

When you’ve been featured in a major publication, this not only signals to your audience that you are a trustworthy accountant or bookkeeper but also helps to establish you as an authority within your niche – and this is essential if you want to have high value clients queuing up to work with you.

Numbers

How many businesses have you worked with? How many decades of experience do you have? How many years have you been a member of the professional association?

Displaying numbers that show your experience, expertise and scale can help build trust with leads. If you’re new to business or just starting out, including testimonials from previous roles is a great way to show some social proof and gain credibility early on.

Influencer Endorsements

Influencer marketing is an incredibly powerful way to add credibility to your business. Collaborating with the right influencer can be extremely powerful in convincing leads to work with you, because they have an established audience who trusts their opinion.

Make sure you only work with influencers who have a similar target market to yours and are relevant to what you do. This will ensure that their audience is more likely to be interested in your services. It’s also important to choose a creator who shares your values and reflects  the brand you want to portray.

Joint Venture Partnerships

Business owners often overlook joint venture partnerships when considering how to use social proof to drive sales. However, they can be incredibly powerful.

Working with a complementary business is an amazing way to reach new audiences and add credibility to your firm in the process.

A partnership with a trusted business is essentially a stamp of approval from them.  Clearly, they believe  in you, your business and what you do. If a lead is already familiar with the partner organisation, there’s a good chance they will trust them enough to at least find out more about your services.

Final Thoughts

When it comes to growing your business, social proof is incredibly important. It’s essential to use it to build trust with your audience and stand out from the crowd.

When done well, social proof can be a game changer for your business because it helps you to fill your sales funnel with more high quality leads and allows you to nurture them along the customer journey more easily.

A Guide to Writing a Business Growth Plan

Posted on | by Jessica Weston | Leave a Comment on A Guide to Writing a Business Growth Plan

Successful business growth requires a solid plan. In fact, rapid and uncontrollable growth can actually do more harm than good in the long run, which is why it’s vital to have a growth plan in place.

But how do you go about mapping out a growth strategy? And, since no-one can predict the future with 100% accuracy, what do you do when things inevitably veer slightly off-course?

This guide will discuss the components of a successful growth plan and provide tips for creating one that works for your business. Let’s get started.

What is a Business Growth Plan?

A business growth plan is a roadmap for increasing revenue and expanding operations. It outlines your company’s goals, strategies, and tactics for achieving growth in both the short- and long-term.

Why Do You Need One?

Businesses of all sizes can benefit from having a growth plan, for multiple reasons.

Market Share

If you’re not growing, your competition is. And if they’re taking market share from you, it’s only a matter of time before they start eating into your profits. A growth plan can help you take back control and regain any lost market share.

Minimise Risks

As your business grows, things will inevitably become more complex. This can lead to a number of risks, such as cash flow problems, operational inefficiencies, and customer service issues. A growth plan will help you identify and mitigate these risks before they start to pose a real problem.

Cash Flow and Revenue

Your business needs money to survive.  A growth plan will ensure that you have the necessary cash flow to sustain operations and fund expansion. It will also help you to increase revenue and profits, which can provide a cushion in tough times.

How to Write a Business Growth Plan

Now that we’ve discussed the importance of having a business growth plan, let’s take a look at how to write one.

There are four key components to any successful growth plan:

  • Market analysis
  • The right target market
  • Product/service offering
  • Sales and marketing strategy

We’ll discuss each of these in more detail below.

Market Analysis

The first step in writing a business  growth plan is to do a market analysis. This involves studying your industry and competitors, identifying trends, and assessing the potential for growth.

To conduct a market analysis, you’ll need to gather data on:

  • Industry size and growth
  • Market share by segment
  • Trends in technology, demographics, and consumer behaviour
  • The competitive landscape
  • Opportunities and threats in the market

Target Market

Once you’ve completed your market analysis, it’s time to identify your target market. This is the group of customers that you want to do business with and who are most likely to buy from you.

Your target market should be based on:

  • Your company’s strengths and capabilities
  • The needs of your target customers
  • The size of the market
  • The potential for growth in the market

Product/Service Offering

Once you’ve identified your target market, it’s time to develop a product or service offering that meets their needs, or adjust your current offering to capitalise on new opportunities for growth. This will involve creating  a unique value proposition and determining what makes your product or service different from the competition.

Evaluate Your Team

No matter how great your product or service is, you won’t be able to sell it if you don’t have a team of talented salespeople. Before you write your growth plan, take some time to evaluate your current sales and marketing teams. Do they have the skills and experience necessary to reach your target market? If not, you’ll need to make some changes.

Sales and Marketing Strategy

Once you’ve developed your product or service offering, it’s time to create a sales and marketing strategy that will help you reach your target market. This should include:

  • A plan for increasing market share
  • A budget and timeline
  • Strategies for generating leads 
  • Tactics for converting leads into customers
  • A communications plan
  • A way to track results

Finding Capital to Fund Growth

The final step in writing your business growth plan is to identify the capital you’ll need to fund expansion. This may involve taking out loans, seeking investment, or using your own cash reserves. Whatever route you choose, be sure to include a detailed plan for how the money will be used and when you expect to see a return on investment.

Putting It All Together

Now that you know what goes into a business growth plan, it’s time to put all the pieces together. Start by creating a rough outline of the plan, then fill in the details as you go. This will help you stay on track and ensure that your growth plan is comprehensive and achievable. Bear in mind that your growth plan can be adjusted as you go along, so check back in regularly to ensure that the document stays up-to-date.

What’s the Difference Between Budgeting and Forecasting?

Posted on | by Jessica Weston | Leave a Comment on What’s the Difference Between Budgeting and Forecasting?

Budgeting and forecasting are related, but they play different roles in business. In a nutshell, a budget is a step-by-step spending plan, while a forecast is an estimation of an outcome. Both have an important role to play in taking control of your business and preparing for the future, so let’s dive deeper into the key differences between the two tools.

What is Budgeting?

Budgeting is a detailed spending plan for the future. It’s used to provide financial direction while making sure you can meet your business goals and objectives. In other words, it controls what happens in your day-to-day operations by influencing how much money goes into different areas of the business, such as marketing and human resources.

Different Types of Budgets

There are two types of budgets: operational and capital. An operational budget is used to control your day-to-day operations, while a capital budget focuses on major purchases or investments in the business. For example, an annual marketing campaign will probably fall into the capital category because it’s something you do once per year instead of on a daily or weekly basis.

Budgeting Techniques

Budgeting techniques are used to determine how much you’ll spend in different areas of the business, such as sales and marketing. There are many types of budgeting techniques, including:

  • Zero-based budgeting, where all expenses for a period must be justified.
  • Percentage of sales budgeting, where a certain percentage of your total revenue is set aside for spending.
  • Value proposition budgeting, where you allocate resources based on the value each budget item brings to your business.
  • Surplus budgeting, where the total revenue is greater than the total expenses.
  • Gap budgeting, which identifies gaps between goals and actual performance levels in different areas of your business.

How to Prepare a Budget

In order to prepare a basic budget for your business, you need to calculate your total revenue for the period you’re looking at. 

Then, calculate your fixed and variable expenses. You should also factor in any planned purchases or investments over a set timeframe, as well as expected changes to your overall business strategy. 

Subtract your expenses from your income and then create a tax estimate. The final figure will be the profit that you have to invest in your business.

What is Forecasting?

Forecasting helps you create a plan for the future. It’s used to predict if your business will meet its financial goals, and is most commonly employed by growth companies that want to provide investors with an idea of their expected revenue. Forecasts are often related to quantitative data like sales forecasts or cost projections, but they can be based on qualitative data as well. 

The key difference between budgets and forecasts is that budgets are effective in the short-term, while forecasting works best over a longer period.

Qualitative vs Quantitative Forecasting

There are two main types of forecasting: qualitative and quantitative. A qualitative forecast is based on expert opinion, while a quantitative forecast uses hard data to produce numerical forecasts like sales projections.

How to Prepare a Forecast

In order to prepare a forecast for your business, you’ll need to list all of the assumptions that underpin it. This includes things like expected sales growth and any major changes in the market or economy over a certain timeframe. You should also factor in variables such as pricing models, competitor activity and customer behavior into your quantitative forecasts.

The Key Difference 

In conclusion, budgeting helps you control your daily operations, while forecasting is a tool for predicting future performance. A budget is used to set limits on your spending, while a forecast  is used to predict whether or not your business will meet its goals. Both are important tools for business performance and growth, and thus should be taken seriously.

How to Build and Maximise Your Referral Network

Posted on | by Jessica Weston | Leave a Comment on How to Build and Maximise Your Referral Network

Referrals are an excellent way to grow your business and generate a lead flow. However, when you have a very specific ideal client in mind they are not always helpful. By creating a referral network, you can gain more control over the process. There are different types of referral networks you can create, so let’s take a closer look at how to build the right network and make it work for your business.

What is a Referral Network?

A referral network is a group of individuals or organisations that provide referrals for one another. Within certain industries, there are official referral networks that exist, but there are also more informal ones around, too.

An example of an informal referral network might be a loose group of professionals within your niche who share business cards and contact details, and regularly refer clients to one another. There’s nothing in writing, but it’s a de facto “you scratch my back, I’ll scratch yours” kind of arrangement.

Tip #1 – Connect with Larger Businesses

When you run a small business, it may seem counterintuitive to create a referral relationship with your larger competitors but it can, in some instances, be beneficial. For example, if a business only works on large projects, it’s better for their reputation if they refer smaller clients to an appropriate provider rather than flat-out refusing them.

Connecting with these companies means that they can send these leads your way. Equally, if you have a client whose requirements are too large for you to handle right now, then you can return the favour and thus strengthen the relationship.

#Tip 2 – Network

It almost goes without saying that in order to build a referral network, you first have to expand your general network.

This means attending conferences, events and trade shows. Get up on stage if possible – that way, people will be keen to talk to you and even seek you out. The more visible you can be, the better.

Online networking is another great way to build your referral network. Reach out to business contacts, past clients and other professionals within your industry. Swap contact details and even mention that you will send any suitable future leads their way, as they’re more likely to keep you in mind to do the same.

#Tip 3 – Content Marketing

Content marketing is great for a number of reasons. It allows prospective clients to find you more easily and it enables you to build trust and relationships with your audience. What you may not realise, however, is just how useful content marketing can be when it comes to your referral network.

When you are showing up every day delivering value, it’s not only your prospects who will notice. Other business owners are likely admiring you too, even if they’re doing it quietly. If they see you as an expert within your niche, they may well send leads your way if one of their clients or customers has a need that falls outside of their remit.

#Tip 4 – Offer Rewards

Finally, you can incentivise your customers and clients to refer you by offering a reward in exchange. This could be a discount the next time that they buy from or work with you, rewards points or a free gift; it all depends on your specific business type.

A referral reward scheme is also a great low-risk strategy to boost sales because you don’t need to pay out until after you’ve made a sale.

Conclusion

There are several ways to grow your referral network whilst continuing to attract the right kinds of leads. Referrals are a low-cost way of acquiring new clients and so don’t overlook this strategy and its power to boost your business.

How to Set Business Goals For 2022 (And Beyond!)

Posted on | by Jessica Weston | Leave a Comment on How to Set Business Goals For 2022 (And Beyond!)

Setting goals for your business is an important step in making sure it thrives. While some people might think this is a simple task, it can be more complicated than you may think. This guide will walk you through the process of setting goals and provide tips on how to make them actionable, achievable and measurable.

Why Are Business Goals So Important?

Business goals and objectives are important and should be established for a number of reasons.

If you don’t define what success looks like, the chances are that your business will never achieve it.

You need goals to measure growth by comparing them from year to year or month to month. If you’re not seeing the results that coincide with your expectations, then it’s either time to adjust your goals or get to the bottom of why you cannot meet them.

Goals are also important because it shows that you’re organized and have a plan in place, which is especially helpful when raising capital for growth. It lets potential investors know what milestones to expect throughout the process of investing into your business.

Goals keep you and your team focused, and provide a clear benchmark against which to measure your success. Clear goals enable you to prioritise the most important tasks and focus on the things that matter most.

Step 1: Identify Key Areas Of Focus

First things first. What are the top areas you want to focus on in your business? Of course, this depends on your unique business and industry, but some examples to consider include:

  • Improve customer service
  • Reduce costs by 10%
  • Grow sales volume by 20%
  • Be the first mover in your industry with a new product or service offering
  • Increase employee satisfaction to 75%
  • Improve customer retention rate by 5%
  • Reduce company debt and interest expense below a certain threshold, e.g. $40,000
  • Increase profit margin by 10%
  • Reduce time required for product or service production by 12%

Step 2: Set SMART Goals

In order for your goals to be effective, you need them to meet a specific criteria. They must be SMART. This means:

  • Specific  – very clear and easy-to-understand.
  • Measurable  – determined by the numbers or data.
  • Achievable – your goals must be realistic, or else you are simply setting yourself up for failure.
  • Relevant –  each goal should be pertinent and directly beneficial to your business.
  • Time-bound – the deadlines must be clear and reasonable.

“Increasing profit margins” is not a good goal because it’s far too vague. However, “increasing our profits by 10% in the next 12 months by reducing costs and increasing efficiency”  is an example of a SMART goal.

Step 3: Set a Timeline

Your goals need to have a timeframe. This is important because it helps you think about which resources are required, how much time your goals will take and what milestones must be reached along the way. For example, you won’t increase your profits by 10% overnight – it will happen in much smaller increments. Therefore, you should set milestones that will be reached along the way. For example, you might aim to increase profits by 4% by the end of Q1. Then, you can adjust your goals against real-time progress.

Step 4: Review Your Goals Regularly

It is crucial that you regularly review your goals to ensure they are still relevant and helpful. You may find that the market has changed, or that new opportunities have emerged based on customer feedback which would alter some of your original plans – this means it’s time for an update. Maintaining four or five year goals is a good idea, but you should also create one-year and quarterly plans to ensure your business stays on track.

Step 5: Accurately Track Your Goals

You cannot measure progress unless you are measuring against something specific – that’s where SMART goals come in. You need to establish metrics and benchmarks against which you can measure your progress. This way, it’s easier for everyone to see whether they’re on track towards achieving the goal and when adjustments need to be made.

Final Thoughts

Clear goals provide a clear direction for your business and keep everyone on the same page, working towards achieving something that is meaningful and beneficial to all. They can be used as an effective tool when pitching to investors or potential partners to give an idea of how the business will progress over time.

No matter how well your business is doing, there are always areas for improvement and new heights to reach. Setting goals is the first step on the journey to success..

Four Steps to a Successful Profitability Analysis

Posted on | by Jessica Weston | Leave a Comment on Four Steps to a Successful Profitability Analysis

Are you uncertain about the level of success you achieved? There’s a quick way to get an overview of your finances.

Not enough companies run a profitability analysis – a defining indicator of profit. Such an analysis relates to costs and overall revenue and it can provide insights into how a business runs.

The occasional analysis can also indicate if it’s time to make some changes. 

Maybe some clients require too much time for the money. Perhaps there are other opportunities around the corner that you can jump on.

Either way, it should be on your list of tasks if you want to ensure long-term business growth. And here’s a simple blueprint to follow for a successful profitability analysis.

Step #1. Calculate Margins

Two of the most important variables in a profitability analysis are gross and net profit margins.

You can get the gross profit margin by knowing your sales revenue minus the cost of labour.

For the net profit margin, you must subtract all expenses from your revenue to get the magic number – the margin – and then divide the previous result by your revenue

Don’t forget to look at the segment profits, too. 

Odds are you offer a suite of services that each has its own revenue stream. Take the numbers for each segment, subtract the costs, and include overheads in your calculation.

If you do this, you get a more detailed insight into how money moves in your business.

Step #2. Perform Client Valuation

Here, you must look at each client and figure out how much each of them brings.

Performing a client valuation essentially means to determine the worth of each client. So, subtract from the revenue all of your costs, such as marketing, hourly labour, travel expenses, and so on.

After all, you want to find out the costs of keeping each client satisfied. 

Some clients may not pay a lot for your services. But you may have a better profit margin with them if their projects take very little time from you or your team.

Maybe you have good cash flow. But it’s possible that when you draw the line, there’s not a lot of profit in it.

Step #3. Look at the Past Numbers

A thorough profitability analysis looks at past quarters over the years.

Why?

Although your current numbers may look good on paper, you need something to compare them to if you want to know where you stand.

Step #4. Benchmark Industry Ratios

Your numbers only mean something in the context of your niche. It’s because profitability numbers aren’t the same in accounting as in health care, education, e-commerce, etc.

If you look at your past and current numbers, you can figure out your business’s progress so far. But what about compared to your competitors?

What about your position in relation to the market?

Always be sure to check average industry ratios to give you a better sense of where your company is as opposed to where it should be.

Do It for Peace of Mind and Direction

A good profitability analysis can help curb anxiety when it comes to your business. At the same time, it can tell you what you should be doing to improve and grow it.

If you ever find your business lacking direction, remember that an analysis can help you spot issues that you couldn’t otherwise. 

It’s a game changer.