It’s funny that everything changes on a day. Last year (2017) is over. Closed. Done. Behind us.
This year (2018) has just started. Open. Starting. Ahead of us.
One is known. We know what we did last year. We can analyze it. Do an autopsy on it all.
Yet, we all have to face a statistical fact. 2017 performance is not an indicator of this year.
This year is unknown. Just born. Not even crawling, yet.
We have no clue where we will be 364 days from now. Up, down, sideways, who knows?
What can we do to make sure some type of success or ability to see when we’re getting off track as business owners or key decision makers?
We can find what our 2018 targets actually are and strive towards hitting them.
Here’s a quick checklist for my fellow business owners and entrepreneurs to make sure we’re heading down a path of growth.
Start with the 1. Finance side
First let’s get the math finished and out-of-the-way. How much blood do we have to keep our business alive?
- FCF – What is your Free Cash Flow situation. Don’t know what FCF is. Well, it’s how much cash you have on hand or access to within 30 days to use running your business? ________________
- Fixed + Variable Costs – How much does it cost to run your business day-to-day? I like to do this as a monthly figure. What is your month cost? ____________ x 12 = __________ year total.
- Acid-Ratio Test – Can you survive the year? Take #1 and divide by #2 = ______You want this number as greater than 1 and less than 2 for most businesses. Meaning your business is fully funded for the next 12-24 months. Consider investing those excess funds into other assets as a hedge against potential future business losses.
If your Acid-Ratio Test is 1-2 or greater than move into the next section. If your acid-ratio test is higher than 2 then talk to your financial advisor on what actions make the most sense for your situation with making the extra cash work for you.
However, if it is less than 1 it is certainly a different ballgame. Many employees live paycheck-to-paycheck. Business owners can sometimes live in between the days between money in (AR) and money out (AP).
Not to worry though if it is under 1. Just consider it a wake-up call or cold shower to increase sales and profits.
Remember the finance side of a business is fairly simple for most businesses. We just have to make more money than we spend.
Unless of course we have rich relatives funding us via debt. That’s a different scenario to explore in another post.
Let’s say our ratio was .5. That means our business and bellies can live for 6 months. We don’t have to worry about those six months. They’re covered. We need to focus on getting another 6 months of free cash flow. Meaning the number from 2 x 6 = _______________
That becomes our sales target. We have six months to hit that target.
IMPORTANT: One last thing before leaving this section. Make sure you factored in your known tax obligations when adding fixed + variable.
For US – check with your accountant or tax attorney on how the new laws will impact your business.
For all other countries – factor in your tax structures and check with your accountant or tax attorney.
Great. So now we jump right into sales and marketing, right? Ummm. No
Move to #2 – Leadership Situation
Who is the leader? You? Someone else? A partner? An investor? A team?
What are the three (3) strengths, three (3) weaknesses, and three (3) core values of yourself or those other people? All of those are the inputs that will have direct impacts on all business actions and choices.
We are looking for these answers at a personal level first. Who are we outside of our business? Who are we if this business does not exist?
We don’t want to set ourselves up to fail by gaining our self-esteem from the success or failure of our business. Why? Well, simply too many things are out of our control.
We could do everything proper and still fail. We could make every dumb move possible and become a billionaire. Gaining self-esteem and setting our sense of worth with strong attachments to our business titles or the amount of money on the ATM slip isn’t a healthy choice.
Is it a solo business? If yes, then these leadership issues are even more important to discuss with trusted friends before jumping into sales and marketing decisions. Before we can think outside of the box – we need to damn well understand the good things in our box and what should immediately be discarded.
Why? Well, because it will give us focus.
It will remind us that we are in charge of our destiny. Or at least our choices towards trying to reach a certain destination. We are driving. That means we’re accountable and responsible. So where do we want to go? In simple terms, we want to land in Profitville not Devastation Reservoir.
I urge people not to try to change their negatives. I find this a giant time-wasting event.
Accepting my weaknesses – that is the key for true growth.
Batteries have a positive and negative. That’s how they get their power. Nobody is perfect. When we embrace our weaknesses life gets a lot lighter and easier. The same is true for our business leadership role.
What message are we sending? Who are we sending it to? Why?
We need those answers before we can jump into marketing or sales.
Move to#3 – Marketing
Why do I put marketing before sales? Well, if we don’t know the answers to these questions we are certainly setting ourselves up for failure during in the sales process. Why? Our customers are going to ask us these questions and much more. Shouldn’t we know the answers first?
This is why marketing has to come before the sales process.
Otherwise we’re wasting the one thing we can’t afford to waste – time.
Time is our most valuable resource. It is an even playing field for all business owners. Most important it is free. Even more important it is finite.
Sales types will argue that it is all about generating revenues. That’s quite naïve.
They will also forget the basic fact – most people dislike sales people and certainly don’t enjoy being sold.
I can tell you story after story of great sales deals that have bankrupted companies – because they couldn’t service what they sold. Or great salespeople who couldn’t manage or build a team to save their lives.
Sales is important – but it is only a piece of the business puzzle – not the puzzle.
As a business owner I want to take the time to really answer these 10 key questions about my business, customers, products, and services.
It will help me in the sales process in ways that bring more profits.
- Who is our customer?
- Who is not our customer?
- We should understand the wants, needs, desires, wishes, and hopes of #1 and should not hang out with #2
- Where do our customers hang out?
- Can they afford our product/service?
- What are the creative ways to reach them based on our budget?
- How can we track the success/failure of those tools?
- What is the message we need to craft?
- How do we consistently deliver that message?
- What do we do to refine the message? To make it new and fresh again?
Move to #4 – Sales
Truth is most people don’t like sales. It’s hard. It is a bipolar event that swings from euphoria to frustration. multiple times throughout the work week.
It does not come easy to most people.
There are a few ways to approach sales.
- Hire someone and allow them to do it for you.
- Create referral systems. If you have a high-ticket product/service with decent profit margins use 3-5% referral fees if possible. Some businesses are legally prevented from paying referral fees. (check with your attorney on these issues)
- Do it yourself
- Create a referral environment
Understand that if you’ve answered the questions properly in Finance, Leadership, and Marketing then the sales process isn’t that complicated.
- We know our target – Finance
- It is within our power to get there – Leadership
- We know who we need to talk to – Marketing
- Now we just need to ask a few simple questions – Sales
Because it is just a five-step binary process now that you’ve done all the other work.
- Do you want to buy my product/service? – This is a binary event – Yes or No. Maybe is a polite version of no. Don’t waste your time with tire kickers or people who want to have long conversations without providing some type of payment to you for your time.
- Can you afford my product/service? – Again another binary event – Yes or No
- Bill them for the product/service – Again another binary event. They either pay or don’t pay.
- Deliver the product/service to them. Again another binary event. Did you do what you said? Yes or No. If no, fix it quick.
- Ask for more business and referrals. Again another binary event. They either give you more business and referrals or they don’t.
Ygetarts is here to help you grow your business during 2018.