Don’t Just Leave Your Business Numbers to Your Accountant: Learn… Understand… Make BETTER DECISIONS for Your Business
In the world of business, every move you make leaves a trail—a trail of numbers, data, and information.
Whether it’s a sales invoice, a bank statement entry, or a delivery record with a courier company, your business generates a constant stream of data.
This data isn’t just numbers; it’s the key to unlocking your business’s full potential.
Welcome to the world of effective business planning, where numbers become your trusted ally, not just for accountants, but for savvy business owners like you.
Imagine planning a road trip from London to Edinburgh.
Any sensible motorist would map out their journey: Which motorways to take, where to exit, the distance in miles, fuel needs, and petrol station locations.
If a hundred drivers set out without planning, how many would actually reach Edinburgh? Not many, right? Well, business planning is no different.
Effective business planning begins with understanding your business’s current state.
As a business owner, you should know your assets—functional ones like machinery, factory premises, computers, and vehicles, monetary assets like sales invoices and cash balances, and intangible assets like customer databases and production processes.
But that’s only half the story. You must also have a clear picture of your liabilities—outstanding invoices, finance agreements, tax obligations, and other debts.
Yet, your business snapshot doesn’t end there. You need to consider your products and their profitability. What’s your gross profit margin on each product? Which product is your best-seller? Is the market growing, and who are your competitors? Often, these questions are overlooked, but your business doesn’t operate in isolation. It thrives in a dynamic marketplace where customer needs change, affecting demand and competition.
Understanding your place in the marketplace is crucial.
Once you’ve grasped your business’s current position, it’s time to chart your course for the future.
Your vision should encompass tangible, realistic goals—perhaps a 25% increase in net profit, a 30% reduction in borrowing, or acquiring enough cash to buy new equipment. Your goals must be clear and documented.
Now, you know where you are and where you want to be. The next step is to devise a plan to bridge the gap.
When formulating business plans, don’t just state targets; create actionable steps.
Saying you’ll increase sales by £50,000 in a year isn’t enough. How will you achieve this?
Will you focus on existing customers or seek new ones? If it’s the latter, where will you find them, and what strategies will you employ?
You can harness the power of data analysis to understand your customer acquisition process better.
For instance, if sending sales brochures leads to sales calls and eventually new customers, you can use data to calculate how many brochures you need to send to reach your customer acquisition goals.
Remember, business plans can address various aspects, from customer acquisition to improving production efficiency or reducing overhead costs.
Regardless of your goal, it must be supported by realistic and actionable steps.
Now, you’ve identified your starting point, your destination, and the roadmap to get there. All that’s left is implementation!
Plans may encounter unforeseen challenges, but savvy business owners understand the importance of reviewing data regularly. Your business’s data footprint will help you track progress and make necessary adjustments.
In essence, this comprehensive planning process forms the bedrock of business success:
- Understand your current business position.
- Set clear goals for where you want to be.
- Create actionable plans to achieve your goals.
- Implement the plan and continuously monitor progress.
With this approach, you’re not just a business owner; you’re the captain of your entrepreneurial journey, steering your ship to success with confidence and data-driven insights.