A need to survive and thrive!
A few weeks ago, I was standing in the biting cold with a few fellow unfortunates, waiting for a business premises to open. When I was able to get inside to talk to the business owner, I rapidly realised that some ‘tough love’ was required over the next few hours. The individual concerned had never prepared a sales forecast or cash flow, and had no idea which of her various sales channels were the most profitable or generated the most cash. In addition, due to a series of ‘bargain buys’ she was overstocked, with no immediate prospect of turning these stocks into sales. In short, unless rapid remedial action was taken, she was facing financial catastrophe. So, we worked closely together to rapidly generate a focused sales, profit and cash flow forecast. The stressful heat generated in that meeting meant that the cold outside was a dim, distant memory. It had been tough for her, but at least she could see a way forward to survive, and then thrive, with renewed hope. As I drove away with my heater going full blast, it struck me that, sadly, her situation was not unique – follow up research proved this assumption to be correct.
Recent research has shown that up to 91% of small businesses are surviving beyond 12 months, but that this figure drops to just 40% after 5 years. Why? Many start ups manage to ‘hang on’ during those 12 months, relying on personal funding, or part time employment, and living on hope and enthusiasm. After a year, if the business is still failing to make enough money to provide a sustainable personal income, hope begins to fade, and the idea of going back into employment starts to look attractive. But this need not be the case.
Action to Survive and Thrive in your Business
Here are a just four suggestions to not only survive, but thrive in your business beyond those early days:
- Prepare a Business Plan. This doesn’t have to be very long, just covering key points, for example, your target market, and how you are going to approach it, at a competitive, but profitable price
- Build up a monthly sales and cash flow forecast for at least 12 months, identifying your key income streams, relative profitability, and your ongoing running costs or overheads. This will focus you on the important sales and help you to spot cash flow shortfalls in good time to take remedial action.
- Don’t forget your personal budget – how are you going to cover your household bills until the business can afford to pay you something?
- Talk to those who care about you. You will need their support during the tough times, so explain to them your ‘why’ and how you plan to build your business over time
Keeping focused on these essentials will help you to not only survive, but thrive in your business. If you would like to get back in control with some robust financial planning, and actually start enjoying being in business, call me on 07774 548822 or email firstname.lastname@example.org .