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Monthly Archives: February 2017

Tips to Do Forecasting For Profits

Forecasting may appear to be difficult at first sight, but with careful thought and realistic assumptions it is surprising how accurate a forecast can be. Not only will a good forecast show up any slippage in your assumptions, it will very quickly allow you to see how efficient your business is operating and reveal areas that can be improved and so increase profit.

One important point to remember is if you find you have made significant errors in your forecast and you discover the error, you can always revise it for the remaining time it has to run.

The income of the business should be comparatively easy to set. It will comprise any revenue coming into the business from various sources. Obviously different businesses have different streams of income, which will include sales of goods or services, commissions, fees, rents, rebates and many other sources of revenue. When compiling a forecast do not fail to take into consideration any known price increases or other factors, including inflation that will affect your income figures. It is a great sense of achievement and encouragement when you see your actual income figures exceed your forecast income figures and your expenditure figures in line with or below your forecast. So try and get it as near right as possible the first time.

When setting the expenditure figures for the business extra care should be taken. This is one of the most difficult forecasts to make. Done realistically and with careful thought it will be of enormous benefit to the business.

What you are endeavouring to do is to forecast as accurately as possible how much money it will cost you to operate your business for the period of the forecast (usually one year), split into monthly segments. This will mean itemising and considering all expenditure, large and small that the business will incur. It is not possible to be absolutely accurate with these forecasts, but with care, realistic figures can be arrived at. Don’t forget to include known increased costs that will be effective at a later date such as taxes, statutory costs, rent increases, wage increases, inflation, seasonal variations and any other known factors. It is always advisable to add a small percentage to the expenditure figures that are likely to fluctuate as a contingency.

Once your expenditure figures have been set and you are satisfied with them make sure that you check your actual costs against your forecast on a regular basis, certainly at least once a month.

By doing this you will be able to see immediately what your expenditure is in each area of forecast and enable you to take remedial action on any serious over expenditure.

It will also show up quickly any shortfall in your income and enable you to determine the reason for the shortfall and take swift action to rectify the situation. It will show up any areas where savings can be made on items of expenditure, for example savings can very often be made by shopping around for outside suppliers of services.

 

Small Business Administration

The most important part is the generation of revenue, whether you are selling something, making a product, servicing customers or any other activity. It is in the interest of any business to secure as much revenue as possible whilst keeping under control the overheads. This is the reason planning and controlling your business in the greatest possible detail is essential and, monitoring the performance of your business against your business plans regularly. This is why your administration should be organised to give you all the information you require with as little delay as possible.

Stock control is a very important item that has to be dealt with continually. Some of the costs involved in stock items should have been covered in the business forecasts, but not all. If you carry too much stock of products or materials, whether bought in or manufactured by you the same result applies. You have tied up capital and labour that could be used for other purposes. You also have the danger that the stock could depreciate and even become obsolete. If you stock too little or carry too small a range you will lose sales to your competitors. It is essential therefore to have a good, efficient and accurate stock control that gives all the information you require such as cost prices, date of purchase, maximum and minimum stock quantities, turnover ratios and any other information relevant to your business. A typical use for a good computer program.

Another administrative function which needs careful and close attention is debtors. If your normal trading terms for credit transactions are 30 days from the date of supply you expect to be paid within that 30 day period. If you are not paid within that time your customer is in default. So take action to recover your money immediately your customer breaks the agreement. This does not mean becoming heavy handed or upsetting the customer, very often a simple polite phone call will resolve the problem. Explain the situation. Ask if there is any sort of problem with your goods or service and make the point that you agreed terms which they have failed to keep. If you still do not receive payment after a few days confirm your telephone conversation with a letter adding that you require payment by a certain date. If you still do not get paid it is then time to take a firmer approach. It is better to lose a customer who does not pay than to keep supplying them in the hope that one day they will eventually pay.

Debtor control is an important task, do not neglect it. If you do not relish the idea of chasing debtors there are other ways of overcoming the problem but all of them will cost you money. Just to name a few methods that you may wish to consider are:- Factoring Services, Solicitors, Debt Collection Agencies, individual debt collectors and other debt collection services. As stated they tend to be expensive and one other drawback is that the debtor is not their customer, but yours. This can very often upset your customer but if the customer really is a liability this should not cause you undue concern.

You will need the services of a good accountant who can advise you on financial matters, offer tax services, employment costs, staff payroll and many other services you will require. It is always advisable to discuss with the accountant just what they are to do on your behalf and how often it is to be done. You must also agree fees with your accountant before committing yourself and do not forget that you can negotiate fees in most cases.

Banking for your business is a necessity which you have to arrange. It is an expensive service that so it is advisable to shop around. Find the best deals available to suit your business and circumstances even if it means changing bankers occasionally. You may wish to consider on-line banking, which the banks claim is less time consuming and cheaper than conventional banking. The type of banking that you use depends entirely on the requirements and situations of your business, but whatever they are, examine the offers and plans that the banks have to offer. Talk to your accountant and bank managers. Obtain the best deal that you can and, above all, make sure that any proposals put forward are in your interests and always query any charges which are not self explanatory.

 

Small Business Marketing Keys

1. Know your niche. Choosing a target market will help you focus your marketing efforts. If you aren’t sure who to market to, how will you effectively choose advertising outlets and marketing activities?

Knowing your niche will also help you create products and services your potential customers are interested in. Hang out where they hang out and ask them what they need. Create products and services to meet those needs – voila! Sales will follow.

2. Start an e-zine. And if you already have one, actively promote it.

If you build a mailing list, you will have a group of people who have told you they are interested in your products, and, you can consistently market to them over and over again. The key is to actively promote your list, and get as many subscribers as possible. A great way to entice people to sign up for your list is to give them something in return. For example, you could give away an e-book, a report or an e-course.

You may be worried that you can’t write well, or that writing isn’t exactly your favorite thing to do. No worries. If you’re not a writer, there are article banks where you can pick up great content that your niche will love. Do an Internet search on “article bank” and you’ll find hundreds of sites that provide great content.

3. Be consistent. You need to be in front of people on a consistent basis so that they will get to know you, and they will remember you when the need for your products or services arises.

If you decide to do an e-zine, publish it consistently. If you decide to write articles, do it on a regular schedule. Whatever efforts work for you, do them regularly.

A good rule of thumb is to spend about 1 to 2 hours per day on your marketing activities. This will ensure that your name is consistently pushed out into the market.

4. Choose marketing activities that you love. For example, if you love networking, make that a part of your marketing activities.

If you choose marketing activities that you love, you will be continually motivated to carry them out. You do not have to engage in activities that aren’t authentic to you. There are plenty of activities to choose from.

Create a marketing plan using the tips above and act on it consistently. Remember, people will purchase products and services from those they know, like and trust. Allow people to get to know you by engaging them on a regular basis. Before you know it, your efforts will be paying off, and you’ll have a powerful business.