Posts Tagged ‘12 Months’

So you have a business plan; a solid direction and strategy for achieving the goals you have set for you, your team and your business. But, have you taken care to make sure you avoid getting trapped by the most critical of the business planning mistakes?

Don’t panic. While many people make these mistakes, they are easy to avoid.

Business Planning Mistake #1:
Not having a written plan! Companies both large and small often operate without written business plans, and they say, “Well I have a plan.” But that plan is in their head! Without a written plan they have nothing to keep them on track when circumstances and life take them over; they have nothing that shows their team what they need to do and why they are doing what they do; they are missing a key accountability tool! Plus, if you can’t write where you are going, you can’t speak it. And if you can’t speak where you are going, you can’t tell others where you are going. And without a team that helps you, you can’t get there (at least not easily). It is simply too big.

Business Planning Mistake #2:
Working from a plan that is more than one year old! We live in a world of great change and if you are operating from a plan that was written or revised more than 12 months ago, you haven’t likely made the changes necessary to adapt to the change that affects your business, your team, and your customers.

Business Planning Mistake #3:
Not following the plan you write. More business plans than anyone cares to admit end up serving as a doorstop. So why do people write a plan and then not follow it? Many times the author of the plan doesn’t want their staff to know the plan is in existence because they are afraid of being held accountable for doing what the plan says they need to do, in order to get to where they say they want to go.

Business Planning Mistake #4:
Not being specific enough. A business plan needs to be very clear in terms of what specific measurable results (SMRs) will be produced and the date by-when they will be produced, especially in stating the company objectives, sales goals, and margins. Without these specifics: a) it is nearly impossible to hold anyone accountable for reaching the objective; b) you leave too much room for assumptions and misinterpretation; and c) without specifics, you don’t know when you have reached your goal and are actually done!

Business Planning Mistake #5:
Making unrealistic assumptions! In every business plan there is a certain number of assumptions that have to be made. However, in making those assumptions you have to be as realistic as possible. For instance, if you assume in your plan that your potential market will contract by 2% and realistically it will contract by 10%, your entire plan is based upon bogus numbers. What good is a plan if that plan is nothing but a fantasy?

Business Planning Mistake #6:
Not understanding what the financials are telling you (and your investors). There is a reason why companies have financial officers to keep the company’s financial affairs in order. It simply takes a person with a head for financials to do them well. However, that doesn’t mean that the entire executive team doesn’t need to understand what the financial data is ultimately telling you and your investors! If you have to, ask for the financial information in terms that make sense to you. Don’t ever accept a financial analysis that you can’t explain to someone else!

As you can see, not one of these common business plan mistakes is insurmountable. Just be aware of their dangers and use these tips to avoid them. What’s next for you is just waiting for you to claim. So have fun and go for it!

Clay Nelson is a business coach, experienced talk show host, author, former “nail belt wearing” contractor, and speaker at numerous trade show and corporate events. Backed by 30-years of experience and leadership in the building industry and as a business coach, Clay uses his innate intuition and people skills to help his clients and audiences take a look at what’s stopping them from achieving their goals. He then helps them create plans and build teams for getting what they say they want and by-when they say they want it!

He is the founder of Consulting Services Network LLC, Clay Nelson Life Balance, and a non profit organization called Transforming America’s Youth that makes a difference for troubled youth throughout the United States. For more information, go to http://www.claynelsonlifebalance.com

Author: Clay Nelson
Article Source: EzineArticles.com
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What is a Business Plan?

A business plan is basically a blue print to success. It sets out the parameters of how the business will operate, who the key players are, the plan going forward and any other relevant information that the author deems necessary should be included.

Why do I need a Business Plan?

You need a Business Plan for a number of reasons. First and foremost it is will focus your mind on where you are going or where you intend to go. It will dictate the speed of growth and will also allow your staff and other members of your team to share the vision.

Secondly, a Business Plan will be required if you intend to raise finance. If you intend obtaining a Business Loan or finance through other funding streams then again you will need a Business Plan. One thing is for certain, it is imperative that you construct a plan and amend/update it regularly.

Does the Business Plan change?

Yes it does. As your Business grows and changes, so should your Business Plan. It is wrong to assume that a Business Plan, once created, is filed away in a draw for 12 months. It should be kept in an easily accessible place and be update on a regular basis – for this reason alone it will focus your mind on where you are going.

What should the Business Plan contain?

This will depend on your own requirements but let’s take a look at some basic components:

SECTION 1 – Principle Business Details and Activities.

1. NAME OF BUSINESS

The name of your Business goes here.

2. BUSINESS ADDRESS

Company address goes here.

3. BUSINESS TELEPHONE CONTACTS

Your business telephone contacts go here.

4. DATE BUSINESS COMMENCED

This is the date that your business started or was registered with Companies house.

5. LEGAL STATUS

Whether you are a sole trader or a Limited company.

6. PRINCIPAL ACTIVITIES

Describe your main business activities. For example:

The development and creation of jewellery which is then sold via the internet worldwide.

SECTION 2 – Your key Business Objectives

SHORT TERM BUSINESS OBJECTIVES

Here you should include your short term vision. An example of this would be as follows:

To develop a sustainable business through the development of excellent products and customer service. We aim to develop 30 products within the first 12 months of trading, and achieve a turnover of £50,000.

MEDIUM TERM BUSINESS OBJECTIVES

A medium term business objective should be 3 to 5 years maximum. Include here where you want to be by this time and how you plan to get there. For example:

We aim to have created 100 products by 2008. The majority of these will be created by staff that will be employed as a result of the short term aim achievement.

Our turnover by this date will be £250,000 with a profit margin of 35%. Our sales will be predominantly achieved through internet advertising although we expect during this period to trial other methods such as National newspaper advertising.

LONG TERM BUSINESS OBJECTIVE

The long term business aim should be your ultimate goal. This can be any length of time from 5 years to 15 years. An example of this would be:

To have 50 different retail outlets strategically placed around the UK in areas of high demand. The company aims to exceed an annual turnover of £2,000,000 with a profit margin of 35%. The company will still continue to trade via the internet and it is expected that this will account for 40% of our business.

SECTION 3 – Key personnel

NAME AND POSITION

Insert name and position. Example:

Richard McMunn – Business Development Director

DOB

Insert date of birth

STATUS

Business Development Director and shareholder.

EXPERIENCE AND KNOWLEDGE OF THE INDUSTRY

Insert any experience and knowledge of the industry.

PREVIOUS EMPLOYMENT

Insert previous employment here.

QUALIFICATIONS

Insert qualifications here.

NAME

Repeat the above for all key personnel.

SECTION 4 – Premise details

In this section, indicate where the business is registered and where the business operates out of.

SECTION 5 – Equipment

Include all equipment that is owned by the company. Examples of these would be:

- Computers including software and hardware
- Vehicles
- Manufacturing equipment etc

SECTION 6 – Products and services

Indicate here what services and products are offered by the company.

SECTION 7 – Advertising

Here, include details of how the company advertises its products. This may either be in the form of internet advertising (Google, Yahoo or otherwise), Newspaper advertising (either National or local), other media avenues such as Admedia or any other form of advertising.

SECTION 8 – New products and services

Include here all of your predicted new products and services that will go on sale within the next 12 months.

SECTION 9 – Pricing

- How do you price your products?
- What is the profit margin of each product?

Include a breakdown of how much each product is on sale for and how much that product costs to produce.

SECTION 10 – Customers

What is your target audience and how do you know this? (i.e. ages 16 – 30). How to you reach your customers? How many visits does your website get each week?

SECTION 11 – Business strengths

Include here all of your business strengths.

SECTION 12 – Areas for Improvement

Here, include all of the areas you believe you can improve on. A business that has no areas to improve on is not telling the truth!

Be honest and look critically for ways in which you can improve or develop.

SECTION 13 – Business competition

Who are your major competitors? How do you monitor your performance against theirs? What are they doing that’s different or better than you?

SECTION 14 – Market predictions

How do you predict your market and adapt to the changing conditions? For example, during Christmas time sales may increase depending on the type of product you are selling or the service you provide. January through to April maybe slow in terms of sales due to the fact that people are less likely to spend after the expensive Christmas period.

Think about your business and how the market will vary from month to month. It is essential that you begin to track your daily sales/turnover right from the word go. After a year or two of trading, you will be able to predict your sales and adapt accordingly.

SECTION 15 – Sales and Promotions

What are your predicted sales and the reason why? Are you planning on running any promotions throughout the year?

SECTION 16 – Financial Information

How long have you been trading and what is your monthly/annual turnover?

How much have you spent on starting up your business? How did you finance this initial investment?

What is your predicted turnover for the next 12 months and why?

SECTION 17 – Business asset statement

What are the financial assets of the business including stock.

Richard McMunn, a Firefighter for the last 17 years and a HSBC Award winning Entrepreneur, has created a winning formula that will show you how to succeed at any business, even if it’s part time. Claim Richard’s free course now : => http://www.how-to-start-a-business.co.uk.

Author: Richard McMunn
Article Source: EzineArticles.com
Healing food: natural way to cure cancer

Let’s look at what makes a retailer profits.

It’s just a few main things…

Number of stock turns in a year, Gross Margin or pricing strategy, How many staff you have working relative to turnover, Rent proportional to turnover or revenue, Conversion rate of walk in traffic to purchases

Let’s investigate all 5.

Stock turns per year, from years of working with retailers, is something a lot of the shop keepers don’t know. Work it out if you don’t know by looking at how many times the cost price of your stock divides into your turnover in 12 months.

e.g. If your stock was valued at $50,000 and you turned over $150,000 your number of stock turns would be 3. If your gross margin was 50% you would make $150,000 gross profit as well.

Stock turns gives you profit, so therefore the more stock turns you do the greater the profit, this is important for you to remember.

In retail you want as many stock turns as possible. But what affects stock turns is what we need to look at.

Stock turns is affected by price and conversion rate (or selling skills). If your prices are much higher than your competitors this may (but not necessarily) affect your sales and hence stock turns.

Conversion rates play a massive role in making profit. If you get 20 people a day walk into your shop but only 2 buy you won’t be making much profit. How you approach customers is extremely critical as you can lose any chance of a sale by uttering just 4 words.

I hope you don’t take offense, but I am going to tell you the worst 4 words you can say…

Can I help you?

Every person has hear this a 1000 times so their reflex reply is virtually always… no thanks, just looking!

Sale lost!

So I suggest you say to people – Hi, have you been into our store before – or something similar. If you have a lot of repeat business with people coming back very regularly I would recommend you say – Hi there, how long since you’ve been into our store?

Either question has to elicit a yes or no answer. Either one is great as you can follow it up with – Really. Let me show you around!

This is so simple, yet so powerful. I worked with one retailer who used this first line and with a bit more help and fine tuning he achieved a 100% success rate for a whole week! Yes, every person who walked in bought something. Prior to this sales system he was getting about 62% of walk in people buying.

So try it out for yourself, let me know how you go with it.

So let’s look at how to increase stock turns, apart from the most powerful one, which is always sales training by using a different greeting…

To increase stock turns you must find out what’s selling and what isn’t. You must measure to find out. Whatever stock has been in your store too long (which could be 3 months) you need to get rid of. In other words sale it off.

I never recommend discounting by a percentage. This can be fatal! I suggest you mark down the price with a tag that says – Was $X, now $Y, save $Z. This works great. Or, just cross out one price and put the new lower price.

Or you can put all stock you want to sell in a special place and tell customers if they buy something else in the shop for ($X) they can have anything in the special place for half price.

The reason you MUST sale off old stock is due to opportunity cost. In retail you need to divide the whole floor up into squares then look at what is selling in each square. It’s all about return on investment from rent paid. You must make a profit from every square in your business, so whatever occupies a square must be selling every 3 months or so.

Whatever isn’t selling in a square is costing you money, lost money from having something in the square that could be selling.

This is called retail knowledge and comes with years of experience in your industry. Finding out what sells best with good margins is what retail profits are all about.

Most retailers I have met say it’s too much work to measure stock levels every 3 months, so they do it once a year because they are too busy. Busy-ness has nothing to do with profits. Busy people go bankrupt from business ownership every day.

Let’s look at the next point. Your pricing strategy or margins.

I meet retailers all the time who don’t know their gross margin or profit. When I ask them what their gross margin is they typically tell me 150% to which I reply you can’t have over 100% profit. Unfortunately retailers mark up by a percentage, they don’t often work on gross margin.

Gross margin gives you gross profit and gross profit is what pays the rent and overheads, not mark up. That’s why it’s more important to know margin. So ask your accountant to work it out if you don’t know how. I don’t have much space here to explain it.

Here’s out last point to cover, how many staff you have working relative to turnover.

This isn’t a simple cut and dried answer. This takes careful measuring from history to decide on the future.

This is where additional marketing can be extremely profitable, yet few retailers do it effectively. If you design and run a newspaper ad, make sure you have an offer on it so it makes it easier to track responses, sales and profits from sales to know if your ad worked or not. This is crucial!

Don’t assume your ad works as I have found 98% of all newspaper ads do not make even $1 profit enough to pay for the ad from the profit from the sales, which to me is the only measure of a successful ad. It takes great expertise to make good profits from newspaper ads.

When you have a turn-key system to generate sales, it makes it so much easier to plan staffing needs.

In regards to rent to turnover I have met business owners who are paying 32% of their turnover as rent and wondering why they can’t make enough profit to even pay themselves. So get hold of some benchmark numbers for your industry, look on the web or ask your accountant and see how your rent compares to your turnover for your industry.

One final tip… have each of your staff measure their own conversion rates, from walk in to paying customer as a percentage. This will automatically increase, just by measuring it! A very powerful thing to do.

Put all these tips together, including changing how you greet customers, measure what sells and what doesn’t, monitoring marketing returns, watching staff numbers and selling off items that haven’t sold in a needed time frame, all will add up to BIG profit increase. And that’s what you’re in business to achieve isn’t it?

Tim Stokes is a master at finding the key KPI numbers in any business to measure, which instantly create profit improvement. His results with growing businesses are so incredible they almost have to be seen to be believed.

Tim is the Founder of Business Building Mentors and creator of the unique business training service – The Business Freedom Workshop Series.

To learn how to increase your net profit margin to give you more freedom in your life as a business owner (not a self employed employee) from better small business management or visit – http://www.7stepstobusiness.com.au.

Author: Tim Stokes
Article Source: EzineArticles.com
Excise Tax

If you have been in business for any length of time then there’s a good chance your business today is a lot different than it was in the past. Industries change and to remain successful you must change too. Your business of today may not resemble the one you described in your original business plan. You did write a business plan, right?

There’s a tendency for business owners to become lax in watching their profit centers when business is going great. Sales are growing, profits are increasing and business owners just enjoy the ride. That attitude will quickly get you into trouble when the times turn tough (and at some point that will always occur). To increase profits in both the ups and down cycles, you must be ever vigilant in identifying the most profitable parts of your business. The least profitable should be identified as well.

The key is to identify and/or eliminate products and services that are marginally profitable. Then use the resources that were going into those marginally profitable products and services and redirect them into expanding the portions of your business that are the most profitable.

Some owners wait until their company suffers a downturn in profits and/or sales to take a closer look at the ‘profit centers’. Delaying that analysis will increase the odds that you will actually go out of business. By properly acting on the results your company will be more profitable during the up cycles and more likely to survive during the down cycles.

How do you do it? Take a close look at the sales price of all of your products and services and then assign the proper costs to them. It is not a complicated thing to do and the results may give you some real insight on how to increase profits.

For example a friend of mine owned an Air Conditioning and Heating distribution business and the profits had declined steadily during the recent 12 months. We performed an analysis of his operation by matching two years worth of customer invoices and then matching them with the Cost of Goods associated with each invoice. We selected 2 years because according to the owner, the year prior had been a very profitable year. The problem was that recently the profits had declined even though the overall sales volume had increased.

We analyzed the prior years invoices and assigned the associated Cost of Goods to them, that gave us a baseline. The analysis of the most recent invoices did not show much difference in what the profit should have been. It actually showed that there should have been more profits than in the prior ‘good’ year. So if sales were up and the costs of goods sold were in line, then where was the profit going? As it turned out, he had some major theft going on within his business. He instituted new security measures as well as adding cameras in his warehouse and performing more spot inventories and audits. Within a very short period of time his profits had bounced back and were higher than in the past.

The issue is that he waited until he had a problem. Had he been more proactive he would have put those types of security programs in effect much sooner. Had he done so, he would not have missed almost 12 months worth of declining profits.

Here’s another real world example. Restaurants are the most failed business venture in the United States. The percentage of restaurant failures exceeds most other types of business by a very wide margin. Why is that? In my opinion, there are two major factors. First there is a tendency for people who can cook really well to believe they should open a restaurant. So they open a restaurant and realize they know nothing about running a restaurant. These types of failures usually happen pretty quick.

The second reason is most restaurant owners do not do a proper analysis of the cost of the menu items. They may open their business and have an outstanding first year or so, then notice that profits are dropping even though business appears to be very good. After about a year in business these owners begin looking more closely at their competition and decide they must price their menu items ‘at the market’ to remain in business.

Can you see the problem here? The owner is making a business decision without ever studying the underlying cause and effect. Most restaurant owners will NEVER conduct a profitability study on every item on their menu. Which is exactly what they should do and continue to do so on an ongoing basis. If and when restaurant owners take a look at the gross profit study, odds are pretty good that they will find the price they sell some menu items for will not even cover the cost of the raw ingredients, much less contribute to any overhead. Armed with that information they can either alter the menu or adjust their prices. Here’s a nugget of advice “Just because your competitor is doing it, does not mean they are making a profit doing it”.

All businesses owners should conduct a gross profit study. And what will the study show?

You have probably heard of the ’80-20′ rule, otherwise known as the Pareto Principle. The idea of the Pareto Principle is that 20% of the known variables will produce 80% of the results. The results can be either positive or negative. For example, 80% of your problems come from 20% of your customers. Or 80% of your profits will come from 20% of your products. So after your gross profit analysis, you will have a good idea of exactly where to concentrate your efforts.

If you find 80% of your profits come from only 20% of your products, then obviously you should concentrate on growing the most profitable product sales. Or if 80% of employee problems come from 20% of your employees. Identify the problem and take action to eliminate the problem. Most business problems are the result of ’cause and effect’. Knowing this, you can use a straightforward plan to move your business in the right direction:

1. From your studies make a list of every part/item of the problem you are analyzing.

2. Based on the knowledge of your business, arrange the list by order of magnitude of importance.

3. Identify the most important items on the list. This will be your top 20%.

4. Next identify the least important 80%.

5. This step can vary depending on which type of problem you are analyzing. For example, if you are identifying the top 20% of your products that result in 80% of your sales then you know which products to emphasize. On the other hand if you are categorizing 80% of your customer service problems you will know which 20% are the most important to your customers.

Set up a system to conduct theses types of studies on an ongoing basis. Once you have completed the first one, you will immediately be in a better position to make better, more knowledgeable decisions about how to best grow your business. Knowledge truly is power when your are a business owner.

H.R. Smith has been a successful business owner since his early twenties. He has started, grown and sold businesses throughout his career. Two of his companies were sold to Fortune 50 companies. Today he continues as a trainer and business consultant and grows his online business model, which he refers to as his ‘virtual real estate’. One of his many websites is about locating a posture corrective brace. That particular site is designed to help individuals find posture corrective braces to meet their specific needs.

Author: H. R. Smith
Article Source: EzineArticles.com
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