The old adage that you should be working on the business and not in the business is always tossed around in mentoring circles. I do understand the significance but the majority of small businesses hearing this would be saying ‘if I stop working then there is no business’. However I want to walk you through what I believe to be the most important part of this statement, which relates to planning.
You would have heard the saying ‘fail to plan, plan to fail’. Well I’m here to tell you that this one is true. We can get in the car and drive and yes you will end up SOMEWHERE but my point is that you will not end up where YOU want to be without pre-planning that journey. This is one of the biggest mistakes small business make. Lack of planning or direction can be the cause of your demise. If you are not looking at where you are going how can you see opportunities or threats or be prepared to deal with uncertainties like cash flow or profit fluctuations, interest rate rises, increase in material costs and the list goes on.
I mentioned Interest rates and you might say well I don’t have an overdraft or a business loan. No, that’s not what I’m talking about. I’m talking about the effect that interest rate rises have on consumer spending which in turn effects small business. It’s not hard to work out that rising interest rates make consumers less willing to spend their hard earned, not only as they have less disposable income ( as they are putting that money into higher mortgage payments) but the uncertainty of what is to come.
If we are working on the business and looking at appropriate timely reports including KPIs and financial indicators you will be able to make quick decisions, meeting with your accountant regularly can also help you to see the turn in sales and react accordingly, which may include reducing overheads, cut spending or turn to your banker for short term finance. In your business you will experience what impact Interest rate fluctuations have on the industry you are in and the impact that these interest rate fluctuations will have on your business and industry, planning and monitoring is the key to your survival.
Of course different industry feel the effects differently. For example a property related industry like, real estate agents and mortgage brokers. If you are part of this industry you may want to look at your planning.
If this sound like something you haven’t done Call us, we are here to help.
