Revisit your business plan and review your finance arrangements, says lender CEO
To kick off the new financial year, The Invoice Market (tim.) CEO Angus Sedgwick has some tips and tricks to help small business owners consolidate their goals to achieve their targets.
Revisit your business plan
Many business plans are filed away to collect dust once they’ve served their purpose. This is a lost opportunity for many SMEs. A well-crafted business plan is a vital tool for all businesses, according to Sedgwick. Business owners should have a plan for both times of growth and stagnation.
A good business plan should include information about products and services, the business’s ‘unique selling point’ (USP) and market, competition, growth opportunities, business finances and future plans.
It should also set targets that are based on real figures and achievable plans. Even business plans written to impress bank managers can become useful documents.
But a business plan shouldn’t stay the same. It needs to adapt as a business grows and evolves. “A new financial year is an optimal time to review your plan and consider if it still reflects your current situation and future aspirations. Look on it as a living document at the heart of your business strategy,” Sedgwick said.
Check your funding method
Sedgwick encourages business owners to review their funding and finance arrangements by delving into their financials to identify where, how and why margins are dropping or increasing.
Even though a business may be earning, its cash flow can still be negative if customers delay paying their invoices and suppliers demand quicker payments. The important thing is to understand those numbers and be able to explain them. “Try to forecast your cash flow needs, weekly, monthly and quarterly and ensure there is ample cover in the company account,” Sedgwick said.
Business owners should also review their financing options. Business owners usually think about new financing options for one-off expenses, but if it’s part of an organic growth process they tend to go for whatever finance is most readily available, which can be a huge expense.
Sedgwick encourages businesses to regularly review their finances and operations. It will help them spot potential cash flow problems and identify areas that escalate costs.
Think about succession planning
One should also consider how to eventually exit their business, according to Sedgwick. Options may involve selling, or turning it over to a family member or staff. A succession plan will help a business owner smoothly transition out of the business when the time comes.