It’s that time of year! Teachers are diligently preparing their classrooms and parents are gathering school supplies as students are headed back to school. I think we can agree that next level planning and preparation is required at the beginning of each new school “session”, and it got me thinking that this type of planning is exactly what business owners should be doing just in case we begin to see any further signs of an economic “recession.”
Let's explore my rundown on back-to-school planning for business owners. Here are my top five recommendations to contemplate and work on in your business.
Cash
It’s no secret that cash is king – it’s what all businesses need to survive and thrive. Business owners should be focused on growing a rainy-day fund and be more diligent about cash in the coming months through these practical methods:
- Monitoring cash regularly – create a system and process for evaluating cash balances, receivables, and payables so your business decisions are flexing according to your cash balances
- Creating a budget – establish a set of expectations as to what you want to happen in your business through a budgeting process. Creating a budget makes it a lot more likely that:
1) What you want to happen actually will happen because you are being intentional and
2) If the desired result is not achieved, you are notified and can take actions to make corrections.
- Investing in tax planning – spend some time with your accountant to identify ways to keep your money working for you in your business by finding ways to reduce the cash outlay for taxes. Some ideas would be financing equipment purchases to get non-cash depreciation deductions, writing off the use of your home office, maximizing deductions by making sure all business expenses are recorded, re-thinking entity organization/taxation, investigating the employee retention credit and eliminating fines/penalties.
Expense Management
It’s easy to get lax on controlling the spend in a business but all those little expenditures add up over time. Here are the areas to focus on when it comes to controlling costs:
- Take a look at subscriptions and other automatic recurring costs to see if they are still in use by the business and if the cost is worth the service.
- Examine contracts and look at upcoming renewals to make sure that you aren’t locking your business into long-term purchasing commitments and that any contracts are still relevant to business needs. Don’t forget to ask for pricing discounts or more favorable terms/services when negotiating long-term deals.
- Shop around. Don’t assume that existing agreements are the best priced and are offering your business the most value. Many things have changed in the last couple of years and now is a good time to see what else is out there and how much it costs.
- Implement solid employee spending rules and leverage technology to help. Look at programs like Divvy or Expensify to help you make sure employees are following the rules when it comes to spending on travel, meals, supplies and business development. And tighten up on the monitoring to make sure accountability is present in your company.
Revenues & Profits
As the old saying goes, “Revenue is Vanity. Profit is Sanity.” One doesn’t happen without the other, so you need to be focused on growing BOTH proportionately. Economic changes, such as those forecasted, should prompt a more thorough look into what you are selling, to who and for how much so that you are maximizing opportunities to drive revenue and profitability.
Here are some quick things to think about when it comes to sales and gross margin:
- Get sales processes hammered out. My friend Tiffany Koettel with Sandler Sales Training says that we will default to the customer’s buying process if we don’t have a standard sales process…or what I would call – total chaos. Clear processes are comforting to buyers, keep tasks on-time, result in positive experiences and ultimately propel buyers to want to pay more.
- Nurture and manage leads. Consider investing in a CRM system and ditch the spreadsheet to track prospects and better understand how you are getting new business.
- Revisit your pricing. Analyze and evaluate the price of your goods/services in relation to your costs, the value provided and the price of other alternatives available in the marketplace.
- Get some help. Contemplate hiring more team members so that you can expand your sales activities.
- Focus on customer experience to drive retention. It’s expensive to acquire new customers so take care of the ones you have and make sure that you are paying attention to them so that they aren’t under-served.
People
Employees are the heart of your business and acquiring new talent is harder than ever before. So, it’s time to double-down on taking care of your employees and that doesn’t necessarily have to mean pay raises and bonuses. Here are some additional ways that you can make it win-win for all parties:
- Be flexible. Reduce the stress that employees feel from having to juggle all the obligations in their lives by offering flexible hours, work-from-home days, and part-time options.
- Create opportunities for growth/professional development. Have candid conversations with employees to better understand what they want to learn more about, their career aspirations and how your company can contribute to their success.
- Be transparent and engaged. Business owners are sometimes disconnected from their employees and don’t really share much about the long-term vision. Start communicating about company’s goals, progress, and victories.
Innovation
Value is driven based upon the creation of new ways to do something so just stop, take a step back and start asking questions about what you do, how you do it, why you do it and what could be better? There is always room for improvement, so take some time to really think…. then challenge yourself to dream up something better and enter into the world of “what if?”
Then, start working on strategic planning. Map out where you want to be in the next 3, 5, 10 years and establish a regimented process to keep pushing towards these goals.
Conclusion
If being a student taught us anything, it’s that procrastination often leads to problems. Be an A+ student and don’t put off your Back-to-School planning and preparation.
