4 key tools for successful business management
Posted: 03 May 2015
These are the four things every business should have!
You need to know what the year is going to look like. How much profit you will make, when you will be making your profit and how your income and expenses are likely to move about. Without this you will be under prepared for the year and need to manage by gut instinct or reaction to events as they occur. Get your budgets in place and then you can track performance against expectation.
Capital expenditure budget
This is about understanding and identifying how much you are likely to need for capital purchases throughout the year. This might be replacements or new plant or equipment required because of business growth or change. Most businesses have capital expenditure requirements but many don’t plan for them. When they occur they can disrupt your cash flow. Plan ahead. They are an essential part of your cash flow budget.
Cash flow budget
You absolutely need this. Cash is king and there is plenty of evidence that the Australian Taxation Office and large suppliers are taking a tougher approach on collections. Your cash flow budget needs to flow on from your operating and capital expenditure budgets. You need to forecast the timing of money flowing in and out of the business. Make sure you include things like tax payments, loan repayments and dividends. And, plan around the cycles that can occur with BAS payments. If you are going to be tight for cash at some time in the year, talk to your bank early up.
KPIs (Key Performance Indicators)
These are a great way to manage the business. What are the key indicators that show your business is on track? It might be the number of enquiries, machine hours for a production business, on time delivery, customer complaints, or staff turnover. For most businesses you can measure performance around six KPIs. They are the key influencers of your business’s operating performance and should be capable of being easily tracked and managed. If you haven’t used them before give it a try.
For assistance to get your business running at its strategic best this financial year, please contact either myself, John or Sam today to arrange a time for us to work with you on your business’s budget and KPI planning.