Among all the diverse projects you run, do you know which projects are most profitable?
Profitability is best described as the firm’s ability to earn financial profit/gain from a specific project. Continue reading “Project profitability: Overview and key factors”
A lot of small businesses don’t have a fixed salary for their owners. They think the profit should be their salary so they don’t include that in pricing etc. Continue reading “Where is your salary business owners?”
Nearly two months ago, I shared why web design companies face cash crunches. Today I’ll show you a demo on how you can do that with ProfitBoard: Our cash flow management app for web design businesses.
Profits are defined as revenue fewer expenses. They may also be referred to as net income. Cash flows, on the other hand, refer to the inflows and outflows of cash for a particular business. Continue reading “How Profits and Cash Flows Are Different?”
Before moving to accounts receivable management first, let’s find out what’s the definition of accounts receivable management. Continue reading “8 best ways to turn accounts receivable into cash”
Having a creative idea can’t only help a startup to grow. The one & only aim or goal of every startup business is to grow financially also to maintain financial stability throughout its lifetime. But the path to achieving this goal is not that easy for startups.
Project budgeting is the process of allocating or assigning a cost for a particular project. This cost includes all expenses need to run the project like new equipment purchase, employee costs, average delay costs, operating cost etc.
Here I discussed one part of the problem and how to structure your project cash flow and payment schedules. Continue reading “Structuring your project cashflow – Why do web designing and IT services companies face cash flow issues?”
Why companies or say start-up companies need a fully fledged budget plan to successfully run their business? But the question is why? What will happen if they just spend money on priority expenses without following any plan?
Lets’ define cash in a scientific way. If we take the company as a human body then cash is the blood. Then why blood, because it’s the most needed thing same as oxygen. A human can’t survive without blood and oxygen and a company can’t run without money, which is cash and human resource, which is an employee.
Every year many startups have been joining the startup journey but few exist for a longer period. The only way to survive in this competitive world is to have a strong marketing or business growth strategy.
So last week we introduced a cool new feature called saved searches and we introduced a budgeting of such. With this tool you can save the search that you frequently do and a bit frustrated to filter the Cash summery every time.
As shown in the picture. Once you searched something in the cash summery, click on the star icon to save that search. You can keep the dates boundary for your search or keep it open for adjusting to any date.
Plus you can mention the budgets you want to create. You can do budgeting for either income or expense for now.
This kind of budgeting would help you in budgeting expenses for a particular project or for a particular employee or activity that you tagged.
We’ll soon publish a video explaining what more and effective you can do with this tool. Till then ponder over your own ideas and create fabulous saved searches and budgets for them. And do let us know how it helped you.
Try it. See ya.
Once you’ve achieving recommended CIH, for couple of months and continuous good sales for 6-8 months, your next job as a business owner should be about straightening the revenue curve.
Might be now your revenue graph seems like this:
What you want to make it is like this:
Look we are not growing our revenues like anything, but we are ensuring our revenues curve straightens towards top. This ensures we can at least have this many revenue at any given month. It removes the basic fear of decision making if you don’t know if your next month sales will plummet. This also can help you in planning your hiring, fund planning, stock planning etc. This makes you now a serious businessman.
Now if we study the current graph of yours it might be a result of the issue of sales or product delivery. But now an effective CEO needs to ensure his curves are straightened on top of which he can make baseline decisions as we just discussed above.
Now let’s see the few steps necessary to make it happen:
- Ensure your sales guys are motivated continuously, well trained, and perfectly compensated.
- Ensure your delivery people have tools to make work faster.
- Ensure you created and operational structure & efficiency into the system.
- Ensure you align your company according to a profitable market segment.
- Now push the sales & hire if necessary.
And now ensure minimum target is set and make sure your organisation achieve it each month or quarter. Hope it helps
Ask us if you need any help doing these planning inside SlickAccount.
We see many businesses trying to get a lot of income in a highly competitive market by providing their services and product really cheap. While this is not a bad thing to be known as Low Price King if you did your maths on pricing and how to deliver in the budget, many among you file losses due to avoidance of Rule No1 of this market. i.e. “Be Lean & Stick to the plan”
You could be able to provide products because you figured out the volume to sell, maintaining the operation etc. Like in the case of Wal-Mart or BigBazaar in India, they have a very great supply chain to make them be able to do it.
So it’s important for your business not to be slightly over budget in any field. The major problem comes in Operations. You need to be lean and should use perfect tools and checks (bound by time & budget) in place to do so.
Let me give you an example:
If a small shop will sell 500 pieces of AwesomeCheapThing at $1 each day with a profit margin of just 5cents, he gets (5×500)/100 = $25 in profit each day. Let’s see if one day its supply truck came late by just 1 hour which reduced its sell to mere 450 pieces for that day. He lost 5×50 = $2.5 on direct sell. But if we analyze what he actually lost, we got to know he pays his sells man for that 1 hour without selling anything + electricity cost etc + he spent little extra for inventory of that 50 pieces which made his loss to little more higher making that product price to sell at $1.5. But we guys have a tendency to neglect such minor stuff and we just think that we lost only $2.5 for that day.
But the guy who is selling it at $10 and sells only 3 pieces may not have that much of trouble and all extras can be adjusted to his profit.
So if you guys operate in a low-profit environment, being lean and on time makes sense else you might be doing just another business that’s losing the only issue here is that you don’t know where you lost it. You can stick as some high strength glue to your operation plans. Losing is not a bad thing but knowing where exactly you lost is really crucial for you.
Training and education are important part of a healthy organization. You need to help employees improve their skills. Also you need to take business coaching continuously. That way you always remain more knowledgeable, advanced and well functioning organization.
WHAT ALL YOU NEED TRAINING AT:
- Technical & job oriented : New coding language, new form of marketing, sales and customer support.
- Communications & behavioral : You can reduce 30% work load just by communicating better amongst your teammates and to customers.
- Cultural & team-coordination : If you have all people share same cultural philosophy for your organization, you’ll attract more customers and good staffs to your organization. And team-coordination training make your team to work to achieve the same goal.
- Customer Induction : This is not a training but an education. Monthly once you need to invite one of your customer to your place for 3-4 hours, or may be on a dinner. Gather all of your team. Let the customer tell their story. How they do shopping and how they use your product or service. And make all the employees, be it marketing person, sales person, accountant, managers, HR person, product people or your office staff, to understand how they can improve the experience for your customer.
- Listening & questioning methodologies : Although it’s a part of communications training, I want to highlight it as a regular exercise. Every week, your employees should learn to question and then listen to the other person. This exercise will gradually boost the performance, understanding, confidence and ultimately the creativeness and innovativeness of each person.
NOW HERE’S MULTIPLE METHODS TO DO THIS:
- Have a small library. Else here an eLibrary with Kindle.
- Subscribe to Udemy etc annual plan for your team.
- Invite expert speakers or trainers to your organization.
- Sponsor your employees to workshop events.
Now what are the other training that should be included? What are other sources of training?
Customers are different even though they purchase the same products or services from you. They all require different treatment, isn’t it? And you are responsible for building an organization that can better serve the kind of customers that gives you more value.
Once you have some customers, profitable businesses figure out the customer segment worth focusing at and weed out customer segment that don’t bring them any value or profit. All good managers and entrepreneurs know the power of this kind of data. They separate their customer base and continuously segment it. They continuously understand who their customers are and how they are changing.
Now let’s see how different and unique your customers are. Use a spreadsheet (or a CRM software). Add the following columns to your spreadsheet against all your customers name.
1. Channels they came from
2. The geography they belong to
3. The business they are in
4. The older or younger the organization is
5. The older or younger the decision maker was
6. The size of the company
7. The revenue of the company
8. Who in the organization contacted you
9. Who authorized you the money
10. Who got benefited directly from your service in the company (eg: the marketing team or the CEO or COO etc.)
11. The sales they gave you
14. The services they got from you
15. The quality & support they demanded
16. The profit you got from this customer
17. The effort you needed to market/sell them
18. The effort you needed to service them
Now apply 80-20 rule to this. Focus 80% of your energy and staff on serving the most valuable customer segment and 20% serving less valuable. Both things are equally important. While most valuable customers will give you most of the cash, less valuable customers may show you a different future. They can show you if there’s a new market segment emerging or a new kinds of product you can launch to capture a big potential.
Focus your marketing, sales, copy of your website, the product, the contract, the investments accordingly.
As a small business want to grow big this will make you focus your energy and resources in building more value and wealth. You save time, become more knowledgeable about the outcomes and bring more profit.
What else? What more can you do with this customer data? Do this and comeback and comment how this helped you understand your business better.
The most common reason for business failure is people don’t invest in stuffs they should. And that’s called not taking risk.
Can this tool make me more efficient and I can get more out of what I’m investing and can get success done quicker.
They just continuously look into their wallet and tells oh scrap I shouldn’t invest in it. Else I’ll not have money for tomorrow. And that’s why they just keep having the money on their wallet and they never could increase it.
And it’s not just about monetary investment, but more often it is the case.
And don’t laugh, you might be in that state too. I know, I was there too.
And thank God we didn’t built SlickAccount software on that rule. We always hated to show something that deters people from investing. And that’s the common thing accounting softwares do. We instead focus on incomes and cash in hand. It’s OK to invest. But can you get this much in this amount of time?
This thing is so subtle. But you can see it everywhere around SlickAccount. And it’s a biggest secrete in making SlickAccount work for a lot of small businesses.
So invest on stuffs that can make it easy for you to reach your goal fast and buy you time. But don’t spend on stuffs that’s independent of this relationship. You can do that later.