More and more business owners tell me they feel like both the economy and their business are out of control. Their stress levels are up and their confidence is down. There is a sense of helplessness that leads to paralysis.
However, now is the time to take action and make sure you are in the driver’s seat. Here are some steps that you can take to feel more in control of your business and its future.
Own the Numbers
Every business owner really needs to understand their financial statements. There should not be any item on the Income Statement or Balance Sheet that they don’t understand and know is correct. Not only should they understand their numbers but they should be comparing the actual performance of the company with a budget.
If there are any major variances between budget and actual performance then they should investigate and understand what caused them. The more you understand your numbers the quicker you can react to changes both good and bad.
Balance Your Check Book Monthly
One of the best ways small business owners can truly “own the numbers” is by balancing their check book monthly. Owners can get a sense of timing of revenue collections as well as a feel of the monthly expenses. They can confirm their cash balance and make sure they understand what is happening to the cash in their company.
Know Your Break-Even Number
A company’s break even number is the amount of revenue the business needs to make to cover its expenses. This number should be like the North Star for every business owner. It is the minimum amount of revenue the business needs to generate over a defined period.
Every business owner should know their break-even number in dollars, or in units, or sales per day, etc. When you don’t make your break even number, it alerts you to the need to make changes.
Know Your Industry Standards
As a business owner, not only do you need to know and understand your numbers but you need to know how you compare to your industry standards. This is important because it can give you clues as to areas that you should improve upon or areas in which you are a leader. Knowing industry numbers can give you insight regarding whether or not you are pricing right, buying right, or operating efficiently. A great way to obtain industry numbers is to join a trade association or buy research data from a group such as Risk Management Association.
Once you know your break-even number, your past performance numbers, and industry data, then it becomes easier to set realistic and achievable goals. Many people set goals by establishing a budget. The big issue when it comes to setting goals is to get your staff involved in the goal setting process. The more involved they are with the goal setting the more they take ownership of the goals.
Have an Action Plan
The old saying “What gets measured is what gets done” is very appropriate when discussing goals. Whatever the goal, you need to develop an action plan on how to achieve it, who is responsible to see that it gets done, and a timeline to achieve it.
Surround Yourself with “Better” People
Now is a great time to hire the best employees. As you move into new markets or restructure your current business or just update your market strategy, now is the time to hire people who are experts in their field. We tell small business owners that they always want to hire people better than themselves in areas of key responsibility. The typical response is that they can’t afford it. But at the present time, you may find that you can afford it.
Another way for small business owners to feel in control is to keep learning. It’s easier than ever before to pick up new skills and take classes to improve your existing skill sets. Business owners can take webinars, continuing education classes from their local colleges, or get free business consulting from SBDC and SCORE consultants. If you are willing to learn, there are people and resources out there to help you succeed.
The next time you begin to feel you have no control, just remember that there are steps you can take to gain control over your business and its future.
Lynn Vos is Area Director of The University of Georgia Small Business Development Center. Contact her at 912-651-3200.