Five Steps to Controlled Growth

Our 5 steps for growing your business while increasing profitability

1. Get your team involved:

Your team will need to know what you are up to. They need to know and understand your goals.  How can you expect them to go on this journey with you if they don’t know where you are trying to go, how you want to get there and what you are going to do?

Get them involved in the process.  There are two ways to increase profitability: Revenue and reduction of expenses.   It’s amazing what solutions your team will come up with.  We guarantee there will be at least one that you would never have thought of!

2. Make an quarterly action plan

We aren’t talking a 100 page full cycle plan here.  We are talking about a 1 page plan. Break it down in to action steps.  You should be determining where you are today and what you need to do in the next 90 days.  This should then be broken down further into monthly and then weekly steps.

This isn’t an all encompassing task.  You likely aren’t going to get it right the first time anyway.  But the more your team does this the better you will get at it and the most successful you will become.

3. Measure your key performance indicators weekly

(see our prior post “Cash is King!” for what a key performance indicator is)

Most business use historical information to make their decisions, often last year’s financial statements that may now be 4 to 6 months after your year end.  Is the best way to make decisions today to base those on numbers from as long ago as 18 months? We think not.

With today’s technology you are capable of getting real time results.  This can be a hard adjustment from the traditional desktop accounting software.  It’s well worth the learning curve and your access to information will improve 10 fold!

4. Give bonuses, not raises

When you give a bonus, the money is already in the bank and based off of actual performance.  When you give a raise you are increasing expenses forever!  If you actively engage your team they will understand how their bonus was calculated and be engaged to continue to help the company grow.  Don’t jeopardize your cash flow by giving raises.

5. No accounts receivable

Try driving past the first window at Tim Horton’s and see what you get at the second window?  They don’t do credit and neither should you!

As soon as you carry a receivable you have entered the banking business.  If a client/customer doesn’t pay on time they will crush your cash flow, especially if you have to remit that pesky HST to CRA before they have paid.

If you would like further information on any of this points or help in putting any of them in place, please reach out to us.  We are here to help.

Five things everyone should know before starting a business

You’re ready to take the plunge and start a business. You’ve thought long and hard about it, made a business plan and ready…now what? What should you know before you open your doors?

Five things everyone should know before starting a business:

1. Manage debt

For any new business a certain amount of debt is inevitable.  Unfortunately, expenses come before income.  Many new companies have to borrow money to finance leaseholds, equipment and initial operating expenses.  Financing is an important part in managing and growing your business.

What you need to watch out for is the level of debt you take on.  When debt payments get too high they quickly become unmanageable greatly affecting your business.  Debt can be a tool to help you grow but it must be within the financial constraints of your business.

2. Find mentors

You might assume an owner at the top of their field has little to learn, but everyone can improve.  A new business owner can greatly improve their business by seeking out a mentor with more experience.  It will also likely help you not make the same mistake they made. New business owners will have to make decisions they have not had to before.  Having a mentor’s guidance and perspective can give you an alternative to the challenges you face.

3. Find stress relief

This is crucial!  You will be under deadlines you never imagined, juggling cash flow, employee and customer personalities and a never ending workload.   Finding stress relief will sharpen your attention, memory and ability to deal with others.  It will also help to prevent this stress from creeping into your personal life.  Find something you enjoy doing; running, walking the dog, playing with your kids or mediation.  Managing your stress is the best way to improve everything!

 4. Think twice and then a third time before hiring

A bad hiring decision is one of the most costly mistakes you can make.  It can drain your bank account and suck all the energy out of your daily like.  You often don’t realize the effect the employee has on you until they are no longer there.  The opposite is true of a good hire.  They can transform your business and make you a better leader.

Is a 30 minute interview really enough to judge how well the individual will perform?  It is crucial to assess your candidate’s skills by giving them a practical test to give you a better idea of the impact they will have on your business.  We know of one company that puts each potential hire through a 2 day paid virtual skills assessment before offering anyone a position.

5. Don’t forget about tax planning

It can be difficult to separate business financial planning and personal tax planning.  This is a great reason to work with an independent advisor.  Bear in mind that the best business decisions are not usually the best tax decisions.  It’s important to be able to manage the two together.  Having someone to advise you what the right salary, dividend and retained earnings is worth their weight in gold.

Remember no one is expecting a new business to have all the skills they need day one.  Most of these skills are learned the hard way, by making mistakes along the way.

As advisors that have worked with hundreds of business owners, we have seen some swamped in debt make a full recovery and go on to be highly successful.  Seeking advice when you need it and finding the right advisor you can trust is the best advice out there.