It is customary, the feeling that business owners have this time of year. Depending on how your business has fared thus far, it will be either a feeling of excited anticipation, trepidation, caution or a mixture of any two or three. As you begin to prepare to close your accounts for the year and take stock of how your business has fared, there will be one prevailing thought in your mind – 2017.
Experts have given their different analysis on what they feel the financial landscape of 2017 will look like and what it means for businesses around the world. As far back as 2014, an article was published in which the Levy Economics Institute predicted that another financial crisis might come upon the US in 2017, due to increased borrowing and rising debt levels.
So the question remains, how do you prepare yourself and your business to survive and thrive financially in the coming year? Entrepreneurs the world over are beginning to take the necessary steps to prepare themselves for 2017. These tips – some new and some of them reminders – will help facilitate your preparation.
- Check your progress with your business plan
Your business plan – and I am sure that you have had one from the beginning – is your guiding light in so many ways. It helps you to decide what steps to take to grow your enterprise while simultaneously serving as an accountability check.
Every well-detailed business plan amongst other things should contain a financial projection, summary and description of your business, business structure, marketing strategies and so on.
Have you hit your revenue target for the year? Are your marketing strategies converting as well as projected? Is your business summary and description still a true representation of where you want your business to be? Your business plan is a good place to start if you want to answer these questions as comprehensively as possibly.
If you have veered off the mark in any of the above-mentioned areas, going back to your plan will help you detect where you faltered, which is the first step to fixing the problem.
- Create an avenue to generate recurring revenue
I do not know anyone ever who grumbled over more revenue. Besides the product or service that you already offer, seeking ways to generate recurring revenue is a sure way to put your business in a good financial position.
You could offer an extra service (perhaps access to certain crucial features on your site) and make it accessible to your customers for a monthly charge. Besides more revenue, a steady recurring inflow of money creates a predictable and therefore, a more manageable cash flow. This will help you in creating a solid budget that your business income will be able to handle.
- Check the effectiveness of your sales and marketing initiatives
If your sales and marketing efforts are not converting as well as you projected, they are not effective. However, sometimes it could also be that you are targeting the wrong audience. Maybe you are on a platform where you ideal customers are in the extreme minority or even completely absent.
If your marketing efforts are not good enough, tweak them. For instance, you could try out new approaches to the way you setup your ads and see if it gets better results. If the problem is the platform you’re on, check other channels to see if they are more compatible with your product or service offering. For instance, a t-shirt printing business will be better off promoting their business on Instagram than on Twitter. This will help ensure that you get a good return on your investment.
- Price competitively, price right and distinguish from the competition
It is true that customers ultimately think with their wallets so most of the time they might go for the business that offers a product at a more affordable price. But offering too low a price can deter customers from even considering your product as a viable option.
It is not about pricing low, but pricing right. Make sure that your pricing reflects the true value of your product or service, is in keeping with industry standards for markups and can sufficient revenue to grow your business.
If you end up with a higher price tag than customers seem to be paying, find a way to distinguish your offering in such a way that they will feel justified in paying more for your product or service.
For example, if you sell drum training pads, you could include a carrying case and maybe an extra pair of drumsticks so that you look different from the competition. Make sure that the cost of production for the carrying case is considerably less than the extra amount you get for including it in your offering.
- Create a budget and stick with it
A budget does three major things for every business: it covers all of your needs, saves for emergencies and the future and affords you greater control over your cash flow.
A budget is a way to account for every single dollar that comes in or leaves your business to make sure that you are always on the plus side of revenue. It also helps keep you in check by restraining you from impulsive spending. Remember to create your budget after subtracting taxies, insurance policies and any other expenditure.
You can use online budgeting or saving tools such as intuit mint to track your progress and ensure that you are still working within your budget. No matter the budgeting method you use, you should adjust your budget from time to time so that it will always be in keeping with the changes in your income, expenditure and priorities.
- Prepare to get a loan
For all your planning and budgeting, you might still find yourself in a situation where you will need a cash infusion that your emergency fund cannot handle alone. You do not want to wait until the very last minute to prepare yourself for this eventuality.
You will need to have a collateral ready, especially just in case you need to borrow a huge sum of money. Also, have your business licenses, personal and business bank statements and tax information, your financial projections, revenue information and income statement and any other crucial business document.
Not all lenders will ask for all this information but it does not hurt to have them handy. Take out sometime to research prospective lenders and decide on the one that fits your exact business needs. Deciding on a lender means that you will have the time to get all your loan prerequisites ready so that you can apply immediately you need to borrow money.
- Invest in other businesses
The richest men and women on the planet know this secret and abide by it. This is why you have investment veterans like Warren Buffet investing in businesses across industries and heavy weights like Microsoft and Facebook buying up others.
Besides saving up a percentage of your business revenue, you should also consider setting aside a portion to invest in other businesses. This includes your competitors. The way I see it, this is a good thing. If your competition is not doing so well, then you are probably doing better. If they are flourishing, then you also will be reaping the benefits of their hard work.
Also, you will find that in the long run it does not hurt to have a stake and/or a say in the business affairs of your competitors; that is a pretty good place to be if you ask me.