Now is a good time to take steps to think about the future of the family business. Here are five things to consider and action. James Sleight from Geoffrey Martin & Co explains more.
Whether it’s doing dry January, getting fit or having a go at ‘veganuary’, most of us make personal New Year’s resolutions. But do you do the same for your family business? Are you making the most of the opportunities available to you in the new decade? Is your business in the best possible shape as you enter 2020?
Here are five things to consider and action:
1. Review your business plan
Your business plan (assuming you have one) should be a living, breathing plan, reviewed regularly and not just written when you first started your business and put quietly in a drawer! If you haven’t got a plan, now’s the time to prepare one.
A business plan will help you to focus on key priorities and set out targets against progress. It’s also an excellent time to look at contingency planning around what will happen to your business if certain factors change (for example, if the price of vital commodities or services increase, how would this affect your business?) and the impact of exiting the European Union.
A good business plan may also help you with raising finance. Banks or business angels will want to see your business plan before they invest or offer a loan or an extended line of credit.
2. Go through the numbers
Review the fundamental numbers that can make or break your business. You may think this one is just for accountants, but every business owner should know them too.
If you don’t have any critical indicators in place, now’s the time to set them – for example, how many products do you need to make and at what price do you need to sell them to cover your costs on a weekly / monthly basis?
Indicators should include key financial ratios such as profit margins and sales forecasts as well as cost of sales, value per customer, conversion rates on marketing activity, or mark-up per product type. You should also be reviewing your expenses to see if these can be reduced. How do your actual numbers compare to your budget?
One crucial area to focus on is cash flow management. This is crucial to any business and is a significant reason why many companies get into difficulty, yet it’s an area that’s often neglected by business owners.
Understanding the numbers that are relevant to your business gives you the chance to grow and prosper. Use technology: cloud-based accounting software such as Xero or SageOne will help you easily track revenue, expenses and bad debt. If in doubt, ask your accountant for help.
3. Review your sales and marketing plans
Do you know how effective all areas of your marketing are? Linked to understanding your financials, most companies will have limited marketing budgets, so knowing which aspects of your sales and marketing activities are working and which aren’t will help you to prioritise and make the most of your budget.
For example, if you have a website, do you know where your customers are coming from and do you have a process to contact them? Social media can be very cost-effective, so are you making the most of Facebook, Twitter and LinkedIn and tracking responses? Review your branding: if you want to be viewed in a particular way, does your branding reflect that?
Do you export? Should you be looking at expanding into new markets? If not, is it something to consider? The demand for certain UK goods and services overseas continues each year, so look at exporting as an option.
4. Plan your growth
Don’t just say ‘we want to grow’ this year. Put a specific number down (whether it’s 10% or even 70%) and work out a way of getting there, looking at new customers, new products and new promotional activity. For example, if you’re in the brewing industry, research shows that more people want to drink craft beer in restaurants; could this be an opportunity for you?
You may need investment to do this, so think about where you may raise money: banks, angels or crowdfunding. Each of these requires a specific approach so work out how much time will be needed. And don’t forget, you’ll need a business plan to show any potential investors.
5. Enjoy yourself
Remember why you set up your business and make sure you allocate some time for yourself. Running a business can be an exhausting experience, so make sure it works for you across your whole lifestyle. Reach out to industry bodies, professional advisers and peers to get the best advice you can to ensure your business grows the right way.
About the Author - James Sleight is a Director at Geoffrey Martin & Co, a pragmatic team of business advisors helping business owners, directors and investors in Yorkshire. They help to navigate difficult situations and resolve financial challenges. Whether it’s contingency planning, cashflow problems, disputes, solvent exit, or refinance, they’ll help you set out a strategy and manage key relationships. If things come to the worst, they’ll be by your side through the difficulties of insolvency, a creditor arrangement or restructuring.