When you run your own business, it can be so easy to get caught up in the day-to-day activities - winning that new customer, chasing that outstanding invoice, replacing the long-standing employee who has just left - that you forget about the bigger picture. That's why it's important to take a step back occasionally and make time to assess your business's current performance.
Here are some of the questions that you should be asking yourself:
- Is your revenue growth following the upward trajectory that you first predicted in your business plan?
- What is your profit margin? Many businesses aim for a net profit margin of 20%. How does yours compare?
- Is your cash flow steady or does your business just muddle along from month to month, hope for the best and rely heavily on its overdraft facility?
- What is the value of your debt that is more than 90 days old? Is there more you can do to chase up your debtors?
- Do you have your costs under control or is unnecessary expenditure starting to creep in? Now that you're established, perhaps it's time to cut back on client entertaining.
- What is your staff turnover like? Do employees stay for a long time or do they move on quickly? Have you created a positive workplace culture where employees feel highly valued and appropriately rewarded?
- Does your business benefit from strong relationships with customers and suppliers and get plenty of repeat business?
Once you've answered the above questions honestly, you will have a good understanding of your business's strengths, weaknesses, opportunities and threats. You will also have an idea of what your strategic priorities should be going forward. Do you need to invest time in consolidating your business, by tackling that debtor's list,for example? Or are you ready to start thinking seriously about growth and expansion?
If you want to concentrate on growth, there are a number of ways to achieve this:
- Selling more of your existing products or services to your existing customers, perhaps by cross-selling or stepping up your marketing campaigns so that your customers have a greater awareness of what you can offer them.
- Selling new products or services to your existing customers. This will involve greater investment in your offering and perhaps hiring staff with more varied skillsets and training staff on new products.
- Selling your existing products or services to new customers. This could mean opening a base in another part of the country, buying a competitor or moving into e-business. Perhaps you could even export your product or service to a foreign market.
- Selling new products or services to new customers. Business experts generally regard this as a very risky strategy and it's not a wise avenue to go down unless you have first undertaken extensive research.