What’s your half time strategy?
The second quarter brings added distractions and activity in the lead up to Christmas, a period that brings peak sales for some small businesses.
For others, it signals the start of their quietest period when business winds down or grinds to a halt in December and January.
Wherever your business sits on the scale of sales activity, now is a good time to briefly assess how your year has fared so far and in what manner it will continue.
Here are my top five tips to get you to the half time break:
1. Check the scoreboard
How did the first quarter results compare with your game plan? Did you meet your sales targets, revenue and profit expectations?
If you’ve implemented KPIs and some simple financial reporting for your business, then this will be quick and easy to assess.
If not, don’t worry, even basic accounting packages will be able to provide some useful data to provide an actual picture of your results during this period.
You should also reflect back on the strategies and action plans you formulated to drive the business forward this financial year.
Did you implement what you intended to? How far have you progressed against your plan and what improvements have you brought about so far? What do you need to do to capitalise on that further?
If you aren’t where you expected to be, there’s no time like the present to rectify that. The great news is, you’re only three months into the year and have plenty of time to make up the difference.
2. Perform some “What if” analysis
“What if” analysis involves taking your current activities and varying them to forecast the impact minor adjustments can have.
This allows you to estimate results before taking new initiatives to market or incurring costs for doing so.
Product lines, sales transaction frequency, price changes, customer segments, distribution channels, debtor collection days, and many other variables can be analysed and modified to show the resulting impact on revenue, profit and value built in the business.
Use your first quarter results to model difference scenarios with your accountant and understand the impact to your bottom line.
Use this analysis to decide where to direct your energies over the coming months. Identify some quick wins that can be achieved before Christmas or capitalise on opportunities that this period could provide.
3. Plan your cash requirements now
How did your cash flow budget compare with actual cash movements? Revise your budget and forecasts for the next few months to see you through the December and January period.
Does your business have surplus cash available to meet its own needs? If not, the “What if” analysis will show where the business can find and free up additional cash.
When you’ll get the cash is just as important as knowing where you’ll find it.
Will the business have the cash in hand at the time it’s needed? If there’s a shortfall or a timing issue, you need a plan to address it in advance.
SMEs have several external funding options. The preparation, process and turnaround time differs for each.
Determine which source best suits your need, find out how readily available that source will be over the coming months and factor a generous lead time into your plan for its use.
While you’re at it, you might want to project a little further forward and consider any longer range requirements you have next year.
Planning your funding needs over the whole financial year and demonstrating the expected return on investment /capital /finance, will enable external lenders to be better prepared, willing and able to meet your needs.
This will enhance your relationship and give you adequate lead time to deal with any issues that arise or put contingencies in place if required.
4. Review stock and efficiency opportunities
If demand for your product or services increase before the calendar year ends, make sure you have sufficient stock to meet anticipated demand.
How do your first few months of the year compare with the same period last year? Does that indicate a trend that means you need to adjust your regular stock levels?
If sales in your business typically slow down, you might capitalise on sales promotional activity or exploit the mentality of finalising deals and projects before Christmas to clear out old stock.
Ramp up communication with your customers and find ways to outsource or temporarily scale your operations to handle the fluctuation in fulfilment. Reviewing the capacity and productivity of your team will assist with this.
5. Give your team a quarter time speech
While we’re on the topic of team, check the mood and morale amongst your staff. Three-quarters into the calendar year and some of your team may need some support and attention.
An injection of fun or a bit of camaraderie is sure to lift everyone’s spirits. A project and common goal can provide the focus and drive to come back strong.
Share your targets and objectives for the quarter with your team. Relate these targets back to their areas of influence and control.
Where your capacity review indicates you’ll have a resource surplus, allocate tasks and projects to take advantage of this.
Or if you’ve got a competitive team culture, use that to your advantage and theirs, by providing an incentive if they achieve agreed targets.
Check and if necessary reset your own mindset and outwardly reflected attitude. This will make sure you’re in the best position to get the most from yourself and the business during this next quarter.
Marc Peskett is a director of MPR Group a Melbourne based firm that provides business advisory services as well as tax, outsourced accounting, grants support and financial services to fast growing small to medium enterprises. MPR Group is a member of the Proactive Accountants Network. You can follow Marc on Twitter @mpeskett