APPLY THE METHOD OF SUCCESSFUL ENTREPRENEURS
The greatest entrepreneurs will tell you that they have applied the famous “Act, Learn, Start Over” method . These three main actions alone summarize one of the successful methods for optimizing the performance of your business. Thus, this approach will allow both old companies and those in the process of being launched to secure their future. In both cases, it is important to realize that the future is uncertain and that we must therefore give up planning for it. But how then, you will tell me, ensure your future if you don’t have a clear idea of where you want to go? Here is how to circumvent the question through 3 key axes:
before embarking on a given course of action, make sure you take the minimum risk. It’s no secret that cash is the heart of business. So plan your cash flow precisely so as not to create a fatal imbalance. Do not absorb more money than your cash flow can afford. Cash flow forecastsare generally done monthly for greater accuracy. Make sure you have a clear and detailed cash flow plan for the next 3 months. This allows you to know in advance whether you will be able to build up a sufficient reserve at the end of this period. It happens that the leader is not a good financier and that he does not have the knowledge required to know what sufficient cash is. In this case, do not hesitate to call on an accountant to enlighten you with his advice and expertise.
don’t wait for your chartered accountant to give you your annual report before taking an interest in your general situation. First, focus on your metrics. These are of two kinds:
- Action indicators: as their name suggests, they focus on your planned actions. And there it is up to you to stick to your action plan to achieve the planned tasks.
- Result indicators: these are closely linked to your actions and therefore also depend on you. However, some external factors may influence the achievement of these results.
It is therefore wise to draw up a table to compare the two indicators. All of the information provided will be invaluable to pinpoint your shortcomings and shortcomings. You will know clearly if you have not achieved your objectives due to a lack of time, resources or organization.
before repeating the two previous actions for each month, it is important to analyze your turnover data. It is important to classify the sources of your turnover and to estimate whether or not it is useful to modify the nature of your actions and the efforts you put into them. Based on this, correct your cash forecast for the next two months and don’t forget to add a forecast month. You will sometimes have to modify your dashboard. So, as a rule, for each month, review and study the results of the past month. This analysis will always teach you what you will need to modify in your future actions. Make sure your cash flow will be positive for the next 3 months and that you will be able to insure your receivables. The dashboard you build should be linked to your actions and goals. This steering instrument is a reflection of what you want to achieve. At the end of each month, take stock of your results as well as a complete analysis of the overall situation.
MISTAKES NOT TO MAKE
To continue insuring like a pro within your company, there are mistakes to avoid. So be aware that you should avoid:
To dispense with the advice of an accountant by thinking you will get out of it on your own. This penny-pinching economy risks wasting your time and taking unnecessary risks. Take charge of the management and leave the accounting to an expert
Develop a somewhat vague action plan concerning the actions to be carried out, the customers to be reached or the results to be achieved
Leaving prices too low. Knowing the purchase price is essential. It is possible to act on selling prices that are too low, which could jeopardize your company’s margin or turnover
If the products you manufacture or resell do not meet your customers’ expectations, your company’s reputation takes a hit… your customers’ trust will be difficult to recover in the event of a problem. Do not neglect the quality of the products.
Being overstocked presents a significant financial risk. Don’t neglect controlling your inventory levels. If stocks are not used, the BFR may increase. This increase can put your cash flow in bad shape
In short, being an entrepreneur means piloting your business and leaving nothing to chance. It is therefore important to focus on your priorities: customers, production and invoicing. However, do not forget to always keep an eye on your dashboards. These support you in your development and help you stay on the road ahead.