7 questions you need to be asking regularly to ensure your business is on the right track

Tuesday 20 September, 2016 | By: Elizabeth Gillam | Tags: business plan, business model, accounting, management

 

Business plans were my life when I was employed as an Accountant, however when I started my small business journey I never never created a business plan. My small business happened to be a franchise, so the business model is sound, I had done my research and therefore assumed the business should just work.


I soon realised that business model is not a business plan. Each business unit is different and you still need to plan how to make the best profit you can from the business you operate, regardless if’s a franchise or you’re building a company from the ground up.

When I was a franchisee I kept it simple and as a result my business plan was more of a business road map, it gave me the directions I needed to get to the destination I wanted. In this case the destination was the profit that I identified in my budgets.

To be sure that I achieved my budgeted profit I always asked myself these 7 questions and the answers became my business plan (road map). In short, I was planning my road trip to profit.

1. What turnover can I achieve?
It was exciting to play around with a budget and in doing so I would identify a number of top line sales figures. Which was the most achievable and what did it looked like on a daily and weekly basis? It is amazing when you identify a figure; name it and set it as a daily and/or weekly goal, how quickly it becomes a reality. You will get to your planning session next year and realise that you have in fact met your sales target.

2. What am I going to do to increase sales?
The key to increasing the sales is to work with your average transaction value (ATV). Identify your ATV from previous Profit and Loss reports, if the same number of customers visit your store in the coming year, how much would they have to spend each time to meet your new budgeted sales figure? Once you know your new ATV, it becomes the figure that your staff will aim to meet daily to ensure you reach your budgeted sales figure. Look for easy up-sells in your business that can be added to every sale and train your staff on how to up-sell each and every time.

3. How am I going to improve profitability?
Increasing your sales is only one step towards increasing the profitability. The other areas are your COGS(Cost of Goods Sold) and labour. Now is the time to cost out your weekly roster and look for ways to reduce your labour cost when compared to your new projected weekly sales figure. It is also the time you look at your COGS expense and compare it with others in the same type of business as you (see ATO small business benchmarks) to see if it needs improvement and if so how are you going to go about it?

4. Can I increase customer loyalty?
Loyal customers are your bread and butter, increasing the number of times they visit during the week, month or yearly dramatically your overall sales figure. Not only are you increasing the amount they spend each visit (question two) but you are also aiming to increase the number of times they visit each week. The simplest way of doing this is by having limited timeframe offers that only appear periodically.

5. Do I have the right staff?
So often employees are hired because they are available on the day or turned up when you were desperate for staff, not because they are good at selling or customer service or have the right product knowledge. They filled a need at the time and that’s it. It is important that you do a staff audit and see what skills are missing to ascertain what training is required. Too often staff are not doing what you want because you have not trained them to do what you want. Create a training plan using the results of your staff audit.

6. How do I communicate with my staff?
One of the most challenging aspects of employees is communicating with them in a way that they turn up for shifts on time and know what they have to do when they get to work. How do your staff know what budget they have to meet for the day and what ATV they need to achieve? There are many ways to keep staff up to date but you need to identify what goals and budgets you want to share, how to share them and then how to monitor them.

7. What are my goals and missions?
Finally, there is more than just the budget goals that lead to success, there are also other goals such as having a yearly family holiday, having a regular day off each week or winning certain awards. Take the time to identify both personal and business goals for the coming year.

It is a common saying in business that most businesses don’t plan to fail they simply fail to plan and this is so true. By taking the time to plan your year ahead, you are increasing the opportunity for success.

 

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ELIZABETH GILLIAM 200x200

About the contributor:

Elizabeth Gillam is the founder and CEO of Franchisee Success, a company that specialises in creating High Performance Franchisees through education and mentoring. Having owned and operated three franchised food businesses; Elizabeth advises franchisees on how to operate a profitable franchise business which begins by choosing the right franchise opportunity. Website: http://franchiseesuccess.com.au

 

 

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