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Archive for the Decision-Making Tips Category

The One Question to Ask Each Day

As a business owner, you’re likely torn in a hundred different directions every day. It can take up most of the work day just fighting fires, serving your customers, and answering employees’ questions. It’s super-easy to lose sight of what you can be doing to move your business forward the most.

That’s when “the one question” can come in handy. It’s something you can ask yourself at the very beginning of each day, even before you check your email.

The one question is, “What’s the highest payback thing I can do today that will boost my profits?”

It’s not fighting fires or answering routine employee questions or even serving current customers. Although those are all important and essential, none of them will take your business to the next level.

It could be meeting with a power partner or referral source that sends you a lot of business, designing the next campaign that will bring in a higher level customer, or researching new products to sell. It’s going to be a task that gets you working “on” your business instead of “in” it.

If you like this idea, consider writing the question on a sticky note and posting it to your bulletin board so that you can see it every day.

Try asking yourself this one question each day: “What’s the highest payback thing I can do today that will boost my profits?” Then do it, and watch your business grow.


Budgeting Breakthrough

When you hear the word “budget,” what do you think about?  Most people would say something similar to “Ugghh!” If you would rather do just about anything besides create a budget, you’re not alone.  The word “budget” brings up connotations of endless numbers, constraints, the opposite of freedom and creativity, and hard work, none of which are very desirable.

Yet, the benefits of a budget are huge.  Budgets can help you with cash flow improvements, keep you on track for higher profits, and alert you to items that need further action.

From “Budget” to “Profit Plan”

To be successful with budgeting, we need to get rid of all of the connotations that go with the word.  Perhaps it might work if we rename “budgeting” to “profit planning.” And then, rather than focus on how little we should spend, let’s start with how much revenue we’re going to make.

Revenue Clarity

It’s simple to create a revenue plan if you go backwards.  What revenue goal would you like to hit this year?  Just like we would never get in a car without a final destination, a revenue plan gives us a number to aim for in our businesses.

Once you know your number, then we can use averages to come up how many sales or clients we need to generate in order to meet our revenue goal.  Here’s a quick example:  Let’s say you want to reach $5 million in revenue this year.  If you average order is $10,000, then you need 500 sales.  If you have multiple products and services, then you’ll need to sum the product of the average sale times the needed number of sales for each line.

From there, you can make marketing and production plans based on the number of sales or clients you need.

Protecting Your Profit

Think of the expense side of your “profit plan” as protecting your profit margins so that you can ensure financial gain from all the hard work you do.  Setting budget limits on spending will allow you to control overhead and other items so you can keep more of what you make.

Exceptional Reporting

A great “profit plan” report will provide several things.  You can compare budget to actual, or better yet, just be alerted to the accounts showing exceptions.  You can also get an income statement that compares the current period with the prior year period so you can see how far you’ve come.  One last option is a benchmark report which provides industry averages so you can measure how you fare compared to other companies in your industry.

A “profit plan” is a great tool for your business.  If we can help you with the process or provide you with custom reporting, please give us a call.

The Fine Art of Prioritization

Running a business usually means putting in over 40 hours a week.  In fact, if you’re the typical entrepreneur, you have more ideas you want to implement than you have time for!  That’s when proactive, strategically executed prioritization can make all the difference.

So Hard to Choose    

If you have lots of ideas in your head or on your “to do” list that are not getting done, you’re certainly not alone.  Here’s a process for helping you decide what to do first, next, and not at all.

Step 1:  Write down all your ideas, tasks, “to do’s,” projects, and even items you need to do on a daily basis.  Use a spreadsheet and list each item in a row by itself.  Later you’ll want to be able to sort the list, so we recommend using Excel or another spreadsheet software.

Once you have everything down on paper, you will be amazed at how much this unclutters your thinking.  You will also have all your great ideas captured so you don’t forget them.  You might also get very overwhelmed, but don’t stop now.  Relief is on the way.

Step 2: Add some information about each item, creating four additional columns:

  1.  Is this item about working IN your business (client work, overhead, etc.) or ON your business (new products or new services, developing procedures, hiring more staff, marketing, creating new partnerships)?
  2. Is this item revenue-generating?  Or will you lose revenue if you don’t get it done?
  3. Can you delegate this task or does it have to be done by you?
  4. If you were to hire someone to do this task, how much would it be worth per hour?

Step 3:  Analyze your choices.  Once you have these additional items filled in, you can go wild with opportunities.  Here are some very cool eye-opening activities to try:

  • Separate tasks that are working ON vs. IN your business.  There is never enough time to work on your business, so force it by blocking out a few hours or a half-day a week and do it, no matter what.  It might be the best way to make progress in your business.
  •  Sort the list by how much revenue the task could generate or how much potential it has, and decide how to prioritize from there.  If you need help calculating the ROI, return on investment of an idea, we can help you calculate that.
  • Take a look at what you marked “not able to delegate,” and ask “why not?”  Does a procedure need to be written?  Do you need more staff?  Does your staff need training?  Or do you need to learn to let go?  Whatever it is, and especially if there are a lot of these items, get these roadblocks tackled so you don’t become the bottleneck in your own business.
  • Sort the list by “column D” above, the market value you recorded for the task.  Then ask yourself what your hourly rate is.  How many tasks are you doing that are below your hourly rate?  Hiring someone to do your lowest level tasks could very well be another item you need to add to your new “to do” list!

This last one is really important, because it can so strongly affect the profitability of your business.  The last thing you want to do is go backwards and give yourself a demotion with a pay decrease, but that’s exactly what you’re doing each time you do a task yourself that’s at a low market rate.

Step 4:  Prioritize with confidence.   With all of this information in an organized spreadsheet, you will gain the clarity you need to make some powerful decisions about how to spend your time.

Time

There’s nothing more precious and scarce than our time.  Every day, we have a choice about how to spend it, but too often we get caught up in the urgent, but not important, daily fires.  This exercise helps us take a step back and look at what’s important instead of what’s urgent.

Six Quick Productivity Tricks So You Can Go Home Early

If you have an endless to-do list, you’re not alone these days.  Most of us are constantly looking for ways to work smarter and get more done.  Here are six quick tips to help your productivity so you can go home early.

1. Group tasks.

If you have lots of errands to run during the week, why not set aside one day or a part of a day to get them knocked out all at once?  It saves start/stop time and may also save gas and time getting dressed up (if you work at home).

You can also try grouping tasks such as personal care appointments, doctor’s appointments, sales calls, and client visits.  Your schedule will be freed up in big blocks of time so you can focus on creative projects without having to constantly watch the clock.

2. Use checklists.

Checklists are best when you have a task you need to repeat.  They’re great when you’re stressed and don’t want to forget a step (such as in packing your suitcase for a trip).  They’re also great for tasks that repeat infrequently (Now how did I do that last time?)

Stop and take a minute to create your checklist the next time you perform a routine task that you will repeat in the future.  You’ll thank yourself the next time.

3. Organize your email.

If you are using Microsoft Outlook for email, consider getting it to work as hard as you do.  As your email comes in, you can have Outlook sort the low-priority emails that come from lists, Google alerts, social media notifications, and subscriptions into folders.  Create a subfolder in your inbox called “lists.”  Then set a Rule to have that type of email go into the “lists” folder.  This one step will substantially de-clutter your inbox.

4. Delegate more.

If you’re a little wary about delegating, try this exercise:  Look at your to-do list and put an hourly rate next to each task that you are doing.  If someone paid you to do that job, what would you get on the market?  Then look at the tasks with the lowest dollar value next to them.

If you feel your time is worth more than the lowest rated tasks on your lists, it’s time to help someone else out who is unemployed so you can be freed up to use your more valuable skills.

5. Order online.

When is the last time you’ve been to the office supply or pharmacy when you know they deliver?  (Yeah, me, too. Enough said.)

6. Avoid long learning curves.

Whenever you realize a task will have a really long learning curve, then it’s a red flag that it’s time to find someone to hire to do it for you.  Here are several examples:

  • Doing your taxes and researching all the tax law changes
  • Installing a new accounting system and customizing it
  • Learning about every new social media platform out there
  • Writing a legal contract
  • Creating a report
  • Troubleshooting a computer problem

The cost of going through the learning curve can be dozens of hours of your precious time lost compared to bringing an expert on board who can perform that task in a matter of hours or minutes.

How did these six ideas compare to your favorites?  I hope you picked up an idea or two so you can get home earlier.

Five Bottlenecks to Avoid that Stump Your Business Growth

As a business owner, you have likely acquired many skills and are wearing many hats in your business.  Although admirable, your versatility can often lead to slower growth for your company.  This happens when you become the bottleneck.  Here are five places to check to make sure you haven’t become the bottleneck in your own business.

1. Managing everything.

It’s definitely good to keep tabs on everything that’s going on in your company, but once your company grows, you may find yourself inundated with information.  Instead, try managing by exception.

You don’t really need to know everything that’s going on in your company; you really only need to know when things do not go smoothly, or when there are exceptions.  Design a set of management reports that allow you to see these exceptions easily without having to wade through a bunch of information.  This will save you time and help you focus where your expertise and skills are needed most.

2. Doing too much production.

Probably the most common small business mistake is working in your business instead of on your business.  If you’re still generating billable work or working too much in production, it should be work that no one on your staff can do and work that requires a very high skill set.  Otherwise, it should be delegated to staff.  And if you don’t have staff, then they need to be hired.

3. Not doing enough marketing.

As a business owner, you are the key person that will be bringing in business, forging partnerships, and creating new opportunities for revenue.  If you spend your limited time doing other things, marketing often goes undone.  Not marketing enough can dry up the pipeline, cause cash flow problems, and get a company in trouble really fast.

4. Being the only one who knows how to do something.

When employees have to wait on you to show them how to do something, you can easily become the bottleneck in the process.  As you train each employee, do it only once by writing procedures for the task as you train.  That way, you never have to train anyone on that task again.  The newly trained employee can show others, and you can be out of the loop, freed up for more important things.

5. Having to review and approve everything your employees do.

A great employee is one who is empowered to make as many decisions as possible without further layers of supervisions getting involved.  Often, a decision can be “cookbooked” so that the decisions can be pushed down the lower layers of management.  Take a look to see if any of the decisions that you are making can be documented and pushed down so that you don’t have to get involved.  That way, your employees will have the right balance of authority in order to do their jobs.

How did you measure up on these five high-bottleneck areas?  When you can clear up the bottlenecks in your business, your firm will be able to grow even faster.

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844-884-3766 | david@tieroneservices.net

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