By Mary Jo Ray
We are down to the countdown for finishing up the year. In addition to pushing to reach your goals for this year, you need to look at what you learned this year to set the foundation for a more profitable 2018. Spend time to look at your financial statements and figure out what brought in money and how profitable it was. Look at how much money each service or product brought in and all the related costs. The related costs include the marketing dollars you spent and the time you and/or your staff spent. Start by evaluating what worked this year and what didn’t work. Be brutally honest with yourself here.
• Is the product or service bringing in enough revenue that you want to focus on it again next year? Are you seeing a trend related to the marketing that could increase the revenue? Are you seeing that the time spent by staff is supported by the revenue? Should you consider increasing your marketing revenue or your staff time? Should you consider increasing the sales price? Is there something you can do to reduce the costs?
• Do you have a new product or service you are considering? Can you use any of the current costs to figure out where to price the new product/service for maximum profitability? What do other providers charge and how does your product/service compare? If you price it at/above/below the market price, would it be profitable?
• Is any particular product or service becoming less popular than in the previous year? Does it need tweaking? Or should you stop spending marketing dollars or time promoting it and just accept the revenue that walks in the door? Or, are the costs so high, you need to no longer offer this product or service? Remember, our clients’ tastes change, and we need to change in order to stay profitable.
Once you have figured out what worked and didn’t work, you get to put numbers to your goals for next year. How much do you want to grow your business? 10%? 50%? 100%? Knowing where money came from this year, what can you do to grow your business? A 10% growth rate will not require as much planning as anything over 25%. If you want to grow more than 25%, you are going to have to review your resources.
• What tools do you need to grow your business?
• Do you have the technology and space to support your desired growth?
• Will you need more staff? If you need more help, should you hire someone, or should you keep the level of staffing and outsource some activities? Mind Masters is a good resource for finding answers.
• Do you have the cash for the marketing to support the growth you desire?
• Do you have the technology to support the growth you desire?
Not only do you need to look at the resources you will need, you need to look at the timing. Don’t market for more business until you have the resources in place, and this includes your time. To make 2018 more profitable, start now so you can get off to a running start.
Mary Jo Ray, owner of RCR Financial, helps small businesses with financial analysis or projects that involve the creation and execution of high-impact strategies to enhance both financial and operational performance. She can be reached at MaryJo@RCRFinancial.com