Simple arithmetic may be the difference between success and failure

With New Year just around the corner, business owners – and those contemplating starting a business – are turning their minds to goals and plans for 2013, but 70 per cent of those best laid plans will come to nothing because Kiwi SME owners struggle with self management.
Having worked with more than 200 businesses in the past nine years it’s quickly become apparent that small business owners struggle to follow through, and that’s why so many remain small business owners or self employed.
Planning is more than writing down your goals and the steps to achieving them. It is actually about execute, measure and correct. Anecdotal evidence suggests that 80 per cent of people don’t plan – but of the 20 per cent who do plan, 70 per cent don’t implement.
The main obstacle to implementing plans is lack of accountability.
Being your own boss has its pitfalls, and one of those is a failure by SME business owners to self manage.
I’ve seen hundreds of good plans – some simple bullet points and others an inch thick – but the businesses most likely to achieve their goals are those that have business partners or some kind of accountability mechanism.
For several years I have been in the habit of writing down my goals and plans on foolscap paper and it is the most frustrating, painful process imaginable because its a constant reminder that I need to lift my game.
Successfully achieving plans and goals hinges on:
• Think ahead
• Planning
• Execution
• Measurement
• Correcting course
• Making sure there is accountability
True accountability is about being part way out of your comfort zone, and part way in your comfort zone. Hit that sweet spot and you will achieve your goals.
Simple arithmetic may be the difference between success and failure.
The failure of small businesses is so high because business start-ups think too small.
Everybody understands that they must charge more than their costs, but more often than not, that kind of thinking doesn’t take the business much beyond the breadline.
Business operators need to grasp that to be profitable by one dollar is not good enough – it has to be ten times that, at least.
So many people find themselves despondent when they realise they have to put money away for the taxman, for re-investment, for paying off loans and other costs… never mind having anything left over for themselves. It’s a painful discovery when they realise that there’s nothing left, and all that they’re doing is working to pay off the taxman next year.
New Zealand may be the easiest place in the world to start-up a business, but it’s also probably the toughest place in the world to succeed. We are a very small market, which means every cent counts.
In all my years of teaching and mentoring business owners, the most common mistake without question is that most start-ups under capitalised, under resourced and under-knowledged.
Anybody can make money, but there’s a difference between ‘making money good’ and ‘making money bad. The solution however, may be as simple as making one per cent changes.
A one per cent price increase
A one per cent sales increase
A one per cent decrease in cost of sales
A one per cent decrease in expenses…
…can lift profits by as much as 26.6%.
It is critical to do the arithmetic, to know what the true profit of the business is.
Unfortunately, real business success hinges on boring numbers – there’s no cash flow, no innovation and no vision if the numbers fail to stack up.
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