In the first part of the Break-even series, we discussed what the break-even point is, how to calculate it and the 3 important elements you need to employ to achieve that position. As a quick recap, new businesses might not generate expected income in the short term but can make enough revenue which puts them in a position of not making a loss but not making a profit either. At this point the business can still survive, however, the most preferable outcome is that of making a profit as soon as possible.
Making the decision to start your own business is a bold move that involves risk but can also come with greater rewards. As a potential entrepreneur you need to conduct your market research in order to estimate the size of the potential market, competition and potential sales, as these are some of the factors that will determine your business’ success.
It is a plan to:
1. Control your finances
2. Enable you to make confident financial decisions and meet your objectives
3. Ensure you have enough money for your future projects
The Government has given employers an amnesty of 12 months from 24 May 2018 in order to pay any superannuation liability outstanding for its employees. Employers who have underpaid the superannuation guarantee, need to pay the owed super in full plus a higher rate of nominal interest but will not be subject to penalties for late payment.
Whether you’re just starting up, or have an established business, it is easy to fall into the trap of having to do and control everything yourself. Being the ‘jack of all trades’ limits your time and ability to make quality management decisions. Having your business accounting software online will enable your business to transform, grow and to compete with giants in your sector.
Looking over your cash flow, you’ll notice one expense popping up over and over again, and it’s a big number. Without it your business can’t grow and you can’t get a break! Whether you pay wages weekly, fortnightly or monthly, if you are not truly aware of where these dollars are going, it can hit your back pocket hard.
What’s that saying; you need to spend money to make money? Even with a low cash flow this still rings true; just be sure you are spending money in the right places. When times are tough and sales are down, don’t stop spending on marketing; in fact, spend more and spend less on other things.
However, sometimes the best option is to spend your time rather than cash. Either way, your marketing strategy should be the most productive and sales focused it can be, generating quality leads to close more sales (thus improving cash flow).
Here are some tips to squeeze the most out of your marketing budget:
1. Know your target customers and direct your marketing to being where they are. Don’t waste time or money on marketing for the sake of marketing. If the people who are most likely to buy from or hire you won’t see it, don’t bother.
2. Social media, blogs, forums, etc. These are creative ways to market your business when cash flow is tight- the main investment here will be your time. Connect and converse with other businesses and individuals in related industries on social media, comment on blog posts and give expert advice on forums. Each interaction will give you the opportunity to direct potential buyers to your social media page or website. Be sure to refer to tip #1 for each platform.
3. Utilise your current database via email marketing. Using software such as Mail Chimp allows you to track each open, email interaction and unsubscribe to ensure you are on the right track. Email marketing is a great way to keep current and former customers engaged with your product or service and redirect them back to your website; just make sure you have something of value to say each time you are in contact. This type of direct marketing ensures your voice is being heard by the right people and you will only pay for what you use.
4. Network. This is not about getting your business card in circulation at networking events; it’s about creating mutually beneficial relationships with key people who work in the same or similar industry. So, do your research- who, if you associated with regularly, would have a significant impact on your business? Call them up and introduce yourself. A 1 on 1 meeting over coffee with the right person sounds a lot more productive than attending a “can I flog you my product?" networking meeting, right?
5. Don’t stop marketing when times are good. If you have the attitude “I have enough work right now so I can save my marketing dollars” you are simply setting yourself up for another slump down the track. If you are not constantly and consistently promoting your business regardless of your financial situation, then your business cannot grow. Wouldn’t it be easier to have a continual stream of quality leads coming in rather than having to work twice as hard to find customers when times are tough?
Finally and most importantly, keep data on the source of business/sales. Ask your new customers “how did you hear about us?” and keep records of their answers. Each campaign (that’s each email, each social media platform, each networking source) should have a corresponding marketing strategy that outlines what you intend to achieve with your efforts, how much you have spent and what were the outcomes. This will assist you in achieving tip #1.
There is no “One Way” to design a sales process. There are many options, however considering that most businesses have no process at all, take on the one below as a starting point. The 8-step process below has proved to be successful in hundreds of businesses. You can then fine tune and tweak it to make it work for your business.