Learn how to build an accurate income forecast for your business while creatively taking advantage of your slower months.
By Leah Grant
When I first started coaching my mentor coach warned me that August and December tended to be slow months while January, April and September were the busiest months in terms of clients seeking coaches. Armed with this information, I was able to build a realistic income forecast for my business as well as plan personal downtime.
Planning around my business cycles is one key way I have been able to stay in business for 12 years.
Unfortunately, too many people believe that the amount they make one month will translate to all months and then they’re in trouble when that’s not the case. I have seen it too many times. A business owner will have a big party and overspend after having a great month then they are short when a lean month comes along.
Most businesses have an annual cycle and it’s imperative to know what that cycle is for your business.
Determining The Cycle
If you have been in business for a year or more, go back in your records and chart the amount of business each month. Is it steady? Are some months much higher while others much lower? Use this information to define your business cycle.
If you are just starting out, do some informational interviews with other people in your industry. Ask what the busiest times of the year are and what the slowest are. Ask what affects people’s decisions in buying.
It’s important to make the distinction that the business cycle I’m speaking of in this article is not dictated by the economy but rather by the buying habits of your clients and the seasonality of your market. Slow periods created by a down economy require additional measures be taken to generate business.
Making The Most Of Your Business Cycle
Once you determine your business cycle, brainstorm ways to leverage or minimize the slow times. Here are some ideas:
* Do side work - For example, I teach classes at a virtual university. During slow client months I keep my calendar full by teaching more classes and replace the client cash flow with teaching cash flow. This minimizes the impact of client’s taking vacations and breaks that month.
I would recommend that the side work either relates to your main business, compliment your main business or feed a passion in you. The point is to stay engaged, not to start something completely new and different.
* Catch-up. Although it’s great to think we get everything done we need and would like to, the reality is we often don’t. Make a list of unfinished projects such as scanning business cards, calling old contacts, updating addresses, hiring a new CPA and plan to knock out the list during a slow month.
* Create. Design new products, set-up partnerships or create a marketing campaign that will roll out following the slow cycle.
* Plan. It seems easier to take time to think, plan and strategize when there are fewer day-to-day activities happening.
* Update systems. When fewer people are using the systems you have in place it’s easier to transition to newer, better ones. Some systems to review: credit card processing, database, newsletter provider and communications among your team.
* Schedule doctor’s appointments. I book all my annual doctor’s appointments during my slow months. Doing so keeps appointments from conflicting with my client call schedules and gives me more wriggle room around the appointment so I don’t feel rushed to get back to the office.
* Connect. Meeting friends for coffee or taking the time to have lunch with your spouse can be a luxury during a busy month, so plan some outings when you can.
* Rejuvenate. Slow months can be the perfect time for you to get away because fewer clients will miss you. I take two to three weeks off in December to spend quality time with my family in Colorado. I find that during this time I can turn off my computer completely and enjoy really quality downtime to refresh my creative juices.
To offset the weeks without work, I offer clients the opportunity to pay upfront for the following year’s sessions if they need more tax write-offs in the current year. Typically, two to three clients take advantage of this offer that helps to keep my December income balanced with other months.
No matter how you choose to use the extra time during slower months, make sure you do use it efficiently. Time is a commodity for small business owners.
(c) 2009 Leah Grant Enterprises LLC.
New Business Mentor Leah Grant publishes Startup Success, a weekly enewsletter. If you're thinking about starting a new business or are in the early phases of entrepreneurship get your FREE New Business Startup Kit including the Secrets of Successful Business Owners audio.
Showing posts with label business plan. Show all posts
Showing posts with label business plan. Show all posts
Tuesday, May 11, 2010
Saturday, October 31, 2009
Business Planning for the Rest of Us
Having a plan is about managing your company, not explaining it.
By Tim Berry
So let's say you don't need a business plan. You say your understanding has always been that business plans are for starting companies. Or maybe because you're not looking to take your existing company to market, borrow money from a bank, sell it or get new investment, you don’t need a plan. Those are myths, and they don’t really argue against business planning. But let's suspend disbelief for a bit and settle for this question: If I don't need a business plan, do I not want to plan my business?
Here are some reasons to have a plan, regardless of whether or not you need to show one to some outsider:
Long-term goals: You want to manage, develop, review and implement long-term business strategy.
Business management: You need to manage teams, tasks and accountability. The problem of who does what, when and how much it costs comes up again and again. Responsibility has to be defined. All of this needs to be written down. You need to know what's going to happen. You need to coordinate between people, vendors, events and so on.
Cash-flow management: You need to manage money. You have to watch sales to be able to manage expenses and, more important, cash flow. You don't need any surprises.
Staying strong: You want to keep your business healthy. That means watching for new opportunities, threats and new developments in your market. You don't want to stagnate.
All of these goals are related to business planning. None of them, however, relates directly to the classic business plan document. They don't involve validating your market or showing off your management team. Nor do they involve valuing your company for investment or proving your company to bankers.
They are about managing the company, not explaining it.
My suggestion: Don't throw out the baby with the bathwater. Do your planning, whether or not you develop a full, formal business plan. Do just what's necessary, not what the formal business plan would involve.
But what is it, then? Where is it, how do you do it, how do you share it? Here are my recommendations:
Assume the plan will live on your computer. Don't worry about printing it out.
If you're more than one person in your business, get the others involved. If you're a lot of people, then get the important managers involved. Share the planning process. Do a SWOT (strengths, weaknesses, opportunities, threats) analysis. Set up a schedule for review meetings for comparing plan vs. actual results and making course correction.
Define your strategy in simple bullet points, perhaps pictures. Identify what's special and different about your business--a focused target market, and what you're offering to solve somebody's problems. Include the SWOT. Don't worry about format or tools or software; do whatever works best for you.
Set up a list of dates and deadlines and decide who does what. Determine what is supposed to happen to make that strategy happen.
Run some basic numbers: sales forecast and expense budget.
You don't have to stop life, even temporarily. Don't wait for the big plan to be done. Get going. Put your plan together one piece at a time, on your own schedule, and keep it somewhere easily accessible. Before you know it, you'll be planning to manage your business.
By Tim Berry
So let's say you don't need a business plan. You say your understanding has always been that business plans are for starting companies. Or maybe because you're not looking to take your existing company to market, borrow money from a bank, sell it or get new investment, you don’t need a plan. Those are myths, and they don’t really argue against business planning. But let's suspend disbelief for a bit and settle for this question: If I don't need a business plan, do I not want to plan my business?
Here are some reasons to have a plan, regardless of whether or not you need to show one to some outsider:
Long-term goals: You want to manage, develop, review and implement long-term business strategy.
Business management: You need to manage teams, tasks and accountability. The problem of who does what, when and how much it costs comes up again and again. Responsibility has to be defined. All of this needs to be written down. You need to know what's going to happen. You need to coordinate between people, vendors, events and so on.
Cash-flow management: You need to manage money. You have to watch sales to be able to manage expenses and, more important, cash flow. You don't need any surprises.
Staying strong: You want to keep your business healthy. That means watching for new opportunities, threats and new developments in your market. You don't want to stagnate.
All of these goals are related to business planning. None of them, however, relates directly to the classic business plan document. They don't involve validating your market or showing off your management team. Nor do they involve valuing your company for investment or proving your company to bankers.
They are about managing the company, not explaining it.
My suggestion: Don't throw out the baby with the bathwater. Do your planning, whether or not you develop a full, formal business plan. Do just what's necessary, not what the formal business plan would involve.
But what is it, then? Where is it, how do you do it, how do you share it? Here are my recommendations:
Assume the plan will live on your computer. Don't worry about printing it out.
If you're more than one person in your business, get the others involved. If you're a lot of people, then get the important managers involved. Share the planning process. Do a SWOT (strengths, weaknesses, opportunities, threats) analysis. Set up a schedule for review meetings for comparing plan vs. actual results and making course correction.
Define your strategy in simple bullet points, perhaps pictures. Identify what's special and different about your business--a focused target market, and what you're offering to solve somebody's problems. Include the SWOT. Don't worry about format or tools or software; do whatever works best for you.
Set up a list of dates and deadlines and decide who does what. Determine what is supposed to happen to make that strategy happen.
Run some basic numbers: sales forecast and expense budget.
You don't have to stop life, even temporarily. Don't wait for the big plan to be done. Get going. Put your plan together one piece at a time, on your own schedule, and keep it somewhere easily accessible. Before you know it, you'll be planning to manage your business.
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