Know your business by
knowing your:
1. Offering
How do your products and
services differ from those of the competition – to determine this take into
account price, quality, appearance, packaging, size, servicing, operating
characteristics, and business considerations (e.g. business location and facility,
reputation, methods of selling, open- ing hours, delivery times, credit terms,
advertising and promotion, etc? How could your offering be rebranded or
differentiated from the competition? What plans are in place to develop,
expand, or improve your offering? Any Plans to outsource/offshore?
2. Operating Capacity
What level of production
could be sustained? How would an increase in Production be serviced? If new
productive/operating assets are required, how will these be financed? Any
obsolete assets that need replacement? Are the productive assets being fully
utilised? Are premises in conformity with fire, health, and safety regulations?
Are premises sufficient for present needs and could future growth be
supported?
3. Human Resources
Is the management
structure in place sufficient? Is there a Succession Plan? Staff Turnover – is
there cause for concern, and if yes how could this be checked? Are there Key
Staff, and what plans are in place if they retire? What backup arrangements are
in place in the event of employee absenteeism? Is employees and public
liability Insurance in place?
4. Customers
Who are your customers?
What do they do? Why, when, and how do they buy your offering? What is their
financial worth? What makes them feel good about buying your offering? What do
they expect of you and your offering and what is their perception about you and
your offering and about the competition and the competition’s offering? With
respect to credit sales, is Debtor Turnover Increasing, and if so, is this
because of increase in sales, deficient monitoring, or maybe because of Bad
Debts? Do you assess a customer’s credit worthiness?
5. Competition
Who are your
competitors? What are their strengths and weaknesses? What is known about
potential competition? How is the competition monitored to know what it is
doing and what it intends to do? What Plans are in place to thwart off the
competition, and possibly win market share?
6. Financial
Requirements
What are your long-term and
short term needs at present, and how are these expected to change in the
future? How are financial needs quantified? What security
is or could be offered? Are your bankers kept abreast of your financial
needs?
It is through knowing
your business that you learn about your internal strengths and weaknesses, as
well as the prevailing market opportunities and threats. With this
knowledge, strategies could be laid to retain and possibly win over customers
from the competition, thus growing your business and ensuring success.
7. Know what cashflow is
and its source
Do you keep track of
your cashflow? Do you plan your long and short term capital needs
to ensure sufficient cashflow? Do you prepare a budgeted
cashflow?
If you are interested in
preparing a budgeted cashflow, reference could be made to our web site, where
a suitable cashflow template is freely available.
It is important not to
confuse Sales with Cashflow. Cashflow is cash generated from
sales, capital, or lending that will be used to fund the operations
of the business. In the long-term, a business’ cashflow
will principally emanate from the right type of sales, i.e. those that
are profitable and sufficient to cover all costs and leave a
profit.
8. Know how not to be
complacent
A business operates in a
living and ever changing environment, so you must be alert to new challenges
and ready to take the necessary steps to adapt.
9. Know your goals and
develop a business plan
From knowledge of your
business, set realistic goals of where you want your business to be in the
short and medium term, and formulate suitable strategies to reach these goals.
Write down these goals and strategies and incorporate them into a Business
Plan.
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