Q&A: Small Business Consultant Answers Critical Questions
How can you increase your chances of success? How can your small business jumpstart its revenue? What about developing a budget?
Small business owners have plenty of questions, and not every small business can afford to hire a rock star consultant to help them identify opportunities and roadblocks.
Rick Wakeland, a Senior Business Consultant for Corporate Business Solutions, is sharing some free advise you’ll want to tap into. Listen up as Wakeland answers the most common questions he hears from small business owners.
Based on the economic downturn over the past two years, what immediate action can the owners of small and medium-size businesses take to increase their likelihood of being successful?
Small and medium-size businesses should make a plan based on the new reality of their business. This plan should include at least a three-year budget that will meet their profit expectations. The business overhead expenses and cost-of-goods sold will have to be adjusted to meet the plan. And it should be reviewed at least monthly against actual performance to ensure the business is on track.
What is the best way to increase my revenue in the very short term?
The best method for increasing sales in the short term is refocusing on your current customer base with special offers directed at the products or services they had purchased from you previously. And, business owners should make these offers so attractive that word of mouth will expand the message. Using social networking (such as Facebook and Twitter) and a marketing tool, such as Constant Contact, will support the effort as well.
How do I develop a budget and what are the advantages of developing one?
If you are using accounting programs such as QuickBooks or Peachtree to manage your business, you can download your yearly sales and expenses by month into a spreadsheet (such as Excel). Add a column titled "budget" and one titled "actual." Using this template, it is a simple process to develop the budget for the year, a month at a time. Then you can compare the actual to your budgeted amount and make any necessary adjustments. This will help you quickly identify cost overruns!
Everyone tells me that there is a difference between profit and cash flow. What is the difference and why is that important to me?
Profit is the amount that is left over after all costs are covered, including material, labor, overhead expenses, and taxes—otherwise known as net profit. Cash flow is the amount of money available to pay company commitments on an ongoing basis. Just because a company is profitable doesn't mean it has enough cash to meet its day-to-day operating needs. A business cannot be successful unless it is both profitable and manages for its cash flow needs. Also, profits are often set aside to invest in expansion or long-term investments.
How can I make sure that the price I am charging for my product is the right price? And, how do I know if it's too high or too low?
The prices you charge must be based on your costs, including your labor costs, your materials costs, your overhead costs and a planned profit for you! You cannot set your prices based upon what a competitor charges because his costs will be entirely different than yours. Knowing your costs and controlling your costs is the key to being competitive in any economic environment.