What issues do you see small- to medium-size businesses grappling with at the end of the financial year?
Many of my clients have come to the realisation that although their business is profitable on paper, it is at their own expense - they do not value themselves as an asset to the business.
SME owners put up with things like work stations that cause them discomfort, inadequate tools to do their job or no paid sick leave and no paid holiday leave. In discounting these things, which can make the business look falsely profitable, they deprive themselves, which depletes their passion and enthusiasm for what they do.
And on paper, it possibly makes sense not to spend the money. When a company is starting out, it's prudent to keep expenses as low as possible. But like any physical asset that is neglected, after a while the owners get run down and become less effective. They can begin to feel overwhelmed by the demands of running the business and their passion for their work begins to fade.
How can they resolve these issues?
Work through a very detailed list of all the costs your business might face in the coming year. Within each category on the list, first consider what the needs of the people in the business are. Often, these can be met without breaking the bank, but it is important to allow enough money to fully take care of these needs.
Then look at the wants of the people in the business - maybe there's a training programme they'd love to do or a conference they'd like to attend. The desired level of profit should be included in this process. Attending to the owner's wants helps to fuel their motivation for the business. Finally, look at what the obligations of the business are within each category.
Running the numbers like this then gives the final figure - what the business has to make in order to meet all of the needs, wants and obligations. If that number is unrealistic, then start looking for ways to adjust down the dollar amounts in each expense category.
In making the adjustments, be sure you are still meeting the needs you've identified. Wants may have to be scaled back, but don't wipe them out completely, and some of the obligations can usually be cut back or even eliminated with a little research into pricing. The aim is to establish an earnings goal that might be a stretch, but not out of reach.
By doing this exercise, SME owners have not only the answer to how much they need to earn, but why they need to earn it - what will be possible, or what will change if they hit their earnings target.
This provides the motivation to make the changes that will maximise their chances of hitting the income target. There may be a marketing plan which hasn't been fully implemented. They may need to raise prices, "fire" some unprofitable customers, or focus more on the most profitable areas of the business.
Whatever the plan is for your business, the key is to block out regular time throughout the coming year to implement it. This is where having regular meetings with a mentor is helpful. The meetings provide a deadline, which makes it more likely the implementation tasks will happen.
A quick way to see how well you're doing with implementing your plan is to regularly track your income and expenditure categories - the numbers will tell the story.
Any other advice for small business owners in terms of lowering stress levels?
Don't expect that you can do it all by yourself. Having your own business means working longer hours and being chief cook and bottlewasher - some of the time. But if this has become a way of life, then taking the time to reassess the business could be the best thing you've ever done.