This blog concludes our visit around the (business) gardens. In the first blog, we discussed sales and marketing. In the second blog, we talked about operations. In this blog we look at the vege garden – administration. This is where we plan and cultivate future nourishment, keeping the pests off our crop.
The administration side of your business is a lot like a vege garden – it’s what will feed and nourish your business, and help to keep it healthy.
Create a budget
An annual budget will help you work out the revenue you require to break even. Knowing the point when your business will turn to profit is a great sales incentive.
Check your financials regularly
By staying on top of your numbers, you will have enough time to counter negative trends. Knowing how you have performed on previous client work will also give you the confidence to pitch new work on a fixed price basis.
Not all business is good business
Avoid the temptation to compete on price alone, instead compete on your value offered. Never ‘buy’ new clients by undercutting a competitor if that mean running at a loss. Unless you are a big corporate that can offset losses in one area with profits in another, running a loss leader is not a sound strategy. Putting prices up later is usually a challenge and risk laden undertaking.
Price it right
Sometimes a price hike is justified so don’t fear doing so. Just make sure you can demonstrate genuine increases in your costs or increased value to your customer. If you need to put your prices up remember the 10% rule: if you put prices up by 10%, you can lose up to 10% of your clients without affecting sales income.
Don’t bury your head in the sand
Never neglect your legal, compliance obligations (e.g. Health & Safety) as a cost saving exercise. Makes sure all obligations are fully met. Get suitable insurance cover where possible.
It can be tough (and lonely) at the top
The transition from employed to self-employed is a huge leap for anyone. Having to juggle all the elements of a business and make all the decisions is quite a burden – don’t underestimate it. It is worth taking time to develop your route map in the form of a business strategy to keep you on your path, as it is easy to get distracted by the day-to-day noise.
Learn from your mistakes
Make sure you undertake proactive risk management to avoid mistakes and learn from them where you can.
Talk to your coach
Having an independent coach as a guide and sounding board makes a huge difference. It allows you to vent your frustrations and work through new challenges and opportunities with a knowledgeable critical friend. Asking for help is not a sign of weakness; it’s a wise business decision.
You truly reap what you sow – make the choice to invest in a coach to help your business flourish and bloom throughout the varied seasons. We can meet down the garden shed for a brew and a chat. I’ll get the kettle on.
NCBIZ provides specialist support and coaching to help start-ups and businesses across Christchurch and Canterbury establish a solid foundation, overcome challenges and perform at their best.