At the Business Mastery Level there are 4 distinct areas of focus that need to be considered …
A. Destination Mastery
B. Money Mastery
C. Time Mastery
D. Delivery Mastery
In the last post we looked at how well you understand your business and A. Destination Mastery.
Business is like a game and like any game, it is best that you keep score to know whether you are winning or losing. Unfortunately, all too many people in business either don’t know their score or lose track of the scoreboard … which leads to big problems in and around their business.
The key to Money Mastery is Budgeting & Reporting. All too often I hear comments from business owners that they don’t budget and they rarely look at their Financial Reports. At very least, you need to be looking at your financial numbers every month, no matter the size of your business.
The importance of looking at (and understanding) your numbers on a monthly basis is that if you identify a trend that is going in the wrong direction you can investigate and take alternative measures to turn the situation around.
If you are only looking at your financial numbers at the end of the financial year when the accountant finalises your year end financial report for the Tax Office, it may be too late to take action in averting a financial disaster in your business.
The key areas of Financial Mastery that you must know or implement into your business include:
1. Establish your Break–Even point
2. Gross and Profit Margins
3. Financial Reports including Profit & Loss, Balance Sheet, Cash Flow and Budget
4. Establish Financial Key Performance Indicators (KPI’s)
Gross margin is the difference between revenue and cost of goods sold, or COGS, divided by revenue, expressed as a percentage. Generally, it is calculated as the selling price of an item, less the cost of goods sold (production or acquisition costs, essentially). Downward trends and changes in the gross margin % is an early indicator for identifying financial issues in your business.
The formula is:
Gross Margin = (COGS ÷ Total Revenue) x 100
Profit margin is the percentage of revenue left after all expenses have been deducted from sales. The measurement reveals the amount of profit that a business can extract from its total sales. The net sales part of the equation is gross sales minus all sales deductions, such as sales allowances. The formula is:
Profit Margin = (Total Revenue – Total Expenses) ÷ Total Revenue x 100
Using an accounting software package such as MYOB, Xero or Quickbooks, to name a few, will enable you to print your key financial reports as often as you require, whether it is daily, weekly or monthly.
Identifying and establishing the KPI’s that are important to your business/industry will enable you to have a complete understanding of your business status at a glance, particularly when you have a clear understanding of what your key numbers should be.
CONSISTENT CASHFLOW – Tom Palzewicz
This book is an easy to read book and focuses on having a consistent cashflow - How to Get It, Track It and Keep It in Your Business.
There is no such thing as Time Management, we must focus on Self Management in order to make the best use of time that is available to us. Have you ever wondered why some people manage to achieve far more with their time than others?
We all have the same amount of time available to us every day. It is how we use that time that makes us more efficient and effective in achieving our goals. It is not just about doing things faster, it is about doing things right the first time …!
1. Self Mastery
2. Planning Mastery
3. Delegation Mastery
Self management is about pro-actively doing what needs to be done, rather than just putting out fires and dealing with what is right in front of you at that moment. This is where you take a few minutes to establish URGENCY vs IMPORTANCE (refer to the TIME TARGET diagram). Here it is important to focus on working only on Demand and in the Zone to make the best use of your time.
Build a plan and the work you plan in effectively using your time. Build a 90 day plan that is congruent I with your 12 month business goals. Every 90 days, spend some time working ‘ON’ your business to identify the top 4 goals that you need to achieve over the next 90 days and develop a step by step action plan to achieve those goals. Then break the 90 day plan down to what you need to achieve this month, this week and tomorrow.
At ActionCOACH, we run a quarterly GrowthCLUB where business owners come together to build their 90 day plan in a workshop environment.
Periodically conducting a time study on your daily activities will help you identify what tasks you are doing that should be DELEGATED … Delegation is about you letting go as much as it is about your team accepting responsibility. Look for things that you want to do but don’t need to do. Question yourself ‘Is this activity giving me the best $value and use of my time?’
Make sure when you delegate you don’t just ‘abdicate’. Find 5 hours per week where you can work ‘ON’ your business rather than ‘IN’ your business.
How you go about delivering your products and services to your customers with consistency will set the foundation for healthy growth in your business.
In supplying your customers, do they get what they pay for … and get it on time? Are you and your team serving and delivering your customers with a Quality mentality every time.
How easy are you making it for your customer to BUY from you? Do your customers know all of the products and services that you can deliver?
Treating your customers with the basics of Good Customer Service is the first step in building your customer ladder of loyalty.
Train your staff in the principles of providing excellent customer service and ensure that this becomes the culture of your business. Your customers will love you for it.
Mastery level is where you are taking your business from chaos to control through building a solid business foundation. Remember, there are many things you can do to make business easier for your customer and your business. Utilising management software systems and add-on Apps will enhance your ability to move quickly and easily from CHAOS to CONTROL in your business, particularly in systematising the routine and humanising the exception.
In business, it is always the little things that get big results. Contact Us now if you are serious about achieving the success in your business that you are not achieving at the moment ...