Unless your business is dependent on the Jersey Shore or other summer activities, you probably have some pockets of slow time in your business during the summer. Rather than belly-aching about how slow summer business is, use this time to plan for the busier times of the year, streamline your expenses and make your business more profitable.
Come up with projects for your staff to promote the business, identify new sources of business, locate new suppliers or evaluate things you have been looking to quantify but can never find the time to do so.
If you are looking to be a savvy business owner and run your business by the numbers, you’ve probably got everything you need at your fingertips and you just never thought about using it. If you are using Quickbooks or its equivalent competitors, compare this year’s numbers to last year’s numbers—see what has gone up or down and make sure you can explain it.
Compare meaningful time periods for your business. For instance, in our accounting firm, with the seasonality of tax season, comparing January 1 through April 15 of two years might be much more meaningful than the traditional January 1 through March 31 might be. If you are in retail, maybe you want to compare two weeks before Black Friday through December 25.
Most business owners are so busy running their businesses and putting out the fires of the day, that they never allow themselves the luxury to actually step back and take a thoughtful look at vendors, outstanding receivables, staffing, marketing or other areas that are causing cash flow issues in their business.
Are you friendly with some of your competitors? Is there something you could buy in quantity if you had shared purchasing power? Could you share an employee? Could you cut back your summer hours and save some administrative costs?
College students are off for the summer. Have you been meaning to work on your social media presence? Summer interns, paid or for credit, are a great, inexpensive resource for many special projects.
When you compare your expenses to previous periods, are there certain costs that have skyrocketed? Is it time to find a new vendor or are these increases across your industry? What is the competition doing about pricing? Is it time to raise your prices to follow your costs going up? Are there ways to change what you do or the sizes of products or service packages without sacrificing quality and your reputation?
Take a look at your receivables. Use an aging report to compare the over 30/60/90 days totals with this time, last year. Are you as diligent as you should be on collections? It is always the squeaky wheel that gets paid first! The longer you allow your receivables to go without collection calls, or duplicate invoices, the less chance of getting paid. The more time passes, the less the customer/client is able to remember how happy they were with you when you provided the goods or services.
Sometimes more valuable than getting paid is getting referrals. Reach out to happy customers/clients and ask for referrals and testimonials. Follow up with contacts and reintroduce yourself. Meet with centers of influence: people in related fields to yours that are good referral sources.
Take a look at your payables. Would any of your vendors extend some credit to you so that they’d be willing to wait to get paid until you get paid? You may not have had the years in business or the volume of purchases the last time you asked or maybe you have never asked.
Know your profit margins. Which are your best products or services and which are your worst, from a pure profitability standpoint? Too often business owners cannot answer that all important question. If you cannot, then you need to set up your accounts so they tell you what you need to know to run your business more profitably.
In summary, know your numbers.
Alyssa Lebovic is a partner at Keller & Lebovic, CPA’s in Fair Lawn, New Jersey. They “Help You Keep More of What You Make” by providing Profitability Consulting, in addition to Tax Planning and Preparation services. Find them at www.kellerandlebovic.com or call (201) 797-1966.