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Business Development & Marketing Cash Flow & Forecasting General

Have you reviewed your marketing strategy?

time for a marketing strategy reviewConditions and circumstances in business constantly change so it is necessary to regularly review all your various activities and certainly do so at least once a year.
The New Year is an ideal time to do this, and in particular to revisit your marketing strategy, especially in the light of the confusion and uncertainty that has surrounded the business climate during the ongoing indecision about the way forward on leaving the EU.
There is some evidence that SMEs have been holding off on investment decisions and in searching for new business in the light of this and there is also the temptation to hold back on marketing expenditure.
However, the general advice is that you should not scale back on marketing during an economic downturn or when there is uncertainty. The argument is that even if your business is a well-known name if it disappears from view existing and potential customers may conclude that you have gone out of business.
If anything, this might be a good time to beef up your marketing strategy, thus sending out the signal that you have confidence in your business and its future.

One size does not fit all in marketing strategy

Marketers are always keen to encourage clients into engaging activities in whatever the newest tactic is but this can be a waste of money as well as diluting your message if all your competitors are jumping on the same bandwagon.
Retaining existing customers should be a key component of any strategy, not just finding new ones especially when there is a lot of change in your market. Indeed a downturn can be a huge opportunity if your competitors are not focussed on retaining their customers.
Marketing is not just about promotion and selling but also involves having products and services that customers want, distributing them in a way that makes it easy for them to find and buy, and setting a price they are happy to pay that leaves you with sufficient profit to justify the effort.
If you set up your marketing strategy having first identified your ideal customers and created profiles for them as well as identifying where they are most likely to be active, you will already have a key element of your marketing strategy in place.
You should also have a clear idea, if you regularly check the metrics, (results of activity) where your efforts have gained the most traction, whether this is visits to your website and how long visitors stay there, or whether it is the interaction you have gained on social media platforms, or the viewings and engagement of email marketing.
Equally, you should have an idea of what promotion activity works best, such as adverts, articles, leaflets, blogs, videos, or emails as examples.
Often businesses believe that they must take up the latest promotion idea, whether it is appropriate to them or not, as was the case with videos, resulting in a plethora of frankly dull “talking heads” that eventually turn off viewers.
The best marketing strategy has clear goals, whether to get your business name recognised, to sell products and services, build a trustworthy reputation or to position yourself as an expert in your field.
How you achieve this will depend on your type of business, whether B2B or B2C, the platforms you engage on and how well-produced your promotion materials are.
Most importantly all marketing should put the customer and their concerns first and create a rapport that convinces them that you do truly understand their needs.

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Cash Flow & Forecasting Finance General Turnaround

Why do you need regular Management Accounts?

regular management accounts reviews are your business map and compassWhen setting out on a car journey you need a destination, map, and ought to check the traffic and weather reports, so you can choose the optimal route. You also need to have enough fuel and money to buy more if needed. Indeed, there are many aspects of the planning that are taken for granted for regular trips that you will think about for a holiday or long journey.
Along the way, you will check where you are on the map, monitor traffic and weather conditions and make changes accordingly. You will also monitor your fuel and refuel as necessary. You might even monitor fuel efficiency and adjust your speed to reduce consumption.
This analogy can be applied to running a business. It can be difficult enough to keep a business on track to meet its goals and forecasts, even without the external effects of ups and downs in the economy and, currently, the uncertainty being caused by the ongoing Brexit negotiations.
Therefore, a business needs to be able to assess at regular intervals how it is performing as well as being able to spot early warning signs that something may be going wrong or veering off track. This is where monthly Management Accounts are so useful.
The components of monthly Management Accounts, as outlined in our blog of February 13, 2018, would ideally include an up to date Balance Sheet, a detailed Profit and Loss statement, a Trial Balance and summaries of Aged Debtors and Creditors.
These are the business equivalents that allow you to check where you are on your route map. They provide an indication of the state of your business, its continued health and its ability to reach its destination as defined by the goals you set and forecasts you prepared as part of your planning.
The Balance Sheet, for example, shows the company’s assets and liabilities and more importantly how much money is has in the bank, how much is due and how much is owed to suppliers and others such as HMRC. These are key to monitoring short-term cashflow, which needs to be well-managed if the company is to avoid running out of funds.

Regular Management Accounts are your early warning system

Ideally Management Accounts should be reviewed monthly, or at the very least quarterly.
They will tell you how well sales and margins are doing and how they compare with forecasts and targets. Organising them to provide detail can allow you to see performance by product line or by market segment, even by customer if you have some large accounts. You can also monitor costs which can also be reported in detail so in turn margins and profit contribution by product line or market segment can be monitored.
The information will allow you to adjust the business goals and forecasts as appropriate. If costs are rising, it may be time to review which suppliers you use, perhaps also staff overheads.
You might also monitor the cost of repairing and maintaining machinery or equipment and use this to assess when it should be replaced,
If there are financial anomalies, they may indicate fraud or other malpractices that need to be investigated and dealt with.
Above all, a regular review of Management Accounts will allow you to stay in control of your business and provide you with the information to make early decisions that move it forward in the best way possible.

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Business Development & Marketing Cash Flow & Forecasting Finance General

Annual review of your business and setting of growth plans?

growth plans?The festive break allows time for you to reflect on your business and review its performance over the previous year. It is also an opportunity to consider your growth plans for the coming year.
The discipline of writing down your plans and setting of budgets needs to be underpinned by measuring and monitoring performance as the basis for future planning.
The level of your review, whether strategic or tactical, will be defined by your objectives which might be for little change or dramatic transformation.
While the level of detail and research will differ, whatever the objectives the key information needed for a review are.

  • Last year’s plan and last year’s actual figures, details of your order book and future order prospects an up to date balance sheet.
  • Consideration of the different parts of your business that have been non-productive and those that act as a drain on resources that might be discontinued and those that have growth potential and should be the focus for the future. While this might seem subjective, it should be supported by evidence from historical figures and an observation of trends. Ideally it should involve market research before making any big decisions about major investment or a change of direction.
  • Consideration also should be given to resources available, options for growth, and this can be done by analysing your business’ strengths, weaknesses, opportunities and threats and preparing a SWOT matrix. The key is to use this as the basis of a ‘so what’ assessment of how to exploit strengths and opportunities and what to do about weaknesses and threats.
  • Consideration of your products and markets to identify those that yield the best margins, those that are good for cash flow and those that might require attention, whether increased margins, revised terms or cutting.

Your review should provide you with a clear picture of the business’ current situation and be used as the basis of future plans.

Setting of growth plans

Plans should be based on clear goals and objectives which need to be written down and agreed upon by everyone involved so there is no ambiguity about what is expected and so that they can be measured. A useful test of each goal is that they are ‘SMART’ where each should be based on the following criteria: Specific, Measurable, Attainable, Realistic, Timely.
While business plans might be prepared, all too many sit on the shelf unread for another year. Instead it is often more useful to use the review and SMART goals to produce financial forecasts of profit and loss, cash flow and ideally balance sheet. The more detail the better as they can be used for setting detailed budgets for expenditure and detailed sales by market or product. The detailed expenditure lines in a forecast can be used as key drivers of business performance whether investment in people, in marketing or in equipment. An example is to identify and have a separate line in the forecast for all the various marketing initiatives so that the results of each initiative can be measured and used as the basis for adjusting the marketing plan.
Detailed sales lines can be used to support the SMART goals so that performance can be measured against achieving targets.
The layout of the monthly management accounts should reflect the same line items as set out in the forecast so that once a detailed forecast has been set, such as for monthly sales and expenditure, it can be used to compare with the management accounts as a means of monitoring performance. In this way adjustments to the plan can be made where necessary.

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Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery

The importance of a business review

carrying out a business reviewAt the very least a business review should be carried out once a year although sometimes it should be done more frequently, perhaps quarterly.
This is especially true when, as currently, the economic and business climates are so uncertain with a number of global and local situations in flux, especially in the current climate with inflation creeping up and the UK’s trading relationship with the EU being so uncertain.
At the same time caution should always be exercised in reading the signs and drawing conclusions from regular reviews, since the information gleaned may be subject to short term fluctuations rather than identifying the longer-term trends that might influence a change of strategy.
In addition to influencing strategy, a business review is a useful tool for assessing performance and making improvements to processes, systems or marketing as needed or identifying opportunities that may have been missed.

What should be covered in a business review?

The end goal of a review is to establish whether a business is performing satisfactorily or whether adjustments or something more radical is needed. Essentially, it is the business equivalent of the school student report for parents.
The review should bear in mind the current business plan and any previous reviews or analysis such as the last SWOT analysis (Strengths, Weaknesses, Opportunities and Threats).
It should review the goals that were set for the year and there should be some simple mechanism for scoring the results. It may be as simple as checking of goals have been achieved, exceeded or if there is a shortfall.
using a magnifying glass to look at detailA thorough review will look in detail at all aspects of the business, not just its financial position but also its systems and processes, employee performance, and sales and marketing performance in relation to defined goals that have been set for the year.
Indeed, surveying or simply speaking with customers to get their feedback and in particular their input on how any complaints were dealt with are also useful.
A review can also benefit from the input of staff. One useful way of achieving this is to carry out staff appraisals at the same time.
A key aspect of any review is to consider future opportunities and potential goals, in addition to those currently being pursued. This can influence research that might be carried out so it is available for incorporating into any future plans.
It is often said that no business can survive if it stands still, so a regular business review is an essential tool for setting goals and strategies for its future survival and growth

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Business Development & Marketing Cash Flow & Forecasting General

Resetting the marketing budget for 2017

Ready for Tomorrow?Given the challenges many SMEs are likely to face in the coming year, the quiet period between Christmas and New Year is an opportune time to reflect on the state of a business and consider where next.
Once there is a clear view of the way ahead it is also important to revisit the business’ marketing, consider what has worked and what has not and reset the marketing budget at a realistic level of spending.
One thing to remember is that marketing is not an optional extra. If potential clients or customers do not know who you are and what services or goods you offer they are clearly not going to be converted to buying from you.
This is particularly important to remember when trading during difficult economic conditions, when it is generally not advisable to cut the marketing budget.

How much money is available to spend on marketing?

This involves having a clear idea of how secure the business’ income is and this will depend on whether it has long-term contracts with clients and customers or not.
It is also important to know how much money needs to be retained to cover overheads and other expenses.  For example, the business that has a 12-month contract with a supplier will need to ensure it has the money to fund the obligations, especially when it is prepaid.
Armed with this information and a careful analysis of the potential for increased demand for its services or goods a business will be in a better position to establish what cash may be available to spend on marketing, and what proportion of that it can afford to use for speculative marketing.

Limited duration versus enduring messages

While businesses might consider the cost and impact of promotion material and the medium for distribution, it is also worth considering how long a message lasts for.
Businesses should also monitor the cost and results of initiatives such as time and money spent on social media. Paid for advertising such as Google Adwords, Google’s Universal App Campaigns or Facebook advertising should be measured in terms of a return on the investment.
Much of this activity disappears from view very quickly in that the message put out today may be lost tomorrow – or even in a few seconds in the case of Twitter. However, that is not to say that there is no value to such marketing activity. With sustained effort it can be used to raise awareness of a business’ brand while not directly bringing results in terms of immediate sales. Such marketing therefore needs to support other initiatives.
On the other hand, spending on a printed membership journal or client leaflet, where information remains available for a long period could be seen as more durable marketing. However how many of these are used by clients to find your products or services? It could be argued that years ago online search engines replaced Yellow Pages and similar directories.
There is never an absolute guarantee of immediate results with any form of marketing since ultimately the choice to buy remains with the customer.  Equally, there is a value in both limited duration and enduring messages.
The important point is to know exactly what cash options a business has and to decide how best to apportion marketing budget to get the optimal return on the investment.
 

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Business Development & Marketing Cash Flow & Forecasting Debt Collection & Credit Management Finance General Rescue, Restructuring & Recovery Turnaround

Pre-election honeymoon period for businesses?

With an election looming it is unlikely that there will be any controversial legislation between now and May that will upset SME voters.
There may, on the other hand, be promises made in party manifestos, though we’re not commenting on whether they will be kept!
The pre-election honeymoon period is, however, a good time for businesses to get their finances and their operations in order.
Personal tax returns should have already been submitted (by 31 January) and firms ought to be ahead of the curve with their RTI (Real Time Information) systems in place (the deadline for SMEs is 6 March). It is also time for SMEs to make sure they have a planning time frame for pensions auto-enrolment as the various deadlines are looming (depending on the number of employees and whether an application for deferral has been agreed).
So this period provides a small breathing space for businesses to do some housekeeping and make sure their affairs are in order before the next onslaught of initiatives from a new government, which may be one that philosophically doesn’t like businesses.
A close look at the monthly management accounts may identify adjustments that can be made to operations that improve efficiency, cut costs or reduce risk. It may also identify scope for reducing debt or building up a war chest for investment. It may identify finance facilities that are due for renewal in the near future that might better be renewed early.
It could also be a good time to assess how well the marketing has been performing and tweak it if necessary.
How will you use this time to create a sharper, more efficient and more competitive business for the next financial year and be ready for whatever the election brings?