Happy new tax year everybody. I hope you celebrated it in style …
We thought we’d start the new tax year with some simple ways to improve your financial position overall:
There are two simple ways of increasing sales:
1. Attract new customers
Naturally the first takes longer and can cost more but do you even know who your ideal customer is?
Once you do you can then focus on what they need and where they are to focus on how best you attract them.
Now this all seems very obvious and I agree but the most common error we find here is that clients look to attract those customers who they invoice the most to. However, do you know what they cost you in terms of time and directly attributable cost. Do you even measure whether they regularly pay within the credit terms agreed?
Alongside Xero and other software we can help you here so that you focus your efforts in the correct areas moving forward.
2. Earn more from existing customers
Have you ever heard the term ‘never leave anything on the table?’
Clients don’t know what they don’t know; or in short, do clients know everything that you do. If not, tell them! Do contacts of your clients know what you do?
The easiest people to attract to your business for additional services or who can promote your work to other people are those that know and trust you already.
It is also the quickest and cheapest way so why do people always tend to focus more on attracting new customers rather than building relationships with existing one’s?
Again, building on Xero and other pieces of software we have here we can help you do this.
Reducing costs/making more from your costs
Yes you can reduce costs and then that earns you more money; or so you thought it did.
We’ve all had that experience of going with a cheaper supplier which in turn cost us more money in the long run and whilst I’m not discounting that cost isn’t important, we need to consider the bigger picture and those costs not quantifiable. For example, what figure do you put on that stationery supplier who got you something at the drop of a hat because nobody had ordered in something that was needed the following day? What figure do you put on that supplier who is always at the end of the phone and goes that extra mile when an issue arises?
Look at the long-term costs not just the short-term one’s.
You might then be thinking what do I mean by making more of your costs. Well let’s take your mobile phone as an example; does anybody know all of the features that it has? I certainly don’t and I would even go so far as to say that might consider switching phone to one that has a bright new shiny feature whilst being ignorant to the fact that my current one might already have that feature.
Take your time to build and maintain relationships with businesses that you already work with as the benefit and overall value that you subsequently then receive will actually mean you maximise the return on your costs.
Reducing the costs of financing/recognising opportunity costs
Finally the costs of financing and opportunity costs are so often neglected as people focus on the first two items.
Let’s start with the dreaded word of ‘debt’ or more specifically ‘leasing’ and consider if you’ve just had that shiver down your spine.
Not many people like debt nor do many people like the idea of having something which they don’t own as I used to be like this.
However, let’s consider two scenario’s:
1. You need some new machinery but simply cannot afford to buy it outright. You can either wait until you do have the money or you could lend the money or even lease the equipment.
You need to balance this off against the ‘opportunity cost’ of perhaps losing that customer if you don’t have that machinery.
2. In this second scenario let’s assume you can afford to buy this equipment outright to service this customer or you can finance it or even lease it and never own it.
If you buy it outright that is a lot of money to pay up-front which might mean the opportunity cost is that you cannot then recruit that new member of staff. That new member of staff might; and should I’d hope, generate more money than the cost of financing.
You then think do I own the asset through a finance agreement or do I lease it and again consider the figures but also consider what is the end market like for this should you then have to sell it on at the end of the agreement if you took ownership.
We have the software here that can identify cash-flow issues before they become issues and even plan for what opportunities exist in advance of such issues happening.
I don’t deny lot’s of simple tips here but we often struggle with the time to take a step back and evaluate things to make the best decision.
With ourselves and alongside technology we can help you to make the right decisions first time to ultimately put more money back into your business and subsequently your pocket.
For more information contact us today.