Is Your Business Going To Be OK?
Recent ABS statistics showed that between 60 and 70% of all businesses do not make it to their 5th birthday. Think of all that blood, sweat and tears within those businesses. There are a myriad of reasons for such levels. Two of the key reasons are 1) poor financial spatial awareness and 2) inadequate financial planning and forecasting. As a company, these figures are the reason we are here. To give business owners, and their advisors, clear, sihttp://13.239.31.34/smes-and-nfps/mple, and quick tools for empowering these tools, and skills, and therefore reducing the financial, human, and social strain of business underperformance.
This month, we’re excited to launch the latest iteration of Jazoodle. How will you use your platform? Covid19 has exposed businesses and entrepreneurs to a clear fact, that in times of uncertainty, business owners, directors and managers want to know, “Are we going to be ok?” In this blog, I want to explore a few ideas that may give some great tips in how you may get the most out of your Jazoodle.
First things first
So, let’s take it from the very top. The Jazoodle Business Health Score is your first point of answering the question, are we going to be OK? The health score is central to each and every business and can indicate underlying financial stresses within the next 12-24 months. If your score is not as you want it, what can you do to improve it?
First off, you should take it in context. You can see your progress as a business via the health score timeline. What trends are you seeing? Is the drop in score continuing over time? A sudden drop? Or remaining steady over time?
If it is continuing to fall over time, how steep is the line? If steep, this could mean some potentially serious issues that need addressing now. These may not be apparent. Are your revenues holding firm, or also declining? How about your gross and net margins? If your revenues are holding steady, but net margins declining, why is this? Are you relying on discounting to sell? If so, think about some strategies to counter this. It’s no good selling more, if your margins are falling and therefore not generating enough free cash within your business. Try assessing your competition and their current pricing strategies. Understand your clients and customers. Are they purely seeing your product or service as a commodity, whereby a race to the bottom in discounting is occurring? Listen to your customers more. They may confirm an unmet need, where value could be built with your products. How do they use your products and services and what tasks are they completing with your goods?
Think differently
Are there any tasks that are currently not being met by yourselves or your competitors. Tasks that are a major pain in the butt for your customers, and with a little tweak to your offerings, you could add on a service to your goods. For instance, you sell children’s shoes and as parents, we all know what a pain it is to drag our kids to the local westfield to have your kids feet properly measured ready for fitting. Could you add local or even home based measuring services? We also know that kids shoes wear out through normal rough and tumble, scuffs, and through feet growing all the time. Could you create an annual family shoe purchase plan, with precise fitting included and spreading the load over 12 months ?
What I am trying to say, is your business score will uncover all sorts of areas for your business, and uncovering these early may give you a strong competitive edge ultimately.
Once you have addressed the low margins, watch your score improve (so long as other factors don’t decline of course)
On this subject, the business health score also measures resilience within your business, as well as the other factors described above. If your score is low, but your revenues and margins are otherwise healthy, this could mean that you may need to pay attention to the efficiency of your assets. Assets, when properly planned for, are responsible for generating cash within your business.
You can check the efficiency of your asset base by checking the Asset Turnover score in Jazoodle. This should be above 1, and in fact well above 1, and what it means is that for every dollar of asset, you generate at least a dollar of revenue. Try checking this – if your assets are not efficient, and your asset turnover score is low, this could be your problem. Assess what assets you have in your business. If limited to a car, and you don’t need the car for your business, this could be the problem. What investments can you make that would make a fundamental difference to the running of your business. Can you invest in computer systems or other productivity systems that streamline your workflows? Or increase your customer reach, such as an online store? Can you invest in new machinery that would double your capacity in your business without adding to labour costs?
And finally
