Updated: a day ago
In this guide we share select steps to business operations, revenue generation and efficiency analysis from our team of professional financial consultants. A well done efficiency analysis takes into consideration current management practices, financial data, and operational statistics.
Do you have a Business Plan?
Consider writing a business plan if you don't already have one. Of course, plenty of enterprises operate for years without a proper business plan. However, taking the time to consider and plan fundamental elements of your business, such as management structure, operational procedures, competition, marketing, and personnel will help when identifying what financial metrics are critical to your business.
What is a business plan?
A business plan consists of an executive summary, product/service analysis, market analysis, competition, marketing & sales structure, location, management summary and financial analysis. The business plan details your current standing, future goals, and how to achieve them. Look to create a brief overview of the most important practices, processes, and assets to your customers.
If you would like to view our tips on each section of a business plan, such as market analysis, location, management structure, financial analysis and more, read our guide to writing a business plan.
What are your business Goals?
When analyzing your business's financial efficiency, determining your future goals for growth is essential. Set your goals on both a short and long term basis so that you can concentrate on resource allocation and business processes for certain periods of time. This will benefit your day-to-day operations and allow for future evaluation.
Short Term Tactics
Short-term tactics refer to the day-to-day operations we’re all familiar with. This includes both billable work (revenue generating) and administrative work (non-revenue generating). Businesses are typically proficient at getting tasks accomplished in the short-term. The key to managing short-term goals is the consistent weekly review of your operations with your personnel.
If you're interested in how to set short-term goals or how these goals affect your business's efficacy, read our article on short and long-term goals.
Develop your business plan on a five year basis. It is important to set future goals for your business so that you always have your eye on both the competition and market trends in your industry. These metrics serve as good benchmarks for assisting you in developing future growth plans.
In consulting with many clients, we have found that those who have set long-term goals are better positioned to plan day-to-day operations. If you want to read more, check out our article on long-term strategic planning.
Finding the Problem / Questions for the Business Owner
Business owners often discover that despite strong revenue growth, and after operating expenses are accounted for, they are not making a profit. When business owners approach us with this issue, the following three questions are key for them to consider.
1) Do the hours you spend on administrative tasks reduce your company’s potential revenue?
2) Have you considered alternative strategies to increase revenue without increasing your investment?
3) Have you considered ways in which you can cut costs without sacrificing your revenue goals?
Each question concerns how the business is allocating resources, and attempts to address these points in a manner other than current operating procedures. Of course, the solution to each problem is not always obvious. That's where CPN & Associates can step in with our expertise to review and analyze business' financial data to address these questions. If you are interested in solving these, or similar, problems for your business, read our more detailed article here!
What are your numbers?
As we have discussed, identifying the issues where your business may be experiencing operational inefficiencies is key. Understanding where you are spending time and money will help you find more money on your bottom line.
CPN & Associates commonly finds issues in business's commission structure, vendor structure, and generally high operating expenses. It will take a substantial amount of time to conduct a proper analysis of a business's numbers, however, having this granular view of your business will present solutions.
Read our full article on analyzing your company's finances to solve barriers to growth.
Reviewing your company’s financials on a regular basis can go a long way to keeping your
business healthy and profitable. In addition, consistently analyzing your numbers will keep you
abreast of any problems that may arise, and more importantly, you will be able to spot negative
trends early so that corrections will be minor.
You will not have to wait for a major negative incident (i.e., falling revenue, a monthly loss that was unexpected) to tell you that your business is in trouble. You will be able to anticipate trends, which is one of the most valuable tasks of a business owner.
Preparing for known and unknown eventualities will help your business ward off unexpected expenses. One of the best ways to do this is tracking finances and being diligent when it comes to tax season. If you want our tax tips for small businesses, read our article here.
Where Do We Go Now?
If you're still not sure where to turn for support with your business plan and goals, please reach out. We started CPN & Associates out of our love to watch small businesses grow and realize their potential!
CPN & Associates LLC is a Business Consulting Firm offering strategic business reviews, analytical financial reviews, operational management, and many other small business services.