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How to retire early on a decent income

Most people would like to retire early on a reasonable income that supports their desired lifestyle.

The reality is somewhat different for many, but if you’re running your own business, you are in control of your own destiny more so than most.

All it takes is some careful financial planning, to set out your personal financial goals and how you can run your business to achieve them.

Sounds interesting? Read on…

Not everyone is good at the numbers. But to run a successful business you simply can’t afford to ignore them. By all means leave it to an expert to do the number crunching for you, but do yourself a favour and pay attention to their edited highlights.

For example – do you know how many sales you need to make to break even? How many more sales do you need to increase profitability by 10%? And are your profits being eaten away by a poorly performing product or service?

It’s time to get smart, if you want to retire early!

So, here’s some of the detail…

You need a financial appraisal of your business model, either from your finance director if you have one, or from a reputable outsourced professional.

And this appraisal should include the following:

• A thorough assessment of your business model – what does it do, how does it do it, does it make money, is there potential for it to make more money? Is it losing money unnecessarily?
• An examination of your product or service mix – do they all contribute to profits? Are there other opportunities to increase sales and profits?
• How is cash flow? What can you do to improve it?

At this stage, once you are informed about the financial health of your business, you’re also in a position to make astute business decisions and take action.

And you must set realistic financial targets that are achievable, based on the capabilities of a business model that is running at its optimum level. Then identify strategies needed to achieve those targets

And once this exercise has ironed out inefficiencies and created a profitable business model, you need a financial management system in place to track performance against your targets, so you can monitor progress.

Measuring and monitoring progress is key to identifying where corrective action is needed if you are to stay on course to meet your financial goals. A plan without a gauge is not worth the paper it’s written on. And it’s inevitable, in an ever-changing world, that you will need to adapt your plans to suit the market conditions.

It’s worth noting that this is an ongoing process, and should become part of your monthly, or weekly regime to check figures, sales, profits and how they fare against the realistic results that you’ve established your business is capable of achieving.

Remember – you want to retire early and have a great lifestyle – so the effort you put in to looking after the financial performance of your business now will repay you further down the line.

If you’re keen to take a greater control over the future of you and your business, we can help here at Blaze Ahead.

Julian Portch, an esteemed member of our team operates as a virtual finance director for a number of businesses, adding the financial rigour they need to stay focused on medium and long-term goals through making the right decisions today.

If you’d like to find out more details about this service, please do get in touch. The sooner you act, the better the prospects for you to live life more on your terms!

Alternatively, you could carry on as you are, and hope for the best…

Grab the opportunities of a New Year with both hands!

What are you doing to give your business the best chance it has of succeeding and thriving in 2013? Let’s start with making an honest assessment of the health of your company right now:

Are there warning signs that all is not well?

• How is your cash flow?
• How are sales?
• How is your ability to pay debts as they fall due?
• Are you up to date with Inland Revenue payments?

If you are struggling, take a good hard look at the plans you made 12 months ago. The position your business is in today is a direct result of the decisions you made back then. Were they poor decisions that missed the mark or were they the rights ones but you lacked the will to implement them?

And if your business is doing great, then congratulate yourself on a year well spent, but what about the next 12 months? Now is not the time for complacency. What will it take to improve results, profits and prospects in 2013?

Do you foresee additional threats and weaknesses that weren’t there before?

Ask yourself a direct question – how accountable are you? Do you have your own targets to meet or are you relying on everyone else to deliver? It’s a harsh question I know, but in my experience, those at the top don’t always set the standard for everyone else to follow – and that’s their downfall.

Plans are no good unless they are implemented, they are measurable, and the people responsible for delivering them are held accountable.

So it’s helpful to enlist the services of an independent business consultant; someone to hold a mirror up to the management and ask serious, searching questions.

Here are some ideas that will make a difference, to get you thinking:

What strategies can you implement now to get money into the business?

Look for some quick wins:

• Can you cross sell or up sell to your existing customers?
• Can you change your product offering, your pricing, your marketing message?
• How about introducing a referral scheme to reward existing customers for passing you new business?
• Who should be responsible for implementing these strategies?

Your staff need to understand what your expectations of them are – have you told them, set them targets and reviewed their progress? If you could improve their performance by 10%, what impact would this have on your bottom line?

Times are tough, so it’s time to get tough. Be clear about your objectives, stay focused, review regularly, and communicate with your teams – having them on board pays dividends that help increase profits.

Above all, everyone should be held accountable – from the top to the bottom – adopt this as your mantra, keep referring to it, and see what a difference it makes.

If you’d like an honest, no nonsense assessment of where you are now, and what you need to do to make a tangible difference to your future prospects, talk to us at Blaze Ahead – we’ll help you see it as it is and take the right action!

“Why is my cash flow always so tight?”

It’s a question I hear often, so don’t worry, you’re not alone!

Businesses thrive or fail on the state of their cash flow. It’s no good working all the hours if you’re not in control of your finances.

It’s a common issue with small businesses. Many business owners have their finances looked after by a bookkeeper, (smart move) yet don’t then use the information to control their business finances.

It’s like having a pair of spectacles but not using them!

So, if cash flow is tight, it’s for one or a combination of the following reasons:

• Sales price versus cost price – are your margins large enough?
• Insufficient orders to cover the cost of your overheads
• Debtors are taking too long to pay
• Creditors are being paid too soon
• Poor credit control
• Poor tax planning
• Growing too quickly
• Operating inefficiently
• Too much money tied up in stock
• Lack of investment into time saving technology

The net result is, there’s too little cash in the bank to meet your financial obligations, and it then becomes a time consuming game of robbing Peter to pay Paul, time that should be spent looking after your customers.

Does this sound familiar?

If so, it’s time to look at all of the possible causes listed above to see where improvements can be made. So here are a few tips and searching questions to help improve the situation:

Increase sales without increasing overheads to improve your profit margins. Can you cross sell other items to existing customers, or offer a discount for larger orders? There could be some quick wins here.

Reduce overheads – are there any fixed costs that you can cut or renegotiate? Look at your rent, phones and utility providers to see if there are better options that suit your business.

Get paid more quickly – offer incentives for payment with order and be vigilant about chasing debts that fall outside payment terms. Educate customers that you have strict payment terms.

Negotiate longer payment terms with suppliers, to give you more time to receive money from customers before you have to pay suppliers.

Credit check all new accounts to protect against bad debts and be clear about payment terms on quotations and invoices. Apply credit limits to new accounts, and be strict about adhering to them.

Remember to plan for taxes, keep a financial cushion in the business so that it’s not left short when a vat bill or corporation tax bill is due. A separate bank account for tax, one that attracts interest, is a good idea.

Look at your operations – can they run more efficiently? Can you increase the use of capital equipment to get a better return? Are your staff properly trained and productive?

If you’re growing too quickly, this can lead to gross inefficiencies. Throwing money at a problem to meet a deadline can mean you end up losing money instead of making it. Remember to plan and stay in control of costs.

And take a look at the money you have tied up in stock, and the number of days it takes to turn over that stock. Can you reduce it? Can you negotiate smaller deliveries with suppliers without paying more per item? And if you have unpopular items on the shelves that aren’t worth holding, discontinue the line. Streamline your stock control to free up some cash.

And take a look at the competition – are they thriving where you struggle? What is it they are doing differently? You could learn something.

Have you invested in the latest labour saving devices? And if you’re paying lots of overtime, it may be time to take on more staff. Or if your business has seasonal peaks and troughs, take on temporary workers to control wage costs.

Look also at costs in the business that are not directly related to sales. Are your getting a return on your investment in marketing? Are you getting good value for money from your professional advisors? Be shrewd, and be demanding – see what difference it makes.

There are lots of tips and questions, but the answer to your cash flow issues will be in there somewhere. A methodical approach to the finances of your business will pay dividends – quite literally!

Make a start today, and if you need a hand, we’re here to help, with expert financial planning advice from our resident Chartered Accountant Julian Portch.

And one last point to make – if your business is running on rails financially, you spend less time juggling finances, and more time doing what you’re good at – looking after your customers! Make it your goal, you won’t regret it!

Survive business closure & look forward to the next big step

It happens, businesses can reach the end of their life and be forced to close for a number of reasons:

• The company is not able to meet its financial obligations
• Demand for the product or service supplied has switched to the competition
• Demand for the product or service no longer exists in the marketplace
• Mismanagement of the business when action was needed to stem a decline in sales
• Poor financial planning

The best thing to do is to recognise when this is the case – when the market is in decline, and the future is looking bleak, it’s time to consider an ordered closure of your department, division of even your company.

Don’t wait until the company has become insolvent!

Seek advice early on about how to wind up a business before it reaches financial difficulties. If you wait until it’s too late, there will be consequences, and it may not be as easy as you think to start again in business, especially if you are saddled with debts.

If you’re not sure about your options, or whether you’ve reached this stage, then call us here at Blaze Ahead and we’ll offer you our advice.

It’s good to talk to an independent person, to gain a realistic view on your current situation – is it salvageable or not? Do you want to make it work, or would you rather move on?

It’s not a time to make hasty decisions without thinking things through, but it is important to act quickly so you stay in control. If you do decide that closure is the only option, we’ll point you in the right direction to help you stay legal.

So, what next?

Let’s consider your options. If you still wish to trade with your existing company, assuming it has survived any changes you’ve imposed, you’ll need a revised business strategy to include:

• Restructure of the business – redeploy skills if appropriate
• Communications strategy – let the market know that you are still in business, and what products or services you are selling – make a repositioning statement.
• Review marketing collateral – update marketing materials with new business offering
• Financial strategy and planning – how does the restructured business look in financial terms, what are the goals for the years ahead?

And if your business has closed completely and you need to start again, you need a whole new business plan, to base your decisions now and in the future.

Broadly speaking, this needs to break down into 4 key areas:

• Business objectives
• Sales
• Marketing
• Finance

And though you’ve been in business before, recognise that this is not a time to cut corners. Formulate a thorough business plan, whether you need to pitch for finance or not, make it robust, give it timelines, and make your results measurable.

There’s no shame in bringing a business to a close – people don’t buy VCR’s any more, the last typewriter has just rolled off the production line, fewer and fewer companies use fax machines and when was the last time you bought film for your camera?

Markets do just disintegrate and disappear – the key to survival is to seek out the next big thing and be part of that. Apply your business skills, be open to learning new ones, and try and stay ahead of the curve as best you can.

Most of all, be robust, be resilient, and soldier on – your next big idea could be your best one yet!

Business decline – practical tips to plug holes in a sinking ship

If, no matter how hard you try, customers are leaving in droves, profits are falling and staff morale has hit an all time low – your business is showing distinct symptoms of one in decline.

So, what now? First of all, don’t panic! Keep calm and come up with a strategy to turn things around.

Identify what’s at the route of your problems. This could be due to one or any combination of the following:

• Falling customer demand
• A saturated market
• Poor customer service
• Cheaper, better products offered by the competition
• More innovative products entering the market
• Poor product quality
• Inefficient operations
• Unreliable delivery
• Poor reputation or bad publicity

The list goes on…

Once you’ve worked out where the issues lie, you can make a start on sorting out the problems.

First and foremost you have to have a product or service that people want to buy. Be honest with yourself – have you really got something special?

If the answer is no, you need to make a quick decision to change direction – find another product or service, or adapt what you have to be more appealing to the market.

If there is a genuine market for your product or service, yet you’re just not making sales, then there’s something wrong with the way that your business is being run.

So look at this as a great opportunity to put things right. Here are some common issues that I’ve helped my clients address to turn their fortunes around:

Reducing staff numbers. It’s hard letting people go, but a restructure is an opportunity to re-evaluate the purpose of each role and department to see where the business is not performing or delivering an ROI. Set targets to measure against performance – it’s the most effective way of assessing where improvements can be made.

And if you need to reduce numbers, remember to motivate your remaining staff at the same time to ensure morale is not affected, and seek the advice of an HR professional if you don’t have one in the business, to ensure you comply with employment legislation.

Customer service – if you’re in a competitive market, your customers will vote with their feet if they’re not receiving high standards of customer service. Train your staff properly to ensure they’re motivated, knowledgeable and professional at all times.

Operations – Hone your operations to ensure deliveries are made on time every time, with little waiting times between orders placed and goods delivered.

Expand product portfolio – Partner with a product innovator to expand your product portfolio – the broader it is, the more resilient it is to changes in customer behaviour.

Sales strategy – Are your sales teams delivering boring power point presentations, are they selling confidently, do they know how to build relationships with their customers effectively? Do they know how to identify buying behaviours to adapt their own style? Do they have comprehensive product knowledge and are they incentivised with targets and bonuses?  Review their performance and consider further training to make them more effective.

Image – Is your company identity stuck in the past? It could be time for a re-launch of your corporate identity – to appeal to a different, more discerning market.

Marketing – What marketing channels are you using – are you still advertising in good old Yellow Pages? It’s time to embrace new online marketing opportunities – they are far more cost effective. If people can’t find you, it could be the simple reason why your sales have taken a dive.

A business in decline needs good strong management to turn it around. It needs leaders with vision and the wherewithal to inspire those in the business to devise and adopt the necessary changes.

If your business is stuck in a rut, the good news is there are still ways to make it work. Act now to avoid further decline, you can make a difference.

And if you need help planning your rescue strategy, we’re here, just call.

Coming soon – How to achieve a positive outcome when a business reaches its end

When your business matures, what next?

A business needn’t be old to be classed as ‘mature’. It could have reached a sales plateau in a short space of time.

A mature business is defined as one that has passed the stage of rapid growth, and tends to grow at the same rate as the economy. There is little room for expansion, only by stealing a greater share of the market from the competition. Price pressure exerts significant influence on the future success and profitability of the business.

Is this where your business is right now?

If so, it’s a dangerous place to be if complacency is at the heart of its management – think of old stalwarts like C&A, Woolworths and even Rover cars – disaster can strike if your competitors are acting smarter and more efficiently than you are.

So, what next?

The trick is to be ahead of the game, embrace new technology, pre-empt how customers demands change, and continue to give them what they’re looking for in terms of price, product and place. Very few businesses survive without reinvention along the way.

Think about McDonalds. They suffered a back-lash against fast food and were forced to offer fresh salads and revamp their image. And who’d have thought that Top of the Pops would ever be taken off the air! Times do change, what’s important is to make sure you’re not left behind.

Put your energies into business development to shape the future of your company and secure its continued success.

And here’s where to start

Carry out a traditional SWOT analysis – what are your threats and weaknesses – how real are they and what can you do to deal with them?

Specifically look at:

• The product lifecycle of your product or service – does it have longevity, does it need to change to meet changing customer tastes and demands?
• Pricing – can you compete on price with the competition?
• Customer service – are your customers rewarded for loyalty, or could they be easily poached?
• Competitive activity – are your competitors following an aggressive pricing or marketing strategy?
• Delivery channels – are they robust or under threat themselves?
• Market forces – is the economy threatening the ability of your customers to spend money with you?

There’s more, but I think you get the idea.

And your strengths and opportunities – can you exploit these to give your business a stronger foundation?

Specifically, look at:

• Product development – additional features/benefits
• New product launch – don’t have all your eggs in one basket
• New markets – domestic and international
• Innovative pricing, delivery, routes to market, not used by the competition
• Acquisition or merger
• Customer intelligence – what are they demanding next?
• What is the competition doing? Could you copy it or do it better?

This is all food for thought, and there’s lots more besides.

And here’s another one:

If you’ve reached the point in your business where you think it’s reached its peak and you don’t have the appetite to take it forward, then you should plan an exit strategy. Don’t be left holding a dead duck. Get out while you can, while the business still has value, and let someone else breathe new life into it.

Whatever option you choose, make sure you don’t choose complacency – it’s the death knell of business!

As ever, it helps to talk about your business with an independent person, to get an objective view of its future prospects, and what can be done to help it continue to prosper.

Just don’t leave it too late!

Coming soon – Dealing with a business in decline – a positive approach to plugging holes in a sinking ship

Headless chicken syndrome – the curse of a growing business

So your business is up and running, orders are coming in, customers are keen to do business with you, and you find you have a demand for your product or service.

What a great place to be.

But, what if you find you can’t keep up – you’re running around like the proverbial headless chicken trying to keep everyone happy.

You’re bound to trip up, disappoint customers, lose control of your expenditure, and may even end up ill as a result of all the stress.

If this sounds familiar, you’re not alone, plenty more business owners struggle on through the tough growth stage of a business thinking they need to do everything to stay in control.

And here are some more indicators of business growing pains that shouldn’t be ignored:

• Tight cash flow issues
• Task management is out of control
• Fire-fighting is a daily activity
• Deadlines are missed
• Staff don’t know what they should be doing first

It’s time to calm things down.

Stop and take a breath for a moment. A long deep breath that reaches to the depth of your stomach – then breathe out long and slow.

Feel better? Deep breathing is proven to calm the mind, it’s a great tonic in times of stress and a great tool to use in defence of your well-being.

You need a strategy to get you through this crucial stage, because beyond it lies a successful business with you at the helm, running it on your terms. So start with identifying where your strengths and weaknesses lie.

Accept that you can’t do everything, and identify what skill-sets are needed in your business that are best outsourced.

If you’re great at product innovation but poor at communication, hire a sales person so you can develop your products. If you prefer to be out there meeting new clients, and would rather not deal with the detail, hire an admin or personal assistant.

The key here is to play to your strengths. And outsourcing help needn’t mean a large financial outlay or committing to employing staff – there are plenty of freelancers in all business support roles willing to work flexibly to meet your needs.

It’s time to think about working on your business and not in it. Think strategically, review your business plan and check you’re on course to meet your objectives.

It can help at this stage to review your progress with an independent person – so you get an objective assessment of where you are and what you need to do to stay on track.

Remember growing pains are good, so long as you deal with them effectively.

Is your business reaching maturity? Read on...

Has the shine gone out of your business start up?

With all the excitement and passion you’ve thrown into your business idea, you’ve probably sailed through the first few months on the back of your enthusiasm alone.

But what if you’re now faced with some harsh realities and your business is under performing?
Have you paid yourself properly yet? Are you struggling to persuade customers to buy your product or service? And what if the only way to make money is to work an 18 hour day 7 days a week?

There are startling statistics out there – “80% of Business Start-ups fail” – you’ve probably seen them. And though it’s a scary statistic, there’s absolutely no reason why you should be part of it.

Enough of the scary stuff, let’s be positive and put you back in control.

Planning is the key. Without direction, how can you possibly know where you’re heading?

A plan gives you focus, targets, and impetus to keep going. It should be measurable, realistic, and thorough.
This is not the time to cut corners. Careful planning is the cornerstone of any successful business.

Top Tips
A good plan includes:

• Goals – you need to set financial goals, and assign timescales to them
• Measurability – use milestones to assess progress
• Action points – what do you/others need to do to attain your objectives?
• Assignment of responsibility – who is responsible for each task – don’t leave anything to chance – make sure anyone involved in your business is fully aware of their responsibilities
• Budgets – it’s important to understand your finances, and budget accordingly – this includes hidden expenses like taxes and professional fees – do you have the funds to run your business?
• A marketing strategy – how are you going to let your customers know about your product or service. If your product is similar to others, what is your unique selling point? What marketing collateral do you need.
• Identification of the target market and how they can be reached – who do you need to communicate with and what channels can you use to reach them effectively?
• Additional human resources – who do you need to help you run your business – what skills are best outsourced, so you can focus on what you’re good at?

You started out with a vision, a plan will keep you on track to make that vision a reality.

Break down your plan into 4 key areas:
•    Business objectives – short, medium and long term
•    Sales
•    Marketing
•    Financial

Sounds like hard work? No one said running a business is easy, but it is rewarding. Put planning at the heart of your business, and you’ll be destined to make progress. And if you find your business is not going to plan – at least you’ll know about it and can make the necessary changes – review your plan regularly to ensure you’re still on track.

Is your business growing so fast you’re losing control? Read on…

Are your staff a tad chaotic?

The way people behave in a business results from two things: leadership, and the business’s systems and processes. Good processes allow you to manage your brand – everything goes out to a given standard, the phone is always answered the same way, sales enquires are followed up methodically.

However, most businesses run chaotically; their processes have usually grown organically. When someone leaves, all that knowledge vanishes with them, leaving the business vulnerable, often having to start that process from scratch.

People often say to me, ‘Well, Richard Branson doesn’t have processes. He’s an entrepreneur!’ Great businesses have great people with good habits. I suspect habit drives the way Richard Branson operates. Oh, but what great habits! Written processes are the embryos of good habits.

When your people get so efficient that they can throw away the ‘manual’, you’ll find two things happen. They start to focus on the job or the person they are relating to, not on how to do a given task. They also start finding ways to cut corners, speed things up, do things cheaper. This is innovation, and innovative businesses always out-perform stale businesses.

So when you have trouble containing your rage at how a member of your team has failed to carry out basic tasks, consider your own business processes. Are they written down somewhere?

Top tips

• Identify a key frustration in your business.
• Give the process you are about to create a name that means something to everyone. What are you doing?
• Outline why you are doing it so people understand there is a rationale behind the process.
• Ask your people to help write the steps. (If it is theirs, they will accept it more readily.) So how will you do it? Who must to what, in what order, to what standard, when and how often? How will they know when they have done a good enough job?
• Identify the resources this process needs, and create them if necessary. This might include templates, forms, sample reports, standard emails, FAQs and so on.
• Train your people.
• Monitor your people until the process starts to become a habit.
• Meanwhile, start work on your next key frustration.

Make your business Blaze Ahead.

Make time count

Summer can be a slow time of year for some organisations. Then there’s the complication of the Olympics – many fear it will reduce business still further.

Instead of twiddling your thumbs and lining up your paperclips, now is the time to design your high performing week (HPW) so that when business picks up again, you can be up to 50% more effective with your time.

We help all our clients create a HPW because we need to help them find time in their day to work ON the business not just IN it.

Essentially, we ask them to monitor what they are doing every few minutes for a couple of days – including how long they spend on every interruption. Then we help them analyse their time and show them how to manage it better.

The key question is: how much time does an interruption waste? First there’s the interruption itself – which could be as little as 30 seconds for that so-called ‘quick query’. Then there’s the ‘recovery’ time to get back into your train of thought. Studies have shown that this can be more than five minutes.

So if you are working on a project for half an hour and you have four brief interruptions of 30 seconds each – seemingly nothing in the scheme of things – you’re looking at 20 extra minutes to complete that task.

‘This is where the HPW comes in,’ says client Alex Whitfield of Floriture. ‘Tee encourage me to block out parts of my day and focus on one thing at a time without interruptions. I become a lot more productive as a result.’

Top tips

• Plan your week out on a spreadsheet.
• Note down regular meetings you have to attend, including formal networking meetings.
• Include time to deal with emails and correspondence.
• Block out time when you will make your sales calls.
• Allocate time for resulting sales meetings so you minimise the amount of time you are out on the road.
• Finally chunk out time every day (say an hour) when you are not available and your door will be closed even for quick queries. This might mean getting someone to hold your phone calls, or switching on voicemail and training staff not to disturb you.

The extra time you find is so worth it.