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Business success towards 2025 and growing your business to be independent of you!
The start of this decade (2020) was a turbulent time with COVID-19 impacting businesses far and wide.
The pandemic flushed out the small to medium (SME) businesses that were operating inefficiently, with minimal cash reserves and high levels of debt.
These businesses completely failed or needed to be substantially restructured, once the government stimulus measures ran out. Business owners had life changing outcomes (loss of wealth, loss of family home and in some cases marriage breakdowns) as a result of past decisions that led to failings in the key areas of profitability, cash flow and continuing business operations.
While on the other hand, some businesses thrived or were able to withstand the onslaught. In summary, a third of businesses failed and ceased to exist, a third survived with large impacts on their revenue and a third really thrived with the pandemic stimulating growth in their businesses.
Great businesses are generally formed after crises, as this is the time when existing businesses are going bust (coming out of the crisis not during the crisis).
Examples include WhatsApp, Instagram and Uber in the technology space.
In this paper, we look at some of the mistakes of SME Businesses that should be avoided and what can be done to ensure your SME business thrives.
In addition, we will touch on how SME business owners can make the jump from a business that is dependent on them, to a business system that will run with a lot less of their input.
We will look at the nine key insights to success as part of this paper. What is the one key factor to getting all of the above to work?
You’ve guessed it – Profit!
Profitable Business 2025 – Nine Key Factors
The way forward in 2023 – nine key areas to ensure high profitability and leverage for SME businesses.
We have examined the causes and impact of low profitability and cash flow (and indirectly, high debt levels), now let’s look at how to move your business towards a bright future while staying well leveraged.
This paper is written for business owners that have grown their business to a level where they are struggling to make that next jump, whether that be from $1M to $2M or $5M to $10M. Essentially the business has outgrown the business owner’s time and skills to manage it.
Often as the business owner has taken on more workload (due to the success of their business), certain parts of the operations have been neglected. A key area, often overlooked is managing the business finances. Often the business is growing significantly (or has had a big increase in turnover) and yet it has a negligible profit and even less cash in the bank.
This paper will explore what can be done to improve business profitability and in turn the business bank balance. With these improvements comes peace of mind, lower risk and more ability for the business owner to tick off their goals.
There are nine key areas that if actioned will lead any SME business to success.
01
Financial Reporting
02
Waste & Profit Improvement Reviews
03
Product and Service Review
04
Overheads and Fixed Costs
05
Debt Levels and Commitments
06
Capital Investment Review
07
Strong Leadership & Management Expertise
08
Market Position & Target Markets
09
Stock Control
Profit Formula Tool
As a bonus to the readers of this Whitepaper, you can also download the Profit Formula Tool. This is just one of many tools we regularly use with SME’s to turnaround and improve profitability.
This tool cuts through the noise to help your SME identify strategies to increase your profit.
If you wish to try this tool for your business, do as follows;
- Download and print off a copy of the profit formula tool
- Under the sales area, list up to four ideas you have to increase the sales/turnover of your business and in each case also list the likely increase.
- Under the overheads area, review the overheads (office premises, utilities, insurance) of your business and identify those expenses that can be renegotiated or stopped altogether. For each overhead indicate the likely annual saving. As a tip make sure you are not cutting those that provide value to your business.
- Under the variable expenses, list out any changes you could make to reduce costs in this area. HINT: This could be to renegotiate or change suppliers for your key material purchases or it could be to change your manufacturing process to decrease wastage or defects.
- Once you have the strategies and ideas in place for the three areas above, it is then vital to pick the best idea from each area and put in place actions to move forward. These ideas are recorded in the “Key Sweet Spot Ideas” section.
Business Diagnostic
As a further bonus, we have included a link on the right that will take you to a business diagnostic. This tool takes 5 – 10 minutes to complete and it will provide clarity around the business insights and the top three factors to focus on within your business.
There are 25 multiple-choice questions and you will receive a personalised email with your results after completion of the diagnostic.
