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Author: Kelvyn Peters Article source: http://businessknowledgesource.com/. Used with author's permission.
A thing worth doing is worth doing badly. Yes I know that it should be 'well'. My grandma drummed into me that whatever I did I should do it as well as I possibly could.
But grandma said that there was another side to it. If it were worth doing, even doing it badly was better than not doing it at all.
"Never be put off from doing something that ought to be done because others can do it better", said Grandma, "The others may not do it and then it never gets done".
So it's hard for you to estimate sales - take a stab at it anyway!
I wish I had a dollar for every small business operator who told me that it was impossible to prepare a projection of cash-flow requirements because their sales were so sporadic and uneven.
It's strange in a way that although it is true that each business is unique, it is also true that all small businesses are the same.
Most small retail firms average about 30% as a gross profit. That gives them an average mark-up on purchases of about 42%. It doesn't matter what sort of shop, you can use that as an average.
Similarly, all other expenses average out at about 20% which gives a net return on sales of 10%. Aren't there firms that do better than this? Too right there are…but some do much worse.
So a projection based on averages for your industry will probably be badly out-of-whack. You might think the result is a bad job but it will be one hundred times better than none at all.
The owner will know quite a number of concrete figures without having to guessitimate.
She will know many of her outgoings:
- Rent
- Average wages (these will fluctuate a little)
- Loan repayments
- Plant lease payments
- Her private spending requirements
- Accounting and bookkeeping fees (she should have been told on engagement)
- Insurance premiums
- Registration fees
- Subscriptions
And with all this information her advisor can estimate the amount of profit which will be required to keep cash-flow positive. From the required profit it is a simple task to calculate the sales that are needed to produce the required profit.
"Hey! I hope to have higher sales than that".
But now we've made a start, we can build in some of your expectations, and now we have a projection that we thought couldn't be done.
"But will it be right"!
No it will never be right on the money, but it doesn't have to be. Each week/month we will compare what actually happened with what we had hoped to happen and work out our strategies accordingly.
If sales fall short by 10% in the first month we have a far greater chance of recovery over the 11 months than if we had no plan at all (even if we thought it was a bad one).
And for those proprietors who do a plan and do not compare it to actual until the end of the year any shortfall will be lost forever.
A thing worth doing is worth doing badly.
It applies to all aspects of business - and life.
I often hear owners say, "I can not up-sell. I'm no good at it".
Maybe, but it is necessary. Who is going to do it if you don't? Get a little training and start doing it badly. You'll be surprised at how good you get.
A thing worth doing is worth doing badly. The Author
Kelvyn Peters is one of Australia's longest serving Tax Agents. He was registered in 1962 and became a CPA in 1964.
He's served on many charitable boards including St Aubyns Hospital, Alzheimer's Association and Older Peoples Advocacy Service.
As a young man he won the Outstanding Jaycee Award three times. Kelvyn is a compassionate, generous man who loves people. That's why he is so skilled at helping people in trouble.
Kelvyn Peters was Mayor of Kingaroy Shire Council from 1982 to 1987 and campaigned as the 'Young Man of Action"
Over 20 years later he still calls himself a 'Young Man of Action'.
He is a director of Restaurant Catering Qld Inc the peak employer representative in Queensland, and has advised the hospitality industry for many years.
His specialty is moving in to rescue a sick business.
Kelvyn has spent over 20 years experimenting and researching methods to help small business in ways that are affordable.
He has perfected it with local clients now he is going global and he is only an email away.
http://www.profitstrategies4business.com
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