For a while now, I've been feeling that the business has been running me rather than me being in control. I've been out working in customers gardens, doing estimates, landscaping jobs just like all of you who come onto this website. I've also felt that we have not been making as much money as we should have been and almost treading water.
So I sat down at 6 in the morning yesterday with a cup of coffee and thought I wonder where I've been going wrong. I started looking at the running costs which isn't too hard as they are pretty static and it was a fairly easy process. Then I started to look at the cost of wages over the next year with tax and ni included which then gave me the total outgoings. Then it made me think well what could our turnover be for the next year and then I went on to the break even point and then profit.
This whole process took me an hour at the most and it was so enlightening because it made me see where I have been making mistakes. It has also made me see where I can make improvements within the business. I feel now by doing this process, I am back in control, I also understand now that to run a business, you have to work on it and not in it.
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Replies
Lisa, go look in the key business objective group.
There are some excellent posts and details of other key financial ratio's that help monitor your business.
I learnt a while ago that to succeed you need to balance working in the business with working on the business.
It's a hard balance to strike in the early days.
I now delegate certain functions to 'others' - sure it costs, but I can do better with my time than pulling my hair out, wasting time and still getting it wrong ;-)
It had always been my desire to run a business, so I've got the best of both worlds - running a business, with good staff in a trade I enjoy.
its always good to re -evaluate, asses and calculate debs / incomes etc.
too many people just carry on being 'busy fools' ive heard the expression.
you have to stop , think, look at where you are and where / what you want to do if possible.
good to be a boss , but i think i can manage to earn more on my own . less trouble, less risk and less headache. you can also find yourself giving work away to staff and losing out on your own wage !!
great if lots of big jobs or lots regular work staff can do no doubt.
plus paperwork / tax/ n.i / insurance can make it not worthwhile.
IF YOU PUT UP PRICES 25% (OR HOLD THEM IS BEST AT THE MOMENT) SAY YOU LOSE 10% CLIENTS : YOU ARE STILL EARNING THE SAME BUT DOING LESS WORK !!
my truck is paid . saved a grand on repayments .... still worth a lot .
dont think it was a bad thing john ... as you have said : less worry , reliable , good for business , holds value.
but realize its worth' to you , now you have a chance to buy a well looked after vehicle under market value ?
vw van - cant go Wrong .............. as an economist said the other day - WE ARE MAROONED . so get the Anchor out captain ..
j.p grass roots h&g said:
We do a very crude monthly set of figures on top of the normal book keeping which is simply income-expenses = profit or loss just to make sure we are not trading badly, it gives us a view of how the business performed in the last 30 days. But agree very easy to get stuck into the normal day-to day stuff and not the financials.
Interesting post Lisa. I find it is the unpredictable that is the biggest problem in running a business, the sods law effect. In my own experience the fewer staff you have the fewer problems generally.
As for vehicles they are a big drain on resources, leasing can have its' attractions but it is a regular chunk of cash going out of a business every month before you have earned a penny to pay for it.
Totally agrees about the sods law factor and about vehicles. A mistake vehicle purchase last year cost us a total of £4500 - the damn thing wasn't even worth that much. In hindsight we should have cut and run and dumped the thing at the first sign of trouble. A lesson well learned and a mistake never to be repeated.
Fenlandphil said: