There is little doubt that economic conditions have made it difficult for many businesses to achieve decent growth. The numbers tell the story- average Australian mid-sized and large businesses experienced gross profit of just 2% in the 2017/2018 financial year.
When sales are low you need to explore other alternatives of creating growth and remain competitive. This usually starts with reducing overheads and other common barriers such as processes which require more staff or which take longer to carry out. This can end up causing delays in many areas.
With the help of a business management system, you can integrate your business, operate more efficiently and make informed decisions. A smart business management system simplifies processes, gives you the ability strategies and plan, provides you with better visibility and helps you forecast and manage resources better. All of the efforts combined helps you contribute to a positive growth and in-turn increase sales and revenue.
So, despite having a smart business management system, why do businesses get to a certain size and then simply plateau?
Startups use their initial business plan as the 'book of rules' to abide by when starting their journey for the first five years. However, as the business grows and becomes more stable, often this plan is forgotten. The best rule of thumb is to review and update your business plan yearly at a minimum and review it monthly to help you track your progress. Combine this with reports such as General Ledger and Profit & Loss with your business plan you will receive a detailed and accurate image of your business. If external variables have prevented you from achieving your goals, then the review process will give you an opportunity to re-forecast, so that there is still some accountability at the end of the year.
Once you have a plan for success, you will require the ability to track and measure your success against it. Having a business solution with all data in one place will give you a #RealtimeView of your business. After all, if you can't measure the progress of your sales team, marketing team, supply chain team or any other team, how can you really measure your success and how can you find places to improve on?
A business depends on money coming in on time to pay your outgoings. There will always be a lag between being paid and paying out. But, a business's success depends on how long that lag lasts.
There are some manufacturing businesses with a 180 day pay cycle, and then there are some that are cash on delivery. However the core principle remains the same. The earlier you are paid, the greater the cash flow. The more cash you have, the easier it is to invest and expand your business.
As a business grows bigger their biggest challenge is keeping up with the amount of invoices and debts plus the manual work involved in collating the information and chasing payments.
A streamlined business process and an integrated business management system can reduce the workload substantially and avoid human error. You will also be able to redirect your manpower to more important tasks. Combine this with all data in one place on easy-to-use dashboards, reports which allow you to identify trends before they become barriers, and your business will be in a strong position to grow.
Understanding what your business is good at and looking at new markets can be daunting. We are certainly not advocating a reckless approach. However, missing out on possible opportunities ensures that your business will not survive.
Here are some suggestions on developing new markets:
Taking up new opportunities or moving into new markets can mean that new, more complex needs will emerge such as maintaining adequate inventory levels while minimising holding costs, to balance risk of stock-outs and the cost of expediting shipping, or to manage the different supply times of multiple local suppliers.
Inventory holding can also spread across several locations which can cause additional inventory and management issues. This is where a single, well implemented business management solution can be a life saver and support the pace of your business growth. It will also cater for increased need for more timely and relevant management reporting across the business, with greater visibility of remote local operations.
There is a high percentage of businesses which have outgrown the software they initially implemented when they first started the business.
What worked when you were a startup is highly unlikely to work once you have expanded and hiring new staff is not always the answer.
Let's look at a scenario. It's quite common to see five salespeople being supported by at least 4 admin people. The salesperson would generate an order and manually type it up, which is then picked up by the admin person who will re-type that same information into their accounting software to generate invoice. This makes it hard for this business to grow. If they hired another salesperson to manage the growth in sales, this would also mean hiring another admin team member which is additional costs to the company.
Had this business used an integrated business management system, the sales person would have generated an order within the system and admin team would have simply approved it within the system, without the need to manually duplicate data. This would result in the business reducing the number of admin staff, seeing an instant increase in cash flow and profits, or hiring more sales people to increase revenue and profits.
The final reason a business may plateau is because they forget the most important fact - customers are the number ONE priority. Sometimes businesses get busy with the day-to-day tasks and putting out urgent fires. Its always a good idea to remind and refocus the team to the business roots.
Another helpful process is to look at how customer interact with you across every touch point of a customer journey. Have a third party look at your buyers journey. When you are the expert in an industry, you start assuming on the customer's behalf. A third party will be able to tell you if your website is not easy to read, was the customer service rude, does the company really respond to enquiries within 24 business hours? You may be surprised at the results and now you have the opportunity to figure out where you excel and what you can improve on.
Mid-sized businesses have the tools to grow rapidly in today's globalised world. With the help of innovative tools, your business can compete with large multinationals. A single, integrated business management system enables organisations to receive greater insight into their business and visibility so that they can make informed decisions.
Inecom is an ERP specialist, helping you implement ERP systems such as MYOB Advanced, SAP Business One, SAP Business ByDesign, and HighJump.