For business owners immersed in the day-to-day operations of their company, finding the balance between working “in” the business and working “on” the business is essential… yet hard to achieve!
Knowing everything about your business all the time is too time-consuming and unrealistic. So, to ensure you have the essential insights a business owner needs to make strategic decisions, we have broken them down into 10 key points.
We understand your time is already consumed with the operational function of your job, but to ensure longevity, these big-picture insights are important.
Whether you are a tradie or a small business consultant, monitoring these key areas continuously will ensure sustainable growth and effective management.
Here are the top 10 most important things a business owner must always keep an eye on:
1. Always Be Monitoring Cash Flow
Most business owners are all too aware of how much money they have in the bank. But do you know for how long? Understanding the cash inflow and outflow is crucial for every business.
Regularly monitoring cash flow helps you make informed decisions, ensuring you have enough to cover operational costs, invest in growth opportunities, and buffer against future uncertainties.
You can find this information with:
- Accounting Software: Utilise platforms like QuickBooks, Xero, or FreshBooks for real-time cash flow tracking.
- Bank Statements: Regularly review your business bank statements.
2. Are You Aware Of Your Profit Margins?
Your profit margin is how much extra your income is to cover your costs. Monitor your profit margins closely to ensure your business remains profitable. This involves understanding the costs of goods sold (COGS), operational expenses, and how they impact your pricing strategies and profitability. To determine the gross profit margin, divide the gross profit by the total revenue for the year and then multiply by 100.
As a rule of thumb, 5% is a low margin, 10% is a healthy margin, and 20% is a high margin. This is subject to variations depending on the industry you are working in.
You can calculate your profit margin from your:
- Financial Reports: Generate and analyse profit and loss statements through your accounting software. Or ask your accountant.
- Cost Analysis Tools: Use specific tools or features within your accounting software to monitor the costs of goods sold (COGS) and other expenses.
3. Know What Customers Think
There would be no business without customers. Therefore, customer satisfaction is paramount. Regularly gathering and analysing customer feedback can provide insights into what products can be improved, potential market expansions available, or adjustments in service delivery that could enhance customer loyalty and acquisition.
You can gather these insights by using:
- Survey Tools: Implement tools like SurveyMonkey or Google Forms to collect customer feedback. These can be attached to the receipt or invoice and collated to see if satisfaction increases or decreases over time.
- Social Media and Online Reviews: Monitor your social media channels and review sites relevant to your industry. You can ask customers to leave a review or have it in an email signature or on a card to prompt them without you having to manage another item on the to-do list.
4. Listen To Employee Engagement
Your team is your most valuable asset. Monitoring employee performance and engagement helps identify areas for development, opportunities for training, and ways to maintain high morale, which drives productivity and innovation.
Find out how they are doing with:
- Performance Management Systems: Use platforms like BambooHR or 15Five for tracking performance and engagement.
- Internal Surveys: Regular feedback forms and surveys to gauge employee satisfaction.
5. Keep An Eye On Market Trends and Industry Changes
Market trends can indicate the general direction in which a market is moving. These trends can be driven by a variety of factors including technological innovation, shifts in consumer preferences, economic conditions, and social changes. By understanding these trends, business owners can anticipate market needs, identify new opportunities, and mitigate potential risks.
You can stay on top of the latest news from:
- Industry Reports: Subscribe to leading industry publications, online portals, and newsletters that offer in-depth analysis and forecasts. These resources can provide valuable insights into current trends and future directions.
- News Aggregators: Use platforms like Google News or Feedly tailored to your industry for the latest updates.
- Review Regulator comms: Stay informed about regulatory changes that could impact your industry. These also have a large influence on the operational aspects of your business.
6. Monitor Your Competitor’s Activities
Understanding what your competitors are doing, from pricing strategies to marketing campaigns or new product launches, can help you identify your competitive advantage and areas for improvement.
Monitor what they are doing with:
- Competitor Analysis Tools: Tools like SEMrush or Ahrefs can assist you in monitoring online activity and compare your activity to companies similar to yours.
- Networking: Attending industry conferences or trade shows will broaden your network and put you in contact with other businesses and experts for broader insights.
- Social Media Monitoring: Keep an eye on competitors’ social media channels to spot any campaigns or services that they may be focusing their marketing on. If there are any customer questions asked on their pages, how can you answer them on your channels?
7. Stay Compliant With Regulatory Requirements
Keeping abreast of regulatory changes and ensuring your business complies with relevant laws and standards is non-negotiable. This includes tax obligations, industry-specific regulations, and labour laws.
You can do this by checking on:
- Government Websites: Regularly check official government and regulatory body websites for updates.
- Professional Advisors: Consult with legal and financial advisors specialising in your industry.
8. Track Sales and Marketing Effectiveness
Tracking the performance of sales and marketing strategies allows you to understand what’s working and what isn’t working to drive increased sales. For example, analysing where the majority of your enquiries are coming from and what channels are producing the most conversions helps you allocate resources effectively and maximise ROI.
Recommended solutions are:
- CRM Software: Platforms like Salesforce or HubSpot provide insights into sales and marketing performance. They can inform you about how engaged your audiences are and what the most viewed products are. They can also show how your contact list is growing, and with the correct tags, you can assess what service or location is attracting the most loyal members of your database.
- Analytics Tools: Use Google Analytics for website performance and how searchable you are. Use social media analytics for insights into social engagement and reach. These are great awareness raising tools but not to be relied upon individually as lead generators but rather in conjunction with each other or external elements.
9. Is There A Better Way To Operate Efficiently?
Regularly reviewing your business operations can help you identify inefficiencies or bottlenecks that may cost you time and money. This includes everything from supply chain management to administrative processes.
Tools that will assist you to review these are:
- Process Mapping Tools: Use tools like Lucidchart or Microsoft Visio to visualise and analyse workflows.
- Internal Audits: Regularly scheduled internal reviews of processes and systems. One of the most reliable forms of feedback is to ask those who actually have to do the process and find any pain points or bottlenecks.
10. Are You Meeting Your Strategic Goals?
Finally, consistently reviewing your strategic goals and their progress keeps your business on course. This high-level overview ensures you’re caught up in daily tasks and moving towards your long-term vision. Find out more about the importance of a business strategy and how to build a successful one in our blog.
Prioritise What Will Empower You To Achieve More
For business owners deeply involved in the operational side of their business, prioritising these areas can provide a comprehensive overview without overwhelming them with the minutiae.
At Lift Accounting & Advisory, we understand the challenges you face. By focusing on these key areas, we aim to empower business owners to manage their business effectively and lead it towards sustained growth and success.
If you would like to learn more about how to boost your business success, contact us at
office@liftaccounting.au or call (02) 4344 2460.
