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Tag: forecast

Do You Have The Capabilities And Capacity For Scaling Your Business?

by lauramills
Do You Have The Capabilities And Capacity For Scaling Your Business?

Scaling your business

Scaling your business depends on two factors: your company’s capability and its capacity to deal with growth.

To scale up your business, your company must be capable of dealing with a growing amount of work or sales and of doing it cost-effectively.

You need to know that your company can achieve exponential growth without costs rising uncontrollably as a result. It’s vital too, that performance doesn’t suffer as your company scales up.

You also need to be sure that your business systems, employees, and infrastructure can accommodate growth. For instance, if you get a sudden surge in orders, will your company be able to cope? Will you be still able to manufacture and deliver products or services on time? Do you have enough employees to deal with a surge in work or sales?

Scaling a business requires careful planning and some funding. To be successful, you’ll need to have the right systems, processes, technology, staff, finance, and even partners in place.

1. Identify process gaps

Audit your business processes (core processes, support processes, and management processes) to find their strengths and weaknesses. Find the process gaps and address them before you start to scale up.

Keep the processes simple and straightforward. Complex processes slow things down and hinder progress.

2. Boost sales

Decide what your company needs to do to increase sales. How many new customers will you need to meet your scaled-up goals?

Create a sales growth forecast that details the number of new clients you need, the orders, and the revenue you want to generate.

Examine your existing sales structure and decide if it can generate more sales. Can you increase your flow of leads? Do you need to offer different products or services? Is there an untapped market? Do you have a marketing system to track and manage leads? Is your sales team capable of following up and closing more leads?

Make sure you have enough staff to cope with an increase in sales. If you don’t have enough staff, consider hiring new employees, outsourcing tasks, or finding partners that may be able to handle functions more efficiently than your company.

3. Forecast costs

Once you’ve done the sales growth forecast, create an expense forecast that includes the new technology, employees, infrastructure and systems you’ll need to be able to handle the new sales orders. The more detailed your cost estimates, the more realistic your plan will be for scaling your business.

4. Get funding

If you need to hire more staff, install new technology, add facilities or equipment, and create new reporting systems, you’ll need funds. Consider how you will fund the company’s growth.

5. Make delighting customers a priority

To reach your sales forecasts, your company will need loyal customers. You’ll win their loyalty by delivering outstanding products or services and customer service every time you interact with them.

6. Invest in technology

Invest in technology that will automate tasks. Automation will bring costs down and make production more efficient.

Ensure that your systems are integrated and work smoothly together.

7. Risk management

Every growth opportunity comes with inherent risks. You should identify potential financial pitfalls, ensuring that the company takes calculated risks. Evaluating contracts, overseeing compliance, managing debts, and setting up internal controls help to safeguard assets.

8. Ask for help

Don’t be afraid to ask for help from experts who have experience in scaling up companies.  In an interview, Apple’s co-founder, Steve Jobs, said, “I’ve never found anybody who didn’t want to help me when I’ve asked them for help. – I just asked.”

A solid strategic plan is also essential when scaling your business to align your financial goals with the operational objectives. Failing to plan is planning to fail.

In today’s dynamic business environment, scaling a business requires more than just a great idea or product; it demands strategic financial oversight. For many small and medium-sized enterprises (SMEs), the expense of a full-time Chief Financial Officer (CFO) can be prohibitive. Enter the part-time CFO, an innovative solution to meet this challenge.

How to Scale Your Business for Growth

by charlottenoble
How to Scale Your Business for Growth

Scaling your business depends on two factors: your company’s capability and its capacity to deal with growth.

To scale up your business, your company must be capable of dealing with a growing amount of work or sales and of doing it cost-effectively.

You need to know that your company can achieve exponential growth without costs rising as a result. It’s vital too, that performance doesn’t suffer as your company scales up.

You also need to be sure that your business systems, employees, and infrastructure can accommodate growth. For instance, if you get a sudden surge in orders, will your company be able to cope? Will you be still able to manufacture and deliver products or services on time? Do you have enough employees to deal with a surge in work or sales?

Scaling a business requires careful planning and some funding. To be successful, you’ll need to have the right systems, processes, technology, staff, finance, and even partners in place.

Identify process gaps

Audit your business processes (core processes, support processes, and management processes) to find their strengths and weaknesses. Find the process gaps and address them before you start to scale up.

Keep the processes simple and straightforward. Complex processes slow things down and hinder progress.

Boost sales

Decide what your company needs to do to increase sales. How many new customers will you need to meet your scaled-up goals?

Create a sales growth forecast that details the number of new clients you need, the orders, and the revenue you want to generate.

Examine your existing sales structure and decide if it can generate more sales. Can you increase your flow of leads? Do you need to offer different products or services? Is there an untapped market? Do you have a marketing system to track and manage leads? Is your sales team capable of following up and closing more leads?

Make sure you have enough staff to cope with an increase in sales. If you don’t have enough staff, consider hiring new employees, outsourcing tasks, or finding partners that may be able to handle functions more efficiently than your company.

Forecast costs

Once you’ve done the sales growth forecast, create an expense forecast that includes the new technology, employees, infrastructure and systems you’ll need to be able to handle the new sales orders. The more detailed your cost estimates, the more realistic your plan will be.

Get funding

If you need to hire more staff, install new technology, add facilities or equipment, and create new reporting systems, you’ll need funds. Consider how you will fund the company’s growth.

Make delighting customers a priority

To reach your sales forecasts, your company will need loyal customers. You’ll win their loyalty by delivering outstanding products or services and customer service every time you interact with them.

Invest in technology

Invest in technology that will automate tasks. Automation will bring costs down and make production more efficient.

Ensure that your systems are integrated and work smoothly together.

Ask for help

Don’t be afraid to ask for help from experts who have experience in scaling up companies. In an interview, Apple’s co-founder, Steve Jobs, said, “I’ve never found anybody who didn’t want to help me when I’ve asked them for help.

“I’ve never found anyone who’s said no or hung up the phone when I called – I just asked.

“Most people never pick up the phone and call; most people never ask. And that’s what separates, sometimes, the people that do things from the people that just dream about them. You gotta act. And you’ve gotta be willing to fail; you gotta be ready to crash and burn, with people on the phone, with starting a company, with whatever. If you’re afraid of failing, you won’t get very far.”

Why Your Business Will Fail Without A Plan

by lauramills
Why Your Business Will Fail Without A Plan

Do you know how much revenue your business is going to deliver in the next year? What’s your profit forecast? How many goods/items will you be able to deliver to your clients? How many man hours will you need for each month to make this happen?

It is common sense that all activities in the business have a financial consequence. Many business owners’ responses to these types of questions is “How could I know?”

Well, it would be gold to predict the future operations 12 months ahead. CEOs and executives would be able to plan just enough resources to cater for it accordingly. However, nobody is 100% accurate in their predictions.

Moreover, if we plan the business operations activities at the beginning of the year and manage business according to these plans with disciplines, our results won’t be too far from our predictions. We call this process “Budgeting”.

Case Study

A client I have been working with recently, is turning over in excess of $30 million with 12 business segments and over 200 employees. The business adopted a “top-down” approach to budgets many years ago. Most of the managers didn’t even know how to check their budgets. Effectively, their budgets had been not very informative.

I was brought in as the interim Chief Financial Officer to implement a set of more suitable budgets within short period of time.

After investigating their databases and legacy systems, I managed to extract relevant mega data with the help of query tools. Furthermore, I suggested that the Activity Based Budgeting (ABB) approach would benefit them in the long run.

What happened next

  • Planning meetings were held with all business managers to identify daily activities and 12 month action plans
  • Identifies cost pools and cost drivers within each business segment
  • Extracted, transformed and loaded historical data from and to the relevant databases
  • built customised data models to quantify the business plans
  • Time series analysis, multi-factor regression analysis and stress-testing
  • Presented findings and action plans to all business heads in language everyone could work with
  • Tested the numbers with various scenarios
  • Conducted retrospective forecasting

As part of the budgeting journey, we highlighted the business improvement opportunities and the ways in which to realise them. In fact,  this was pushed by the Activity Based Budgeting.

Consequently, the senior executives were thrilled with the “Porsche budgeting experience”.

What does it mean to you?

Budgeting is a disciplined management process that every business needs to achieve the optimal commercial outcome.

A part-time CFO will review and build out your business plan so that your budgets and forecasting make commercial sense.

Lastly, it is never too early to start planning, and it is never too late to roll out budgets into your everyday business management.

 

Written by Clinton Cheng, CFO at CFO Centre Australia