Sometimes it is good to remind ourselves, why are we in business? Many people will reply – to make a profit, but is this really the case? For example, many entrepreneurs enjoy finding solutions. Entrepreneurs like the ability to control their lives and their lifestyles, and many people are coming round to thinking, ‘If I spend 38.5 hours per week in work, for over 40 weeks in each year for some 30 years of my life, I want to enjoy it’.
Many people forget they will have another 30 years to live after they retire at 60 or 65 – or longer. When we look to one’s tax affairs, they need to work until June each year to pay the taxman – then their earnings become their own, to spend how they wish. To identify how to achieve a better lifestyle, start with an end goal in mind. Set up and agree your aims and your objectives for the coming year. Make a plan. The plan has to be written down, be realistic and attainable. If it is not written down, you may not necessarily notice trends or streamline your plan. Here are my tips, and areas to monitor when running a business:
Become better organised
Set out a process to deliver your plan. Budget for the necessary and for your “play money”. You need to have fun with your money – that is one reason for earning it. Money is only a means of keeping count! Use it wisely and enjoy what money can do for you.
Define your business relationship with all your customers
Clearly set out, explain and document your services to be provided, and define your responsibilities, and your customer’s duties and responsibilities. Agree how decisions will be arrived at, and their cost, upfront and in a transparent manner.
Analysing and monitoring
Once you have implemented your written plan, constantly monitor it to ensure you are on track. Make any necessary adjustments, and monitor progress. Check your plan to make sure you remain focused, on course to meet your aims and objectives. Your written plan will allow you to track and monitor expenses and income, to see where you are spending money, and to assess whether this is efficient use of your money and time. Set an hourly rate for your time that reflects the professional skills you will be bringing to the table. This rate will help you identify if you are efficient and effective, or spending time in the wrong places. Having a set hourly rate also allows your customers to become more critical and time efficient. Choose a realistic rate as your benchmark.
Set out your desired lifestyle to include time spent with family or loved ones
Get away from the office and set aside time for personal goals. Sports or entertaining or other activities to help you relax. When organising your time, set aside time each day for a meeting with employees, and for organising your time in front of clients. Keeping active and in front of clients is time well spent.
Planning and monitoring should be kept to a minimum, and used to check and record and identify areas which you could improve upon.
Let the customer make the decision
Customers like guidance, but wish to make their decision to buy, based on facts and trust and confidence the product, or service will do the job they need. So while you can guide them with relevant information, you must let them decide for themselves.
Prepare for the unexpected
By adopting a written financial or business plan, you should set aside funds to meet extraordinary costs. Changes to business products or services, advances in technology – keep abreast of competition, changes in legislation – may see a significant downturn in business. Keep 6 months cash flow available in your account.
Loss of a key employee or fellow Director
If a key worker or Director dies prematurely or is off work through long-term sickness or accident – you still need to pay wages etc., and work needs to be reallocated. The risk of such an event can be offset through an assurance policy or insurance policy.
Assurance or Insurance policies
There is a fundamental difference between an assurance policy and an insurance policy. An assurance policy meets an event which will happen, e.g. death, whereas an insurance policy is set to meet an event which may or may not occur, (a fire or accident or loss of business due to certain factors). Using insurance contracts provides a facility to offset the risk of untimely or business disruption.
So set out a clear plan for your business, watch out for the pitfalls and make sure you set aside time for yourself and enjoy it!
By Ian Lees, author of ‘Your Financial Future: How to Manage and Maximise your money’