Hey Aunty B,
I am just reviewing my targets for the next financial year. The last few months have not been as strong as anticipated and we are not sure whether this has to do with the current slump, as we have seen some decent growth on last year and our actuals for this year will only be about 10% less than expected.
However, in our down time we have been focusing on new channels for growth and strengthening existing relationships which will lead to further growth next financial year.
From our large customer base and our strong positioning in the market, we know our customer enquiry and website visitor numbers are down from previous months; particularly last year. However, on the positive side it has forced us to be more efficient and effective in quoting processes and lift our conversion rates.
My question – as we have ambitious plans for growth in our targets next year based on our average growth and new product offerings – is how do we anticipate the current slump in our budgets? I am not sure if it will only affect the next six months or the whole financial year. Also, as entrepreneurs how do my partner and I spin this in a way to prove we are actually doing well growth wise and would be doing better in a stronger market which is out of our control?
Thanks,
Unsure
Dear Unsure,
What an excellent question. And one that I suspect is playing on the minds of most entrepreneurs in Australia. Yes, the last few months would have been affected by the economy. It has slumped and most sectors are feeling it. And can I compliment you on your response! You sound like a textbook entrepreneur, focusing on strengthening your marketing and existing relationships when others are retreating under the doona.
Look, next financial year is going to be tough. The good news is that things will pick up a bit in September. Fundamentals are solid and in September we should know the price the Government is going to put on carbon which should give companies some certainty.
The bad news is that the cash from any business you start in September won’t flow into your accounts until November and December. And if you are tardy collecting it, you won’t see that money until late January!
How do you budget? Well, a budget is a projection of assumptions that you are making now. You know it is going to be tougher but you also want to keep the pressure on to grow aggressively. Someone like you will already have aggressive figures on the spreadsheet. Pull them back a little – especially in the first quarter of FY12. And as entrepreneurs you don’t need to spin anything. Tell it as it is. The economy is affecting your business. These are the things you have done to counter the ill effects. This is your forecast, etc. What you might want to do is show some graphs year on year with the costs of the new projects and without so that your stakeholders can see that you are growing but you are also investing for the future. This is a good story to tell!
One note of caution: you say you have new products which is great, but make sure you have the systems and processes in place to ensure smooth delivery and a happy client experience.
As we know, the only way an entrepreneurial business can grow is with new business and repeat business increasing.
Be smart!
Your Aunty B
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