The President’s recent State of the Nation Address highlighted a fundamental challenge facing South Africa’s economy – an expected GDP growth too low for job creation. Over double the GDP growth of 2.5% is needed to create work for some of the country’s 42% unemployed.  

In order for our economy to prosper, the President made it clear that Government needs the support of all South Africans, and in particular, SME entrepreneurs. That said support is easy to call for but operating a successful business is no small task as many owners can confirm.  And it’s not helped by the obstacles offered up by a changing economic and consumer purchasing environment. So how can business owners ensure they’re operating most effectively?

February is the financial year-end for many businesses and the perfect time for owners to take stock of what happened over the last 12 months.  To do this well, numbers need to be crunched and the results analysed to determine successes and failures and for many, year-end is the first time this happens.

“While a monthly review is considered the very least that a ’good’ owner should do by way of watching the key metrics, financial year end is better than nothing.  Figures are your objective business barometer to assess what has worked and what needs to change”, according to Business Growth Expert, Industrial Psychologies and internationally-accredited Business Coach, Kathi Clarke.

“Businesses need facts, not gut feelings, thoughts, opinions or impressions to be able to know objectively which growth strategies and marketing initiatives worked and more importantly how well, so that they can do more of it in 2013.  Not to know these numbers is like driving your car at night without headlights – foolhardy and dangerous.”

Fundamental areas which matter include:

  • What was the acquisition cost of each customer for each marketing initiative?  If it is less than the profit on the first sale then it’s a great strategy that can be safely duplicated over and over again…and if not, then stop it – you’re losing money!
  • What were the conversion rates of leads to clients for each of your sales team members and the business as a whole?
  • What was the Return on Investment (ROI) on each of your different product / service lines…and which one/s should you be concentrating on to increase sales in 2013?
  • Were you consistently profitable?
  • Was there sufficient cash in the bank to pay your expenses, suppliers, team, tax and cost of sales and if not, what will you do to change this?
  • What will it “cost” you to grow?

“Just knowing these is a great start,” Clarke continues, “and presents business owners with information that they can use to begin fixing what needs to be fixed. To do this most effectively will take a plan of action, some SMART goals, measurables in place to check the progress and someone to hold the business owner accountable to ensure the task at hand gets done!

“These habits done consistently are a big part of what separates successful from unsuccessful businesses during economic winter and will position any SME better to aim to grow by at least 10% in 2013.”

For more information on how to analyse your financials / help your business grow, contact Kathi Clarke on kathiclarke@actioncoach.com