Review performance and revenue goals at quarter end.
As part of your standard business management process, you should plan to formally review your performance and revenue goals at quarter end.
If you are running your business on the calendar year, the end of March is your first quarter end. Can you believe it? The year is already 25% over! If you don’t like what you see after your first quarter review, you still have the better part of the fiscal year left to change it to something more favourable to your goals.
For example, let’s say you want to make an income of $100,000 from your business this year. To be able to take that out of the business, you’ll need to bring in about $300,000 to cover your fixed and variable operating costs, pay your business and personal taxes, support your cashflow, and have enough left over to pay yourself as desired.
If your review shows that you’ve brought in $75,000 in revenue by quarter end, congratulations! You are right on track. If not, you’ll have some management decisions to make to turn things around and make up any shortfall by year end.
Here are some key questions you should ask yourself during a quarter end management review to see if you need to make any changes to direction:
- Is your pricing still appropriate for what the market can bear for your product or service? [When was the last time you tested your pricing points?]
- Is your customer demand for what you sell higher or lower than your capacity to provide it? [If demand is higher, you might be putting your reputation at risk or leaving money on the table.]
- Is your cost of product/service delivery higher or lower than expected? [If higher, you need to close the gap to protect your profit margin.]
- Is your sales target being met? [If not, you may need to revisit your assumptions and/or ramp up your marketing efforts by trying new channels or building additional strategic alliances.]
- Is your profit target being met? [If not, you may want to look for opportunities to reduce expenses and/or increase sales volume.]