As I'm sure you are aware by now, each week I've been sharing a new blog, discussing specific character traits of driven entrepreneurs. One of the major driving forces of being a successful entrepreneur is being able to make your venture profitable. The key to this is to prepare financial forecasts, so that you know the path and route that you are heading. Of course, these forecasts need to be realistic and achievable.
So how do you do this?
• You need ‘buy in’ from management The first issue is to ensure that the entire team, not just the board but ALSO senior management accept and approve the budgets that they have been set. It is no good having figures on paper that some or most of the senior team consider unachievable or even too easy to obtain. The figures need to be owned. Ownership is key to success.
Then, where there are departments that need to control costs they not only need to have that responsibility but also the ability to make decisions and controls to do just that. There needs to be transparency with the whole exercise. Not everyone needs to see the whole forecast and profitability of the organisation. It can be sectioned and partitioned accordingly.
• Adequate resources Equally to achieve the forecasts, manpower and supplies need to be put in place for the relevant department heads. This means that the business in its entirety needs adequate finance. Most importantly for the correct term, as well. Short term finance is inadequate.
• Market and pricing To achieve any sales forecast the market place has to be receptive to the offering being made. This not only means that you differentiate yourself from competitors but also that you have your pricing structure correct. It is very easy to over price and not obtain custom and underprice or value your services and be a busy fool. Always review the margins set, they are there for a very good reason and also ensure they are achieved.
Investment has to be made from time to time and also a difference or deviation to forecast must be simply explained, understood and accepted.
• Be ‘super reactive’ Whenever there are differences to forecast that are not timing issues nor one offs, react. Vision is a trait of the entrepreneur so being able to foresee these events are critical to the overall success of the enterprise.
Next week I shall be discussing how sports leadership can be transferred to business.