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March Newsletter

Hi and welcome to a late February edition of this newsletter, otherwise known as the March edition! I don't know what happened to the month of February. It was a fantastic month and seemed to pass very quickly. Taking time out visiting my investment property in the Caribbean allowed me to refocus on my business. If you want to learn more about this investment opportunity there is an information evening coming up on March 24th so if you would like details drop me an e-mail and I'll make sure you get all the details you need to get along and see for yourselves.

So when you look at your business how is it going? At Dolphin we are approaching the end of our 3rd accounts year and it is great to see we've grown each year. And yet the last few months have been tougher. People have been slower to pay, some have reduced their investment with us and this all impacts on our on Cashflow. Sometimes it seems like we are working harder for less. Have you ever experienced anything similar yourselves?

This is an area our clients regularly use us for, to help them refocus on where they want their business to go and to help them get there.

I am sure many of you have heard the expression turnover is vanity, profit is sanity and cash is reality. Well no matter where you are in your business, from start up through to multi million turnover, this fact remains true.

So what do you do if your business is facing tough times and your cash seems to be running short? Well first thing is don't panic and don't hide from it. Find out exactly what financial position your business is in, own where you are, get real with your situation because once you know where you are YOU WILL MOVE FORWARD.

The first step is to get very clear on the numbers that drive your business. Without knowing these you truly cannot move forward. And this starts with your business break even - what does it really cost you to run your business and your life on a monthly basis? We find that often business owners are forgetting key things like the VAT element on sales which of course does not belong to us. Do you quote prices inclusive or exclusive of VAT? Also have you allowed for the appropriate tax payment on your earnings. Most business owners pay themselves out of profits as dividends or drawings and if tax is not deducted at source you can get caught out. A good tip for when you are calculating your break even is to check if your expenses are being appropriately allocated between personal and business. Are you getting the tax deductions you are entitled to and could you be making your money work smarter for you?

The second step is to set your sales targets based on achieving a minimum of break even. You should break your sales targets into achievable chunks - for example if you run a retail business that needs to generate £5,000 sales per month you can break this down into a daily target (£200 per day based on an average 6 days opening per week gives an average 25 open days per month) which you can share with your team. You can go much further than this and looks at the number of customers you need through the door, how many convert and how much they each spend. Every business will have different sales drivers and the more you can break these down the easier it will be for you and your team to achieve them.

I usually set three targets with any business I work with:

The third and most important step is translating all these numbers into a Cashflow forecast. Some of the businesses we work with operate a daily Cashflow forecast, some weekly and all have a detailed forecast that looks ahead at least three months. This means VAT, PAYE and other taxes are never forgotten, any pinch points are known way in advance and if you know a business will have upcoming challenges you can take steps to address them. The best businesses I work with actually operate a system of deposit accounts so the tax money and any major planned expenditure are reserved when money comes in. That way they never get caught short and most are building up a reserve of a minimum of 3 to 6 months trading costs so that Cashflow never becomes a challenge.

If any of this is not yet in place for your business and if this article raises any questions for you then we want to talk to you. We are running a special promotion throughout March offering a FREE initial consultation to any business that contacts us using this link FREE BUSINESS GROWTH SEMINAR.

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Dolphin Business Strategies is a trading name of DB Strategies LLP. Registered No: OC331887. Vat No: 919 2599 83
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