Sunday, September 18, 2011

Budgeting and Goal Setting
Three times in the last week I've talked with people that have told me "I don't set goals" or "I don't believe in goals". When I talked with them further, they said things like:
"Goals don't work for me"
"I don't believe in running a business like the "unethical slugs" [edited for PG audience] on Wall Street"
"Goals are unrealistic, I find them deflating and provide me with negative energy"
"Goals, that is old school".
  
My personal guess is that even if you say "I don't believe in goals" you are doing some planning in the back of your head.
My personal challenge to anyone is: "if you have gotten to where you are today without a plan, or goals or a budget, what would the next 12 months look like with just one of those?"
  
This week: How to start thinking about a budget.
  1. Decide to do it - important first step because you have to know why you are doing it. This is where a desired outcome (another phrase for 'goal') comes to play.
    • Maybe you just want to go on a vacation.
    • Maybe you want a new piece of equipment for the business.
    • Maybe you just want to sleep better at night.
    • Find a visual of your goal and create a quantity (how many $, sales or hours to achieve it).
  1. Get someone else involved. If this is a business budget, maybe your accountant or controller can be of help. If you are working on a personal budget, your spouse or partner will be a likely choice.
  2. Get some historical data. With online banking, it is relatively easy to get the details of past spending and where it went. Don't forget, credit card statements can help identify where the money went, too.
  3. Watch your money like your life depends on it. Think like you are the godfather of your money - protect it from the vultures of waste and whining.
  4. Budget for the unexpected. If you budget a surplus each month for "emergency spending", unless you have an emergency every month, this may need to land in a savings account. If you have an emergency every month, we might want to call that a "monthly expense".
  5. Be reasonable. If gasoline goes up, you will still need to go to work. Budget expenses that vary with seasons and political shenanigans accordingly.
Next week: Tips to make a budget work without feeling like you are on restriction!
  

Running a Small Business - The Seven Fatal Mistakes
There is no such thing as guaranteed success in any business. But there are things that you can do that will guarantee failure. Here are the seven of them.
1. Inexplicitness. Success in business and life has never been achieved through vagueness. Explicit objectives are the drivers of achievement. Setting out clear goals for your business allows you to develop strategies to achieve your goals and to create plans which will ultimately drive your business to success. Without goals, strategies and plans, you are just depending on luck- and how has that worked for you so far?
2. Apathy. Few human activities require a greater commitment than operating a business. Success without commitment just doesn't happen. And apathy for your business will mean commitment is impossible. Commitment requires passion.
3. Pride. Pride in your business is a good thing, but being so proud that you don't ask for advice or help will seriously limit your ability to grow. Successful business owners surround themselves with smart people.
4. Inactivity. Business is generated through taking action. And the best idea in the world just remains an idea until someone takes action on it. There is no return from inactivity.
5. Non-perseverance. Giving up at the first hurdle will never result in success. The chances of success without some disappointments are low. Thomas Edison tried 10,000 different filaments before he invented the light bulb. Perseverance is essential for success.
6. Guessing. If you do not measure the response of each action and tactic of your business, from marketing to service delivery, you are just guessing about what is working and what is not. This means that you will be making bad decisions on what you should stop doing, what you try, and what you should change to improve.
7. Disorganization. If there is no organization in your business, you will have no control over your expenses, you will lose efficiency, and your clients will go to someone who can provide reliable service. Systems ensure that your services are provided consistently following your best practice, no matter who is providing your service. They eliminate the cost of non-compliance, and ultimately create a saleable asset of your business. Without systems, your business will always depend on you being there and you will forever be reacting to events and fighting fires. Such a business has no long term future.
While running a successful business is not easy, there are rules that you can follow that will almost certainly increase your chances of success. And there are also sins that will guarantee your failure.
Copyright 2011 Dr Greg Chapman, editor of the Australian Small Business Blog.
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