Whenever I sit down with a client, the question almost always comes up: “What can I do to improve my business?” My answer always starts with: “Run your small business like a big business! When is the last time you had a board meeting? Do you have a budget?” Directors, owners and officers of small businesses often are the same person. Why would a small business owner benefit from a board meeting?
The individuals a small business owner trusts the most for advice usually include their CPA, attorney, a benefits consultant, insurance agent, investment broker and their banker. Small businesses need to invite these individuals to their annual board meeting and keep the meeting to two hours. At this meeting, as a small business owner, ask your accountant to review the financial statements and tax returns.
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Present an operating budget for the new year and a capital budget for the next three years. Then open the floor for discussion and suggestions.
- Ask for input on legal matters such as employment law, protection of intangible assets, and leases.
- What worries your banker the most about your financial outlook?
- Are all insurance policies up-to-date?
- Are the retirement plans in conformity with all requirements?
- Are we missing any investment opportunities?
By the way, ask your lawyer to jot down minutes of the meeting. Here is the key: let the others do the talking. At the end of the meeting, you’ll have the outline for next year’s business plan!
Budgets in small business are the closest thing to a magic wand.
- I have never seen a business that did not improve simply by preparing a budget and comparing budget to actual results on a monthly basis. It is a simple process to format a budget into the monthly financial statements. Each month, management can easily focus on the two or three items that can produce the greatest cost savings by sorting budget variances from unfavorable to favorable.
But planning is only the beginning.
- Today’s technology makes it easier than ever before to focus on two key ingredients of implementing the business plan: efficiency and effectiveness. Relatively small investments in technology let today’s small business owners run their business like their big counterparts. For example, as computers became increasingly important in my own practice, I spent more time making sure that the hardware and software were always current. In fact, I became a full-time computer guy and part-time accountant! By investing in a fast DSL, I was able to switch to a virtual office environment. All my software is now ASP, and I am one again a full time CPA!
Virtual office solutions make going paperless easier than ever.
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