Managing the Ebb and Flow of New Business
Nearly every business experiences the ebb and flow of new clients and customers,
which means every business should be prepared to navigate the resulting peaks and valleys.
Don't let the ebb & flow cycle interrupt your strategic plans!
PEAKS & VALLEYS
What are yours?
When do they occur?
BEST PRACTICES FOR CONTROLLING THE EBB & FLOW
Create a Yearly Forecast
Prepare a Yearly Budget
Set Up an Emergency Fund
Identify Leading KPIs
Develop an Ongoing Sales & Marketing Strategy
Bring Together a Board of Advisors
PREPARE, WEATHER & TAKE ADVANTAGE OF THE EBB & FLOW
Prepare
Weather
Take Advantage
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If you’re ready to discuss taking control of your ebb & flow cycle, we’re here to help!
PEAKS & VALLEYS
of the Ebb & Flow Cycle
To begin getting the cycle under control, you have to identify your own particular peaks & valleys and when they occur.
WHAT ARE YOUR PEAKS & VALLEYS?
The first of those is quite simple: Know what the peaks and valleys are for you.
How many clients/projects represent a peak?
How few clients/projects represent the beginning of a valley?
Example - For our consulting, project management & documentation business:
Peak = 5 clients/projects, and we have to work evenings and weekends
Just about perfect = 4 clients/projects, and we can comfortably work 40 hours per week
Valley = 2 clients/projects, and we have to increase marketing & networking efforts
WHEN DO THEY OCCUR?
Secondly, it is really important for you to understand when to expect that you will be too busy, and be honest about when you are likely to not be busy enough.
Some possibilities for when peaks & valleys may occur:
Time of year
Level of Networking
Level of Paid Ads
Ability to Follow Up
Weather
Example - For our consulting, project management & documentation business:
Peaks occur after lots of marketing and selling
Valleys occur when we have been too busy with current projects to keep up with an ongoing marketing and selling activities
Now that you have a sense of what your peaks and valleys are, as well as when they occur, how can you be ready for them?
Managing the Ebb & Flow of New Business: Best Practices
6 BEST PRACTICES
for Managing the Ebb & Flow of New Business
1. CREATE A YEARLY FORECAST
A business forecast is an estimate or prediction of future developments in your business such as sales, expenditures, and profits. You’ll want to think about what you could reasonably expect to happen over the next 12 months. A forecast takes into account the ebb and flow history of your revenue and expenses and ultimately helps you plan your cash flow strategy.
A forecast is relatively simple to create. Start with the P&L statements from the previous 12 months and decide how reasonable it is to expect those same activities to happen in the upcoming 12 months.
2. PREPARE A YEARLY BUDGET
A budget and a forecast are very closely related. Think of the budget as the plan for your goals in revenue, expenses and profit. Working from your P&L statements from last year, as well as the forecast you just created, think through your expenses. Can you move them around so that you spend more when you are making more and spend less when you are making less?
Keep in mind that a budget is a living breathing document and may change as your circumstances change. Also remember, a budget is your business’ best friend.
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If you would like to prepare or review your current Forecast or Budget, we’re here to help!
3. SET UP AN EMERGENCY FUND
An emergency fund, also known as a cash reserve or line of credit, can help you get your business out of a tough situation. There is a lot of advice out there about how much you need to have in this kind of fund. Some suggest as much as 2 years of expenses while others recommend as little as 3 months.
How much you need depends upon the structure and function of your business, and is also dependent on your forecast and budget. An accountant, for example, is very busy in the 1st quarter, and much less busy later in the year. The revenue from the 1st quarter may be expected to cover expenses in the 2nd and 3rd quarters, but the accountant may want to ensure the emergency fund can cover 6 month, or 2 quarters of expense, incase revenue is less than expected or expenses become higher than expected throughout the year.
No matter what monetary level is appropriate for your business, there are two common ways to set up an emergency fund:
Build up a cash reserve during the peaks
Establish a line of credit to be used ONLY for emergencies
Just a tip… ALWAYS go to the bank to get money before you need it. You don’t have to use a line of credit – you can just maintain it, in case you do need it in the future. Develop a relationship with a bank and ask for the line of credit BEFORE you need it.
4. IDENTIFY LEADING KPIS
Leading KPIs, or Key Performance Indicators, are the data points that show the future direction of your efforts. A P&L statement reviews what has already happened, so it is about past performance. A leading KPI gives you an update about how you are currently trending. This theoretically, gives you the chance to improve things before your month is closed out and you haven’t reached your goals. KPIs let you know if you are ebbing or flowing while you still have the chance to do something about it.
For example, if I work a minimum of 20 billed hours per week my business will be profitable. So every week on Monday morning, I check the number of billed hours I worked the week before. If it wasn’t 20, I work more hours in the current week to make up for it.
Your business may have the following KPIs:
# of billed hours invoiced this week
dollar value of products or services sold this month
# of consultations scheduled for next month
Develop, report on and take action on at least 3 meaningful and actionable KPIs to keep track of your progress.
5. DEVELOP AN ONGOING SALES & MARKETING STRATEGY
A comprehensive marketing plan, implemented properly, is absolutely the best way to grow your business and ensure that you are always too busy. But even if you can’t execute a comprehensive plan, you need a well thought out and ongoing marketing effort.
As a minimum, your marketing activities should include:
Active & Up-to-Date Website
Up-to-Date & Keyword Optimized Professional Listings
Optimized Digital Presence
Simple Networking Plan
Simple Client Engagement Plan
In over-the-top busy months, you must spend a minimum of 3 hours per week on some targeted marketing effort that is part of your plan. Which ones you should keep up with depend upon the type of business you run, but we recommend that you focus on your client engagement program first and your networking plan second. This might be as simple as having a quick check-in (whether video chat or meeting safely for coffee) with at least 3 people every week; such as a current client, a future/prospective client, and a past client.
In other words, no matter how busy or broke you get, your weekly tasks MUST include some level of marketing.
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We’re ready to get your started with fully customized Marketing & Selling Plans!
6. BRING TOGETHER A BOARD OF ADVISORS
A Board of Advisors is a group of individuals who are appointed to provide counsel, advice, and support for businesses and their leaders.
Whether it is formal or informal, an advisory board is an essential anchor for both the ebb and the flow times. A board of advisor can even be very informal, discussing business over dinner 2-3 times per year.
A Board of Advisors can...
Offer an outside perspective
Expand your network
Supplement & expand your leadership
Increase your credibility with investors, clients & vendors
This group should be people who are in your corner, understand your business, and provide you encouragement. They should also be willing to tell you the unvarnished truth.
Remember, none of us can succeed without the help of others.
PREPARE, WEATHER AND TAKE ADVANTAGE
of the Ebb & Flow Cycle
Now that you have identified your Peaks & Valleys, as well as when they occur, and have reviewed the Best Practices for Managing the Ebb & Flow Cycle, let’s talk about how those best practices are used during the peaks and valleys of new business…
PREPARE:
Peaks
Accept & embrace that there will be uncomfortably busy times.
Keep the big picture in mind.
Save for the emergency fund.
Set extra money aside for taxes.
Be aware - Things are never as good as they might seem. The most important thing is to persevere.
Valleys
Accept & embrace that there will be excruciatingly slow times.
Keep the big picture in mind.
Use the emergency fund wisely.
Review KPIs to anticipate when a valley may be coming.
Implement an A/R strategy to bring in overdue funds.
Plan a strategy for reconnecting with past/lost customers.
Be aware - Things are never as bad they might seem. The most important thing is to persevere.
WEATHER:
Peaks
Be grateful for the gift of too much business.
Keep staff and yourself motivated and moving.
Get plenty of rest & look after your health.
Take some time to celebrate your success.
Reach out to your Board of Advisors for ideas about staying positive.
Hire professionals when you need them.
Valleys
Find a way to use some downtime to give back to your community.
Tap into your passion for what you do.
Stay busy and track your activities. Just doing something and making some progress will get you where you want to go.
Reach out to prospective clients.
Ramp back up all of your marketing and sales strategies.
Reach out to your Board of Advisors.
TAKE ADVANTAGE:
Peaks
Look for the patterns that are making you successful. Write them down so you can study and replicate them again.
Add new customers to database & plan for follow up.
Reach out to Board of Advisors for ideas on how to maximize this growth cycle.
Valleys
Create a new product or service.
Force yourself to look at your business in new lights, reinvent yourself if appropriate.
Diversify your product or services.
Build your inventory for the busy season.
Do additional training or learning in your area of expertise.
Do catch-up projects (like revamp your website, clean out the storeroom, etc.).
Recharge personally & professionally.
Refresh marketing & business plans.
Running a business isn’t easy.
Successful entrepreneurship as you run your business requires focus, dedication, discipline and passion. It also requires the ability to successfully deal with the ups and downs of your business cycle. Identify your peaks and valleys, then put all Best Practices into action and you should be able to prepare for, weather, and even take advantage of the ebbs and flows of new business.