Friday, September 9, 2011

Why You're Broke!

Escape the cycle of living bride to bride and find the financial freedom to really love your career.

By Krista Chapman

No doubt, you started this little business because you wanted to carve out an meaningful and successful purpose.  Months, maybe ever years later, you have seen a glimmer of a idea grow into a wildly successful enterprise.  But you have a  dirty little secret...  You're busy but you're broke.

Nothing feels worse than staring down a ever-increasing pile of bills and wondering how much longer you can rob Peter to pay Paul.  For too many businesses, businesses founded on passion, big dreams and bigger investments,  Peter catches on pretty quick and the doors slam shuts just as quickly as it open.  A likely culprit are to blame for your financial woes.  Four culprits, in fact.  And all are why you're broke.

(1) You buy on impulse.  I like to call this SOS... Shiny Object Syndrome.  How often are you caught ordering office supplies or shopping at Target, when an enticing deal catches you off guard?  Momentarily distracted by the shiny goodness, you pounce and purchase.  Too many small businesses to name struggle with impulse purchases because they're not following a budget.  And you are no different.  Without a clear idea of what you can spend based on needs and incoming revenue, businesses (and employees) fall prey to a staggering number of impulse buys.  Purchases that spend any bottom line faster than you making it.

First things first... you need to create a budget.  One that allows you to reinvest in your business, have fun  money and still retaining profits.  Any employee that has buying power should also be working with a budget.  This not only gives money value, working with a limited amount of resources, people will often take more care to manage those resources.  Shiny Object Syndrome in remission, creating purchasing rules for your company puts you one step closer to plentiful profits.
(2) You're not tracking ALL your expenses.  Not almost all, skipping minor things like a puny $25 water bill, but all expenses, down to the stamps used when you sent your bride a thank-you letter.  I'll admit guilt, overlooking these minor bills.  Wedding vendors are generous by nature... you have to be to work with brides.  But this generousity can come back to bite you.  Trivial expenses add up over the course of a year and a wedding vendor may find that their profit margins have been entirely eaten up by the special meetings, extra trips to Sam's and poorly priced all-inclusive packages .  When you spend more money than you make or more importantly, do not charge fees high enough to cover all your costs, the math simply does not add up.  You are broke and will continue to be broke.  Successful business know where every penny is made and spent and have a clear indication as to their profits.  Refer to said budget above.

Insider Trick: Stagnant inventory reserves are like cash sitting on the shelves.  How do you flip inventory, limiting the cycle of trapped cash?  Make sure operations is talking to sales. Think of these enities as the two halves of your brain.  Except, in most businesses, the corpse collusium has been cut and they just don't communicate like they should.  I made a point to check wine and food inventories weekly as a venue director.  Knowing what was on hand (and needed to be sold), I guided clients towards these items.  As a result, we only bought things when we absolutely needed it and quickly sold it.
(3) You've stopped marketing.  Leads are drying up, no one is calling and revenue has taken a steep decline.  In a panic, many business yank marketing and advertising dollars, hunker down and hope for the best.  Here's what I know for sure... When twenty-something brides can't find your company, they book someone else.  The same fate awaits companies unsure how marketing impacts their sales, companies with too much ego or sense of entitlement and companies unwilling to take on the risk.  They teeter between almost broke and broke, until...

You don't need to continue spending thousands and thousands to stay in front of brides and grooms but you do need to make a effort to stay in front of them.  Like everything else, you're marketing plan must be based on a budget (yep, that word again) that takes sales and revenue flow into consideration.  When one marketing tactic is no longer producing leads, take a moment, weigh the ROI  and make changes.  Even the most successful companies, worldwide brands known the world over, still market.  Many spend millions to keep their brands in front of consumers and search out relevant ways to do so.  When you stop investing in your future... not much of future awaits. 

(4) You're making excuses.  I could hear your inner but... but.... but so I save this one until the end.  The hard truth about life and business ownership?  Customers, opportunity and money are simply not going to fall from the sky because you've opened for business.  One must actively pursue the life they want.  I hate finding myself in conversations with defensive vendors making excuses that brides are buying differently... we're in a recession... I am just not reaching the right brides... I can't afford the advertising I need to grow... blah, blah, blah.  Guess what?  Excuses don't breed confidence, solve entitlement issues, increase your time management skills or make for successful wedding businesses.  Just imagine where civilization would be if progress was consistently stalled by one excuse after another.  Steve Jobs was fired from Apple in 1985. He didn't make excuses or wallow in perceived failure.  Instead over the next decade, he took over the world, his former company included.  Excuses act as a cherished, yet oppressive burden that keep us from our best life.  

The wonderful truth about America?  It allows the weak, the tired, the poor to pull themselves up  by their bootstraps and open a business... no pre-requisites required.  Driven by passion and entruprenial spirit, everyday folks set out for Emerald City.  But what these daring and passionate souls are not protected from the cruel reality of how complicated, difficult and daunting opening and keeping open a small business.  But the other great news?  You can make the changes to overcome diasterous blunders and find our happily ever after. 

Fearless steps of caution, dear readers.