Category: Budgeting

When a family or business creates a written plan outlining amounts of available cash resources to be spent for a specific – usually in a calendar month for a family and a fiscal year for a business. A business budget is thought of as a financial blueprint of the business, while a family budget helps to control overspending.

Small Companies Can Pursue Big Business

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In the movie “You’ve Got Mail”, if you put the love angle aside for a moment you’ll remember a sub-plot in which heroine Annie Reed (played by Meg Ryan) was forced out of business when big-time bookstore owner Sam Baldwin (played by Tom Hanks) moved into town.

You may recall that Annie owned a quaint little bookstore which she inherited from her mother, and although the prices of her books are a little more costly, she makes up for it with excellent service which included packing the books in a specialized bag and knowing all her customers by name.

Sam, on the other hand, moved into town to build a branch for a big chain-bookstore which offered discounted prices out of a huge building which housed the company’s operations, which made Annie’s little bookshop on one corner of the town’s street seem inconsequential.

As the movie went, Annie was forced out of business because her customers went to Sam’s monstrous bookshop, and although they did not get the kind of customized service offered by the small “mom and pop” store she operated they paid less and presumably benefitted from having a larger selection of books.

Thinking back to the movie, we’re told that Annie was forced out of business because she can no longer realize a profit due to her prices being too steep as compared to her competitor’s big business discounted rates; and therefore her only edge is to provide personal service and employ a very small staff (about 2 or 3 employees).

The movie aside, however, this situation no longer holds true in the modern-day business environment, as more and more small businesses are blazing the trail and giving big businesses a dose of their own medicine.

Competition

 

As a small organization you may consider incorporating these tools, resources and features in your daily operations as an edge in competing against the big business sharks. That having been said, here are a few tips on how you can hold your own against a big business:

1. Small businesses have big competition – This means that you need to know how to survive out there. No matter what nature of business you own or manage, it is better to learn about the competition so that you will be able to survive.

2. Keep your business alive – When it seems as if your cash flow is on a downward spiral, keep a tight rein on your budget. Do not spend on unnecessary business purchases, and always balance your books. If you are one who is prone to buying on impulse, or if you are the type who listens to those that sweet-talk you into purchasing “necessary” items, control yourself. Get a second and third opinion if possible, as these impulsive buys may lead to the end of your small organization.

3. Do not be afraid to seek professional help – The fall of most small businesses start with decisions on problems which are not carefully analyzed. Although you may think that you already have a contingency plan, make sure you have foreseen the results of a particular business decision; but in the long run, it is better to seek professional help than to embark on a plan that could lead to the downfall of your business.

4. Keep your books straight – The better option is for you to hire an outside accountant who is a professional to figure the returns of your investment and handle other financial aspects of your business.

5. Take advantage of every free business counseling whenever available – This not only helps to broaden your knowledge, but it will also give you an idea of how other businesses are managed by small-scale owners.

6. Know exactly where your business is headed – In your day-to-day operation, make sure you know where you want your company to be five or ten years down the road, and be always aware of the trends in your industry. Practice good money management and learn how to recognize potential problems before they arise.

7. Learn how to market your small organization – Marketing is not about trying to sell your products and services to everyone, but rather, it is about knowing who to market your products to. In marketing, it is good to remember these fast facts:

  • Know about your customers.
  • Communicate with your customers.
  • Build a good and personalized relationship with your customers.
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This will be a great edge for you to have against the bigger companies. They might offer discounted prices but it is harder for them to keep track of customers on as personal a level as you can.

As a small organization, you need to routinely review the markets that you need to pursue so that you can better reach out to your customers. Remember, small organizations are big businesses these days so do not be afraid to work hard for the company that you have – no matter it’s size; because ultimately, if you work hard, make wise business decisions, learn how to market your small business and personalize your customer interaction, your small-scale business is sure to rise to the top.

Setting Clear Goals and Objectives

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Processes

In order to achieve goals there are processes which should be implemented; processes designed to streamline and analyze such goals and objectives so that they are deemed achievable before the first step is taken. It is important, however, to start at the very beginning and with the smallest, most specific part of the goal or objective, making these initial steps the most important in meeting the guidelines.

An objective is a thorough understanding of what action or plan is to be taken and then identifying the anticipated results. Such a plan provides the set of directions intended on making the decision less complicated than it appeared in the early stages or at inception.

Peter Ducker wrote a documentary-style book published in 1954 entitled Practiced Management wherein MBO or Management by Objectives, was introduced. The book outlined a program which consists of simple but very useful processes in order to meet commitments in an organization. The nature of this program is such that it is also be applicable to personal plans.

MBO consists of 5 steps

First – It should be Specific. It is better to accomplish one goal at a time instead of attempting to – or even thinking of – pursuing several plans simultaneously, since a single objective cannot be reached if there are two or more results expected. Fundamental to this step is the need to clarify that which is to be achieved and giving it full attention. It also must be taken as seriously as possible.

Second – It should be Measurable. Many things that are not tangible can be difficult to measure and, by contrast, there are things which are measurable by the mere fact that they include numbers or ratings. Take, for example, that service crews are hard to measure based on how the service was delivered; but if complaints are counted there is then a specific number which can be used to rate the effectiveness of the service.

 

In offices, the number of tasks or assignments that were accomplished is used as basis for measurement. Cooperation, though a very vague word can also be measured by taking survey a subordinates and peers. How fast or slow customer assistance was provided to a certain individual is enough to provide data on how situations can be measured.

However, refrain from the use general terms when making an objective statement, but speak in clear and specific terms, such as: to write, to recite, to perform, to fix, to process, to designate, to purchase, to choose, to reprogram, etc.

Realistic

Third – It should be Attainable. The resources made available provide information on how an objective can be attained, indicating that it must be something derived from fact which being very realistic. Keep in mind, the possibility that certain objectives can indeed be realistic but the time frames in which to reach or accomplish them are not.

So it is better to state objectives that are factual since this promotes motivation; rather than stating an objective taken from belief, as this may result in unexpected (devastating?) failure and lead to a feeling of discouragement and/or despondency.

Fourth – It should be Result-oriented. An objective should be stated clearly so that the expectation is clear. Focus on the end result as this will be a guide in determining whether or not the objective to reach a stated goal is effective and meaningful. Is this objective going to help the individual grow or succeed? Will it be beneficial to all concerned? For it is only after all the plans are completed, reaching the objective can be considered a success.

Fifth – It should be Time Bound. There should be a limitation on all the things needed to be accomplished. This matters, since the root of any plan can be traceable; but it matters also because it is an indication of whether or not the objective is effective enough not to cause unneccessary delay. Of course, as with any goal or objective, there will will always a sense of fulfillment when accomplishing a set of objectives occurs earlier than the deadline.

Chart

In conclusion, developing an objective that is easily measured, can be attained, within a limited time will help in determining if the objective is realistic enough, meaningful, and worthwhile to everyone involved.

A chart or journal can be kept to keep track of any opportunities and strengths that were recognized along the way. This will also indicate the time that was consumed and the length of the objective developed. A successful objective helps motivate the individual or the group involved toward greater achievements.

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