Strategic Planning Using Financial Models

Strategic Planning Using Financial Models

Uncertainty is a part of making business plans. But this should not stop you from creating strategic plans. This is where financial modeling comes in. Financial models do not make the future more predictable but it does help you choose between various options and prepare your business to navigate twists and turns as you implement your strategic plan.

What Is Financial Modeling?

Financial modeling is the act of building a conceptual framework that depicts where a business’ financial situation will be at some period in the future. It is based on real world information gathered from financial statements and market research.

When done correctly, a financial model considers all areas of a business’ financial performance and generates a three statement models, namely, income, balance, and cash flow . It uses clear, logical, and defensible assumptions in order to account for changes in business activity.

Who Should You Use To Prepare A Financial Model?

A financial model is a tool for your business that will be used to aid strategic planning. The person creating your financial model needs to have a strong understanding of accounting fundamentals and financial statement analysis, and ideally has knowledge of your industry.

What Happens After Creating A Financial Model?

While financial modeling can help a buyer feel more comfortable with your growth projections, it is only the first step in this process. You will want to use your financial model to determine the current and projected value of your company to see if it meets your goals. Next, you should detect areas for improvement or investment in your business, and develop a strategic plan for making this all happen.

Make sure to keep records of everything that goes into this process because buyers want to know how close you came to achieving past projections, what actions you took when you deviated or exceeded projections, which members of the leadership team were essential to this process, and how they can take your business to the next level.

Financial model can be used to develop and enhance strategic planning initiatives. It addresses five components: determining if your business’ value is where you want it to be, revising projected vs. actual results, finding opportunities for improved performance, developing action plans to achieve results, and setting the current organizational structure to reflect your business goals.

Why Should You Regularly Update Financial Models?

It is a foregone conclusion that your financial model will differ from what actually happens as time passes and conditions change. And that is why it’s critical to update your financial models and overall strategic plan on a regular basis. Any deviations from the model must be taken into consideration and actions must be taken to correct the issue.

Are Multiple Choices Always Good?

Are Multiple Choices Always Good?

It is often believed that more choices are better. Businesses believe in offering a variety of products ranging in colour and models in the hope that it will attract customers. It is easy to believe that more options and freedom of choice make customers happy but this is far from the truth.

Choices Are Overwhelming

When you give people a multitude of options they become overwhelmed. If at all they do make a choice, they often contemplate about what they had to “sacrifice” or not choose when they made their decision. They wonder if a different decision would have made them happier. This leads to unhappiness and never being fully happy with their final choice.

This applies to buyers as well. When you offer more choices to a buyer, chances are higher that he will not buy anything. Too many options lead to anxiety and inevitably, inaction.

Making a decision is a mentally stressful and emotionally taxing process. Considering the varying factors, while making a choice, makes the entire process even more difficult. That’s why buyers find it easier to say a no than saying yes to any one of the options.

Choosing Should Be Easy

Make the entire buying process simple by cutting down your offers. Give your buyers single choice. It should be whether they should buy something or not. In every scenario you must ensure that the decision to purchase is made simple, easy and quick.

Eradicate and remove all unnecessary factors that might prolong or distress the customer. It most cases, it the vast number of options that scare away potential customers.

Simple Yes Or No

Simplicity of choices must be seen even in your marketing and sales messages. Let people make a simple choice within a limited time period.

This does not mean that you offer a single product every time. Consider your target audience and their budget and income. The idea is to provide three different levels of service to accommodate people with varying budgets and needs. This is also called “Olympic Factor Pricing.”

This is especially important when you are selling high end or costly items. It need not be taken into consideration with cheaper products because more products only complicate the process and the complication is not worth the end result.

Simplification Is Key

Reducing your options can also be applied in your marketing strategies. When you want people to share your content online, provide them with lesser options. Choose one or two of the best platforms that appeal to your audience and do not clutter your site with other icons and options.

The same can be applied for e-mail marketing.  Do not overwhelm customers with innumerable offers and choices through a simple e-mail. Instead, stick to one major offer which the customer will be automatically drawn to.

Keep your homepage and websites relatively simple and user friendly. Do not bombard potential clients with your latest products and news. A simple website will be easier to navigate and let buyers make their decision.

All in all, if a business wants to improve its sales it must take away the customers’ freedom of choice by removing options. This will make customers happier and earn you profit in the long run.

Tips To Boost Your Sales Revenue

Tips To Boost Your Sales Revenue

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Increasing sales revenue is a key process of developing a company successfully, but doing so is not so easy. To make matters more complicated, increasing sales does not always lead to an increment in revenue. This makes even the best advertising techniques fall short of serving towards the business objectives for profit and growth.

But if effective marketing is not enough, what is a business supposed to do to increase their sales revenue and promote healthy growth?

Here are some tips to increase your sales revenue,

1. Map Out Your Current Processes

Most businesses have an informal sales process, where everyone sort of knows what is supposed to happen and who does what.

The first thing you will want to do is plan out these informal processes to get a formal understanding of all the steps to making a sale.

 2. Define Your Key Performance Indicators

Writing down your processes will allow you to track prospects as they advance from one step to the next. This will allow you to estimate how many leads successfully move through your pipeline. You will also know how long it takes to finish a sale on average from start to finish.

 3. Follow-Up And Measure Performance

Conducting sales meetings are a good way to ensure a regular analysis of sales data. The purpose of the meeting should be to decide what possibilities are in the pipeline and how leads are moving through the process.

Your key performance indicators can also be used to estimate individual performance. Employees usually appreciate the transparency of understanding how they are judged. It can also be a great way to encourage friendly competition within your team.

 4. Use Technology To Simplify Monitoring

Your next step should be to centralize all your client and contact information. This database can be in a simple form of a spreadsheet, but as your business grows, you will probably want to spend on customer relationship management software.

 5. Start Forecasting Your Sales

You can think of your processes as a funnel or pipeline. By measuring your progress rate at every step, you will be able to determine the inputs you need to accomplish your sales goals.

 6. Develop Your Competitive Advantage

The customers need a reason for buying your products or services, in terms of the benefits, results or outcomes which they would not get from purchasing from your competitor.

 7. Increase Your Sales

After you have planned your processes and set a prediction, it becomes simple enough to increase your sales.

Two ways to do this are to,

  • Increasing Your Average Order Size (sell more products)

Consider granting discounts for larger orders, free shipping for orders over a certain threshold, or upselling and cross-selling items.

  • Improving Your Conversion Rate (sell more frequently)

you can also tweak your sales script, create offers that are more appealing and provide additional training to your sales staff.

Do You Know When to Pull the Plug?

Do You Know When to Pull the Plug?

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No matter what the causes behind project failure might be, one thing is for sure, it is never easy to stop a failed project. Here are some things that make it hard to kill the project. People will often continue projects based on incorrect assumptions, such as the belief that if you throw money at a problem, it will get fixed. There is a point at which no matter how much you invest, recovery is impossible. Sometimes people are so dedicated to a project that they refuse to accept defeat to the point of catastrophic loss to their project, and company. Here are some tips to know when to kill a project.

1. Project Is Not Delivering Value Anymore

If your project cannot deliver value, it is worthless. You need to focus on value delivering when executing projects. Assume you cannot kill a project that is costing you more than expected for any reason. You will try to justify the additional cost incurred on the project. And this will affect the growth of the company. if it is the other way around and you want your project to be completed inside the budget and you start to cut down corners to keep the cost down. Even if you manage to complete the project within the budget, it will not deliver the same value.

2. Project Is Costing You A Fortune

Cost is one of the most critical constraints in the project management triangle. Completing projects inside the budget is one of the biggest worries for project managers. If your project costs you a fortune, then you should seriously think about dropping it. Holding onto a project that is costing you much more will only prolong the financial loss and as a business, you can not afford it. The best way to resolve this problem is to cut down extra expenses. If that does not work out, end the project.

3. More Important Projects Waiting For Your Attention

With so many projects running concurrently, it sometimes becomes very difficult to give attention to every project. This is where prioritizing projects can help you. Give special attention to projects that have a greater influence on your overall business. Diverting resources efficiently is key to project management success. There is nothing wrong in shutting down a less important project to redirect all your energies towards a more important project.

4. Change in Business Plan and Strategy

The rate at which the business world evolves demands for a change in business plan and strategy. Hence, a project that does not follow your business plan and strategy can never add to your business’s success. Spending time and resources on such projects is a waste, especially when you can redirect them to other projects and get better results. Therefore, It is better to abandon those projects that cannot keep up with the changing business strategy. Knowing when and how to pull the plug is very important for both the success of the business and project manager.

Innovation Is Key

Innovation Is Key

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Innovation is simply doing or making something different to meet a perceived need or gap in the marketplace. Ideas are what stimulates innovation, and creativity and conceptualism make those ideas unique. Innovation is not merely doing something different for difference’s sake. Usually, innovation involves creative thinking that escapes from a common viewpoint. It can be difficult when you are customary to something, that you cannot see it in another way. 

To help you gather associates and brainstorm here are five tips.

Have A Vision For Change

You cannot demand your team to be innovative if they do not know the direction in which they are heading. Innovation needs a goal. It is up to the leader to set the path for this goal. You need a single statement which determines the direction for the business and which people will readily understand and remember. 

Explain to people how their role is essential in fulfilling the vision and meeting the challenges. It motivates people to become passionate about finding innovative routes to success.

Fight The Fear Of Change

Innovative leaders constantly preach the need for change. They replace the comfort of satisfaction with the hunger of ambition. They must paint a picture that presents an appealing future that is worth taking risks to accomplish. The prospect involves risks and opportunities. The only way we can get there is by embracing change.

Brake The Ice With Bad Ideas

At times people feel pressured by the presence of their bosses during a brainstorming session and this stops them from giving their ideas. Logically this fact is not favourable at all since you can lose the creativity of your team because of the shyness or fear of some team members.

To solve this situation, an effective method is to suggest they share bad ideas for a few minutes. You can begin this to break the ice by throwing out there an illogical and least favourable idea. This can be a warm-up session and when all the members have shared their bad ideas and laughed about them without fearing being exposed, they can concentrate better on formulating innovative ideas.

Welcome Failure

The innovative leader encourages a practice of experimentation. You must teach people that each failure is a step towards success. You need to give people the liberty to innovate, the liberty to experiment, the liberty to succeed. That means you must give them the liberty to fail too.

Be Passionate

Concentrate on the things that you want to change, the most important hurdles you will face and be passionate about overcoming them. Your enthusiasm and energy will translate into inspiration for your people. Filling your bus with contented, self-satisfied passengers is not enough. You need people who believe that reaching the goal is really worthwhile. If you need to motivate people to innovate, to improve the way they do things and to achieve amazing outcomes then you have to be passionate about what you believe in and you have to show that passion every time you speak.

Tips To Launch A Winning Product

Tips To Launch A Winning Product

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A winning product launch gives a head start in sales for your company. It is one of the few opportunities to go from gradual to exponential sales. 

Here are seven tips to achieve a winning product launch:

Matching Product to Market Needs

A winning product launch begins with meeting the capabilities of your product to the requirements of your target market. This is often the domain of a product manager. If you are presenting a new product or service into the market you would be well served by getting out and talking to the potential buyers that your product addresses. Odds are you learn something unique and possibly so enlightening that it could be the turning point in your business.

A winning product launch cannot happen if the market wants a different thing from what you are delivering. 

Study the competition

A detailed competitive investigation based on your research and visits to the target market will help you make key choices. Check for the need to modify your product or service and customize it for that market.

Clear Positioning and Messaging

Positioning is the set of actions you do to place your product clearly in the minds of your buyers. If your positioning is not clear, your buyers and possible partners will be confused.   

Effective positioning is a communication process that makes the benefits and capabilities of your product so crystal clear to your buyers such that they get it without tremendous effort on your part. Your message forms the foundation for all communication to your target market.

Setting Clear Launch Goals

Be particular about what you want to achieve in your new market, including the level of sales you can anticipate reaching.You will not have a chance at a winning product launch if you do not establish clear goals. 

Proper and clear goals frame the purpose of your product launch. Once you have established the goals of your launch you need to consider how they will be measured.  

Priming the Pump

One of the most important tips to a winning launch is priming the pump. Priming the pump refers to all the activities that are conducted to build excitement and create demand for your product before it is generally available to buyers. You can do this no matter how large or small your company or the size of your budget.

Some ways you can achieve this is by involving customer support, though the sales team, your channel partners, executives or by involving industry analysts. 

Time the Launch Event to Maximize Sales

Identify the times and locations that afford maximum leverage and plan your lunch accordingly. Timing a launch can make all the difference in the world. This can be especially true if you launch your products on a global scale.