Are you making one of these three common mistakes that could sabotage your business? In this episode, May Yeo Silvers explores three major pitfalls that can tank an event planning business, sharing personal examples and valuable insights for each. Although her advice is tailored for event planners, designers, and decorators, the business fundamentals she discusses apply to any service-oriented business.
- Premature Investment: While reinvesting revenue back into the business is generally a good practice, doing so prematurely can stunt growth and lead to failure. May emphasizes the need to evaluate the return on investment and usage frequency before making financial commitments.
- Lack of Expense Tracking: Many business owners lack a clear understanding of their monthly expenses, leading to financial mismanagement. Know exactly how much is needed to cover personal and business expenses to make informed reinvestment decisions.
- Absence of a Sales Projection: A sales projection is essential for planning and meeting financial obligations. Project costs and revenue for the next three to six months to guide sales and marketing activities.
May ties these three points together, showing how they are interconnected. Premature investment often stems from not knowing one’s expenses, and without a sales projection, it’s impossible to plan effective sales and marketing strategies.
Quotes
- “When you have revenue coming in, immediately deciding to reinvest it back into your business is not a bad thing, but it could be a premature investment that might stunt the growth of the business and eventually tank it.” (04:05 | May Silvers)
- “To support the business, you must first have sales. If you’re making premature investments to support the business, such as software, labor, and hardware, but you don’t have enough sales coming in, that is going to tank your business. So, you have all these things that cost money, but not enough revenue is coming in to maintain this support that you purchased. Premature investment into your business is one of the things that could tank your business and stunt its growth.” (12:02 | May Silvers)
- “If you don’t know your expenses, how are you going to do a sales projection? You need to get a handle on your expenses first. Then, you need to add in the extra money you want to have after paying the expenses, and that becomes your sales projection. It’s really a no-brainer.” (20:03 | May Silvers)
- “That’s the fundamental of running a business. It all comes down to knowing your numbers. Once you know your numbers, you’re able to craft your sales and marketing strategy. When the money comes in, you will know exactly when to use it and for what.” (26:58 | May Silvers)
Links
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