Lessons: It's a Business after all

22 February 2012

Do you know what puzzles me?  Wedding vendors who think what they do is just an art or a hobby or a job.  I'm sorry but I totally don't agree.  Having a business is a business.  It isn't a job that you dial in on the weekends.  It's not a hobby that you do to fill your hours.  It's not an art where it doesn't matter if you give it away or not.

Yes, we are wedding vendors but we are all small business owners. Period.

Being a responsible business owner doesn't mean that we are not warm, personable, and friendly.  We are all this but also artists, creative souls, and managers.

Often when I speak to business owners and fellow peers, I'm dumbfounded that many don't know simple financial or business stats.

These stats are very important to running a business.  Simple things like 1. how much did you gross last year? 2. what percentage is your gross margin? 3. what is the average sales per wedding 4. % of sales gross this year over last year are stats in which other wedding vendors often do not know.

Why are these stats even important?  Obvious, the reason why I bring this up is simply because these finance numbers are key to understanding what is going on with your business.  Let's just look at the first question.

How Much Did Your Business Gross?
This is an obvious answer to a question that one should know.  We all should know what our sales are at any given time during a year.  It doesn't matter how you keep track of this but you should know what your last year sales are and definitely this year sales.  Even if you don't know the exact number, you should be able to estimate your sales for this year.

It is important to track this number so that you are aware if your business is growing, flat lining, or decreasing.  If it is repeated pattern(over a course of several years), it allows you to estimate future growth.  If it is flat lining, you might want to address what you can do to increase your business in the following years.   If you know that you won't be growing your business then it is time to think about ways to lower your expenses so that you can still maintain similar profitability.  If it is decreasing, it is very important to pause to analyze and pinpoint what outside factors have been adversely effecting your business sales.  It might be time to analyze and reevaluate your presentation and portfolio.  You might also need to look at how many clients did not hire you and what were the reasons.

When business is declining, it is extremely important to figure out if it is a temporary hiccup or a long term downtrend.    We will always years in which we might decline from one year to another.  It does not mean that you business is finished.  But to think that the worse will pass is rather silly.

To do nothing, would be irresponsible.

Imagine that your business had shareholders like an Amazon or Google.

What would your shareholders say to you if you failed to make changes after analyzing why your business was declining.  If you didn't have an action plan, your shareholders would probably sell off your stock.  As the CEO of your small business, you can't just shake it off.  You don't have the opportunity in this competitive environment to ignore signs of trouble ahead.

Once again ---- Do know that just because your sales are down doesn't mean that your business is finished or downtrending.  Not at all

It is key to understand why your sales went down from one year to another.  Please note, if your sales were down and your margin was up, that isn't a bad thing at all.  That means that your sales slowed down but your profit was still health.  For some of us, our sales goes down because we are doing fewer weddings with higher sales which can possibly lead to higher gross margin and more profitability.  

A downtrend doesn't mean that your business is not solid. But if you don't know why your business sales have gone up or down, how can you determine what next to do for you business?

After all, business isn't a hobby, for many of us including yours truly, this is our livelihood.

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Flowers in life said...

very interesting article, thank you !

Adizat| Klassy Kreations said...

Excellent post Nancy! it is definitely a good reminder financial aspect of our business that we ought to pay attention to but sometimes often forget.

Laura Rovig said...

Fabulous to read! Thank you Professor Nancy!

helen said...

this is why i sweat you. you rock. creative genius, but at heart you are a logical, businesswoman. you are the woman i wish i was! business + creativity. unfortunately i just channel excel, without all the awesome floral design capabilities. love you! -helen

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