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| Looking to the Future: 5 Steps to Better Financial Projections During Covid-19 Posted: 11 Oct 2020 07:00 AM PDT By Kuran Malhotra Shelves are empty. Hand sanitizer sold out. Cleaning supplies nowhere to be found. This was the scene across many American towns and cities at the beginning of March 2020. Almost overnight, a global pandemic turned the status quo on its head, and individuals and businesses were left scrambling to adapt and overcome the challenges they faced. For some businesses, that was a loss in foot traffic or a change in consumer behavior. For others, it was a problem downstream in their supply chain, distribution network, or development pipeline, which reverberated back. Every business is going through its own set of uncertainties in today's environment, but those uncertainties provide the opportunity to reflect and to better understand the core of the business, its key profit drivers, and how those drivers can be used to create a path back to a new normal. The importance of projectionsAs a small business owner, you got into business to make or sell the products and services you love to the customers you enjoy working with. Business financials are intimidating, and you don't really see the need for them right now, so you're happy to put them off for another day. My business, a coffee company, was in a similar position. We had built some basic financial projections prior to the Covid-19 pandemic as we worked to expand our business and make decisions about where to allocate resources. Recently, though, we found a renewed need and importance for them. As the pandemic raged throughout D.C., our partners, landlords, and more looked to our projected financials not only as a measure of future success and profitability, but also as a measure of our confidence in the business, our team, and the future. Especially now, as small businesses continue to face new challenges, landlords and banks will want to see updated financial projections before they evaluate your business for a deferral, refinance, or other type of relief. Grantors and government initiatives often look to P&L projections as a measure of how much the pandemic has harmed your business, and so the more accurate they are, the better they will serve you. Beyond that, you can look at your business financials down the line to analyze key aspects of your business such as the unit economics. For us, that involved understanding how much it costs to produce a tin of coffee and what that cost depended on. From there, we calculated how much we were making per tin, and then how many tins needed to sell in order to cover our overhead. While coffee tins may be a niche example, this general concept of unit economics really can apply to any business: what are you making, for how much, and how many do you need to sell to cover your costs? 1. Find a good starting point: Setting up the income statementAn income statement is the best place for a small business to start its projections. It's really the heart of the business at the smaller stage, and will give you visibility into the metrics and drivers you may want to consider down the line. Once you have your income statement, you can use it to build out a balance sheet, and a statement of cash flow if you need to. The best starting point for setting up your template income statement is a public company's corporate filings. Public companies are required to file their income statements, balance sheets, and cash flow statements (amongst other things) every quarter, and by finding one or two in your industry, you can get a sense of what the business world at large considers to be the most important information. Take note of the key line items, such as the various revenue categories, cost of goods sold/cost of services, and operating expense breakdowns. Don't worry too much about the more complex accounting lines, such as goodwill or noncontrolling interests, unless you know they pertain directly to your business. 2. Projecting revenuesOnce you have a baseline for what line items you're looking for, revenues are a great place to start. You already have a good understanding of how your business makes money. The key here is breaking down your revenue into different "streams" that make the most sense for your business and industry. Maybe you sell items in a brick and mortar store and online. Those would be two different revenue streams. Alternatively, your revenue streams could be the products you sell and the service revenue that comes along with continued maintenance of those products. For us, we noticed that our industry looks at in-store revenue versus the revenue that comes from selling our coffee wholesale or to grocery stores, so that's where we started. What drives each one of those streams? For our cafés, it's a factor of how many people come in each day and how much money they spend. The goal here is to take the abstract number of "Café Revenue" and break it down into each of its critical pieces, which are concrete and much easier to conceptualize and project. From there, you multiply them together. For my company, it looks something like this: Daily Café Revenue = number of cafés x number of people per day x average cups of coffee per person Those numbers are much easier to find and track than trying to run trend analyses or looking just at the historical dollar values. You can get more nuanced with them as well—maybe your business has a seasonal tendency, or maybe there's a weekly cadence to your business flow. As long as you can break it down into its different parts, you'll be able to make these projections happen! 3. Variable expensesVariable expenses are those that depend directly on your revenue. You'll see them on your income statement primarily as cost of goods sold/cost of service, with some as operating expenses. Let's look at a cup of coffee. We figured out in our previous example around how many cups we'll be selling in a day, and now we want to figure out the variable costs: the cup and lid, the coffee itself, the water that goes into brewing, the syrup for flavor, and any milk or other add-ins. Adding those up and multiplying by the number of cups sold per day gives us our variable cost. Of course, your business will probably be a little more complicated than this. Maybe your products have different sizes and costs, or different services cost different amounts to perform. As long as you can point to those numbers down the line and explain your assumptions, you are good to go! Other Articles From AllBusiness.com:
4. Projecting fixed costsFixed costs are much simpler to project. These are the costs that you will incur, regardless of how much you sell. They generally fall into a few categories, such as salaries, rent expenses, equipment costs, or other such costs that you know you'll have to pay, regardless of if you sell one item or one million. For many of these types of costs, they are either the same year-over-year, or grow at a fixed, predictable rate, like a rent increasing 2% each year. You can predict and project those out, and they will generally make up your operating costs, non-operating costs (such as interest on loans, etc.), and potentially a small part of your cost of goods sold. From here, you just need to put the income statement all together, fill in any missing lines (taxes, for example), and you're good to go! 5. Building out the balance sheet and statement of cash flowsThese two statements are a bit more accounting heavy. A third party may only need to see the income statement projections, and then will simply ask for the actual balance sheet and cash flow statement as of your last fiscal year or quarter. In that case, you may not even need projections for these two as much as accurate statements from your past few periods of operation. If you do choose to project out your balance sheet and statement of cash flows, the process is pretty similar. Take a public company or other comparable financial statement from your industry, and start filling in the lines. You should be able to go line by line with your income statement, and build out the statement of cash flows based on how much cash you started with. The bottom line of the cash flow statement is the cash on hand at the end of the period, which flows directly into your balance sheet. Before you get started …Building your business financials is no easy task. Projecting them out into the future is even harder. As you take this on, just remember that while it's not the most exciting or interesting project, it can help you down the line, not only with your partners, but in planning and deciphering what areas of your business are poised for success, and what may need to be fine-tuned. Keep track of your assumptions so you can explain them, and take the complicated items and break them down so you and your team can better predict and understand the key drivers. Finally, always remember that these are just projections. As useful as they are, they should play only one role in your decision-making process about what's best for your business. RELATED: What Advice Are Venture Capitalists Giving to Startups in Light of the Coronavirus Crisis? The post Looking to the Future: 5 Steps to Better Financial Projections During Covid-19 appeared first on AllBusiness.com. Click for more information about Guest Post. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.  |
| The 7 Key Elements Your Website Landing Pages Must Have to Be Successful Posted: 11 Oct 2020 06:00 AM PDT By Marcus Cook A landing page is the website page that users land on after they click on a link in a search engine results page, a marketing promotion, or an online advertisement. By optimizing your landing pages, you can improve the results of your PPC campaigns and maximize ROI. There are many aspects that go into designing a high-converting landing page, but we will focus on the seven key elements to maximize your chances for success: 1. Keep ads and landing pages consistentIf you are running ads to get people from Facebook to your landing page, make sure the acquisition process is seamless. If there is a disconnect from what the ad promises and what the landing page shows, it will turn the customer off. Don’t offer free shipping in the ad to get people to the offer and then not offer it at checkout. Also, be sure you are consistent with the aesthetic of your page. If your ad has a blue image, your landing page shouldn’t have a red background. It breaks the user experience and will make customers hesitant to move forward. Make sure that not only your messaging is consistent, but also the experience. 2. Grab their attention with your headlineOn average, if 10 people see your ad, eight people will read your headline, but only two will read your copy. Therefore, it’s important to optimize your headline as much as possible. I do this is with what I call “The 5-Second Rule.” The 5-Second Rule means if you show a landing page to a stranger, would they know what you are selling within the first five seconds? If not, then you need to rewrite your heading so that your offer is clear and compelling within the first five seconds. 3. Create a compelling call-to-actionSo many people just have “Submit” as their call-to-action (CTA). This one flaw can severely impact the outcome of your campaign. Your CTA should entice your viewer to click on it. For example, if you are offering a free e-book, your CTA shouldn’t be “Download Now”; it should instead be “Download My Free E-Book.” This simple change in wording not only makes your CTA more compelling, but also more warm and friendly. 4. Talk like you’re speaking to a friendMany landing pages talk in a “sleazy used-car salesman” tone: “For a limited time only, you can get two bottles for the price of one …” And then a countdown timer appears at the top of the page, which everyone knows isn’t real, trying to pressure us to buy. The goal of a landing page should be to sell without sounding like a salesperson. The way to do that is by talking in the same way you would to a friend. If you wanted to recommend a product to a friend, how would you do it? You wouldn’t try to trick them or pressure them into buying. You would just show them the benefits of your product, the reviews, and explain how the product has made a positive impact on your life. Other Articles From AllBusiness.com:
5. Keep conversion forms easyWhen getting someone to opt-in for a webinar or to download an e-book, it’s a best practice to only ask for what need to know and nothing more. If you’re taking sign-ups for a webinar and all you need is an email address, then that’s all you should ask for. Don’t ask for a phone number, DOB, address, or anything else. People have short attention spans and also don’t like sharing personal information. If someone is simply downloading a swipe file, they shouldn’t have to tell you where they live. The only exception to this rule is asking for their name. This could be beneficial down the road in future email campaigns. If you have someone’s first name, you can refer to them by name, allowing you to come off as a friend rather than salesperson. However, by no means do you need someone’s name to market to them and establish rapport. 6. Focus on benefits, not featuresWhy was the iPod the most successful portable music player in the early 2000s? Was it because it was first to market? No. The portable music player first got introduced to the market in 1998. Was it because it had the most storage? No. The iPod had a significantly smaller drive than competing MP3 players at the time. So what was it? When Steve Jobs introduced the iPod to the market in 2001, he did so with the slogan, “1,000 Songs in Your Pocket.” At the time, every other company centered its marketing message around its storage space, its hard drive, and design. They all focused on the features of their product; Jobs focused on the benefits. When writing the copy for your landing page, remember to focus on your product or service’s benefits, not its features. No one cares that Michelob Ultra only has a 4.2% ABV. People care that they can drink the beer while still following a low-carb diet. 7. Test everythingToo often, I’ll see a marketer run a campaign, and if the results weren’t as expected, blame the ad instead of the landing page. However, I always implore them to look at how much traffic they are driving to the page because if they are getting clicks but not conversions, it often means the issue is with the landing page and not the ad. So what exactly should you test? Everything you can.
It’s important is that you test each item one at a time. If you test all the variations at once, you won’t know which change may be increasing or decreasing sales. Start by testing only headers. Once you find out which header works best, then test the CTA, and work your way down the list. RELATED: 10 Copywriting Tips to Boost Your Website's Conversions The post The 7 Key Elements Your Website Landing Pages Must Have to Be Successful appeared first on AllBusiness.com. Click for more information about Guest Post. Copyright 2020 by AllBusiness.com. All rights reserved. The content and images contained in this RSS feed may only be used through an RSS reader and may not be reproduced on another website without the express written permission of the owner of AllBusiness.com.  |
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