Reactive Versus Proactive

Are you Reactive or Proactive in your business?

There is a big difference between being proactive and reactive in your business. Successful business people focus on being proactive. Being reactive is not only stressful and potentially expensive, over time it could kill your business.

How do Proactive Business owners act?

Most often they:

  • Plan ahead- knowing what the next 1, 6 and 12 months should look like is most important in business today. Proactive business owners set goals and regularly look at these goals to update if necessary and to make sure they are staying on track to achieve the results they want.
  • Have Budgets- they know what their goals are, in terms of sales, customer retention, average sale etc. They also plan their marketing spend, general business spending and set goals for return on investments. Without these budgets, one can easily overspend in many areas without even knowing it. Having budgets helps us to avoid being ‘sold’ programs and ideas that are not useful to achieve the goals we have in place.
  • Understand the financials of their business- they do not wait until their accountant tells them business is okay to know business is okay. They check their sales, Profit & Loss statements, and balance sheets regularly. They know exactly where they are financially every month and then have the information at hand to stop doing what they should not be doing or introduce something into their business that can achieve positive results.
  • Focus on the business and customers they want to attract- they know who is profitable and who is not. Proactive business people know and understand who their A, B, C and D clients are and they work on removing the D clients and attracting more A clients. They don’t waste valuable time and money attracting the wrong customers to their business.

How do Reactive Business owners act?

Most often they:

  • Never plan- they are scrapping by day to day hoping they will still be in business in 6 months. Their daily tasks include more of making desperate sales calls rather than planning ahead to contact consistently the A type of clients. These people work ‘in their business’ most of the time and never seem to have time to work ‘on their business’.
  • Never set budgets- they are unsure how or why budgets are valuable tools or simply don’t see any benefit in having them. Some of these business people are far too scared to set budgets in fear they will not have the cash flow to sustain them. Often if cash flow is an issue, having a budget is so stressful that even if a business owner has one, he/she rarely looks at it or uses it as a useful business tool.
  • Hide form the financials- they don’t understand or want to know about the financials of the business. They hope that someone else has this under control for them. They are not sure who they owe money to and worse, who owes money to them. We all need to have a reliable and efficient accountant who can help us with understanding our financials and the projection for our business, but we as business owners need to understand our own financials and exactly where we are in relation to our finances.
  • Take any business from anyone- they are so desperate for cash they take any customer they can, regardless of how profitable the work might be. They continue to work for customers that fail to pay on time and they discount prices and under quote just to get work in the door. If we understand our financials and what our ‘break even’ is in regards to working with clients, we will be able to do better quotes and attract the right clients.

Often people start out in business because they are good at and love doing what they do. Most often, these people have not had any formal business management training and do not even know how to run a profitable business.

Business can be scary and the financials alone frighten the heck out of most people.

Do you identify with the proactive or reactive business owner? Maybe you identify with a bit of both. There is no shame in seeing yourself reflected in the reactive business owner.

The important thing is that you do something to change!

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