It is easier than ever to build an unsustainable business. 2019 saw the largest class of unprofitable IPOs since the DotCom era. This is one of the reasons so many entrepreneurs fail: not investing in a solid financial strategy and not conducting rigorous financial reviews from the outset. But even if you did not always track your expenses as well as you could have, there is usually time to right the ship. And that’s where AVASK’s Growth Advisory Services comes in.
In this fifth instalment of our Growth Advisory Services blog series, we will dive into the world of financial reviews and analysis. This intensive stage includes things like P&L analysis, value proposition guidance, and the benefits of social proofing.
Crunching the numbers: P&L analysis and financial reviews
AVASK starts its financial stage of the consultancy process with an in depth look at your finances. We pour over the books, look at your incomings and outgoings, and complete a P&L analysis.
P&L refers to profit and loss, and a P&L statement is a summary of the company’s revenues, expenses, and profits/losses over a given period. It is generated differently than a cash flow statement, and can communicate a company’s sales generation, expense management, and profit creation.
AVASK’s assessment of your finances will include areas such as:
- Cost savings
- Profit margins
This provides a multitude of clues about where the business can be streamlined and optimised for greater profitability. We will also examine other areas, such as your CTAs and your social proofing. But the first place to look for ways to improve the P&L statement is to evaluate the company’s value proposition.
What’s on: the value proposition
While the value of an entrepreneur’s product or service is often abundantly obvious to them, it is important to ensure that the value is also immediately apparent to customers. The value proposition is therefore central to a company’s marketing strategy. It refers to the promise a company makes to its customers should they buy the company’s product.
AVASK will work with its consultancy clients to ensure that the product offers good value to customers, as well as ensuring that the value is clearly stated. It should summarise why your product or service stands out among the sea of competition. If worded well, it could be the turning point on the path to conversion for potential customers.
This promise should then be followed up with directions on how to acquire the product or service. These directions are referred to as a call to action.
Follow-through and delivery: calls to action
CTA refers to a Call to Action, or the action a marketer wishes their audience to take. This can be making a purchase, sending a query, subscribing to a newsletter, or simply moving someone further down the conversion journey towards becoming a loyal customer.
An effective CTA is obvious and follows immediately on from the marketing message. And with a CTA, you must pair irresistible reasoning for them to follow through. That’s where social proofing comes in.
Tell them I sent you: social proofing
One of the things many businesses struggle with is knowing how to spend on marketing. Because of the uncertainty many entrepreneurs have surrounding the subject, it is often one of the first budgets to be cut when the belt needs tightening. In fact, according to recent surveys, 63% of businesses said they intend to slash their marketing and advertising budgets as part of their own financial reviews.
But this does not necessarily have to mean less marketing activity. There are many organic means of spreading the word, and chief among those is social proof.
Social proof is essentially word of mouth marketing. It includes things like reviews on third party websites, testimonials, and case studies. It is rooted in the psychology of normative social influence, which posits that people will choose a more popular option. This is also the science behind influencer marketing. The only difference is with social proof, the influencer is society itself.
How can AVASK help with your financial reviews?
AVASK focuses on e-commerce sellers and the unique hurdles they face, and we treat your business and entrepreneurial journey as our own. As an accountancy first and foremost, we have years of experience in e-commerce accounting, bookkeeping, payroll, and other critical financial review operations. You will get the benefit of all our knowledge and experience as if we were your own personal finance department.