The holidays are upon us: parties, shopping, catching up with relatives, meeting work deadlines, closing out the books for the year and taking much-needed time off. These are all important, but it’s also important to take a hard look at where your business has been for the past year, and where you want it to go next year.
Here are a few suggestions on how to make the most of that process.
1. Clear Your Head
The economy has been pretty good the past few years. But there are definite signs of trouble lately. Whatever your perspective is on the economy and business, it can’t hurt to change your point of view so you can clearly see the forest for the trees.
For most people, the quickest way to accomplish this is to do something completely different — something that doesn’t allow you to follow your daily routine.
It might be a week-long vacation to the Bahamas, a weekend trip to New Orleans, a three-day fishing trip in the Canadian woods, a long weekend watching sports or just a few days off reading poetry.
But whatever you do, make sure it is a distinct break from your usual routine. Also, allow enough time to really unwind. This varies widely from person to person. For some people, it only takes a few days; for others, it takes weeks. But you need to do it at least once a year so you don’t burn out.
2. Get The Facts
Once you’ve cleared your head, you can start working again. No matter how large or small your business, you can’t make decisions without facts. While there are a lot of things you can look at, the most important things are fairly simple.
Gather all of your financial statements — balance sheet, cash flow statement, income statement— for the year, along with summaries of other aspects of your business — people, processes, marketing, sales, vendors, partners, competitors and market trends.
3. Do The Math
Now that you’ve gathered the facts, you’ll want to go through everything at a high level, and then in more detail.
- What is working and what isn’t?
- Where are you exceeding expectations? And where are you lagging expectations?
- What can you change now? And what should you change over the next year or two?
- Do you have the right people in the right positions?
- Are they compensated fairly and according to their value?
- Do you have the right processes in place?
- What can you automate?
- What can you streamline?
- What can you eliminate?
- Are there any areas where you should add resources, people or systems?
- Do you have any partners?
- If so, are they the right partners?
- Are they helping you as much as you are helping them?
- Are there other groups you should partner with?
- Is your marketing effective?
- How do you know — are you tracking any metrics?
- Are you tracking the RIGHT metrics?
- Are you taking advantage of new channels, such as social media or search engine optimization? Or are you just doing what used to work, hoping it will continue to work in the future?
- Or do you have one of those companies where you don’t bother with marketing because it just seems like an unnecessary expense?
Despite rumors to the contrary, marketing and sales are NOT the same thing.
- Are your sales and marketing messages, campaigns and people working together in a synchronized manner?
- Or are they disjointed? Or worse, are they fighting each other?
- Are your salespeople meeting your expectations?
- Are they under- or over-compensated?
- Is their compensation properly aligned with your company’s goals?
- Do you have the right vendors in place?
- Have you spoken with them recently?
- Are they really working in your best interests or is this an adversarial relationship?
- Are they financially stable?
- Have you looked at your competition lately? If not, you should; they have probably changed. You may have new competitors, or your competitors may have joined forces, or they may have shifted operations overseas.
- Are they gaining market share at your expense?
Review your customers, regardless of your industry.
- Who are they?
- Who are your best customers?
- What do they have in common?
- Can you replicate the best customers through targeted marketing?
- Are they getting the best customer service you can provide?
- Have you told them you appreciate them in any way other than a product or service promotion?
- Have you asked for reviews?
- Are there any new government regulations that will affect your industry — either positively or negatively?
- Are there demographic, cultural or technology shifts that could affect your industry? (Think about digital cameras versus smartphones — digital cameras are losing; smartphones are winning.)
- Is your industry growing or shrinking?
- Is this trend likely to continue in the long term? Or is this just a short term concern?
4. Plan and Act
Once you’ve done your analysis, the next step is to formulate a plan of action. It should incorporate strategies and tactics, budgets, resources, timeframes and goals. But most importantly, it should be prioritized.
Focus on the big and easy wins first; don’t try to accomplish everything all at once. Don’t waste time on a plan that is so grand and majestic that it will just sit on a shelf and accumulate dust. If you identify 17 areas for improvement, focus on 3 of them rather than trying and missing on all of them.
These decisions are usually determined by your budget and resources; the smaller your budget and the fewer your resources, the more focused you need to be. But once you solve the first few problems, money and resources will be freed up for other problems, and you can really start moving forward.
Most successful business owners do all of this every year; others just close their eyes and hope for the best. Sometimes they do well, but their good luck will eventually run out.
In these uncertain economic times, good planning is more important than ever. If you do it right, it will lead to stronger growth, a healthier bottom line and fewer sleepless nights.
- Interview with David Johnson - January 7, 2019
- Taking Stock - December 24, 2018
- Sell Your Business For More - December 5, 2018
- Six Areas to Determine the Health of Your Business - October 22, 2018
- Interview with Helena Swyter at SweeterCPA - September 13, 2018
- Two Ways to Grow Your Business - July 31, 2018
- The Driving Force of the US Economy - July 16, 2018
- What Goes Into a Restaurant Feasibility Study - July 10, 2018
- Business Assessments – A Critical Component in Your Company’s Success - June 4, 2018
- Interview with Valerie Drame’ at Drame’ Designs - May 31, 2018