By Bill McBean
When you run a business, there are always some certainties as you look into the future. In 2013, you know your best competitors will work to become better. You know your customers will demand more. You know you’ll have to work smarter and harder every day to improve your bottom line. You should also know that this year brings with it new taxation and new regulations that may add expenses and affect the way you operate your business. And of course, you face the usual headaches and worries that come with the day-to-day business of running a business.”
Often, entrepreneurs don’t make the best planners. We are action-oriented people. But by taking a long hard look at a few critical pieces and putting a plan in place right now, you can have a much more prosperous year. In this post, I’ll share some ideas for what you can do internally — with processes, employees, yourself, etc. In my next, I’ll share what you need to do externally — with customers, marketing campaigns, and so on.
1. Evaluate your leadership. Entrepreneurs tend to be ready, fire, aim kinds of people. But the truth is, if you don’t improve your leadership skills, there is little chance your business can improve. Being a great leader begins with a self-analysis of your leadership ability. Next, look carefully at what’s working for your business and what isn’t. Start with a post-mortem of 2012. Did you supply the business with what it needed to be successful — things like the right equipment, your focus and time, required capital, assigning responsibility and expectations, and so on? Did you have the right people in the right chairs? Did you let any bad habits slide that need to be addressed? What should you do differently this year?
Without effective leadership, your employees have no idea what is important, what to manage, or what success and failure look like. In order to have effective employees, your business first has to have effective leadership, and this starts with the owner.
2. Do a top-to-bottom walk-through of your systems and procedures. Examine which processes are working, which need to be improved, and which processes are outdated and exist only because “it’s the way it’s always been done.” For example, your inventory has to change with the market, as do your pricing policies. Your systems and procedures must be able to keep up with these rapid changes. Or maybe your business has fallen into bad habits — for example, overlooking employees who don’t perform as expected, or are continually negative and affect other employees’ attitudes. In particular, look for inconsistencies in how employees handle tasks, especially those that directly impact customers and those that affect the data you use to make decisions about the business. These two important areas usually get overlooked.
If you’re not controlling your procedures and processes, you don’t really ‘own’ your business. You’re just a spectator watching others play with your money. Great procedures and processes need controls, and these controls in turn create great results and skilled employees. In 2013, rededicate your business to upholding important processes, and your understanding that processes operate your business — and employees operate the processes.
3. Kick off a cost-cutting, gross-profit-building mission. Look for ways to increase gross profit and cut costs as they have a dramatic positive effect on profits and cash flow. For example, look for easy “to bolt on” gross profit opportunities, and get creative when looking at your costs.
Don’t assume that you know how much things are costing you, or that your employees are reacting to new sales opportunities. Take a good look at your books. And know that sometimes you don’t have to make cuts; you simply need to renegotiate vendor contracts. Ask yourself: What expensive mistakes did we make last year? How can we avoid them this year? And what can we do to increase bottom line profits and increase cash flow? Don’t cut out the wrong things, but do look for smart, well-thought-out ways to save money and start building up your cash cushion and profits.
4. Re-engage employees. In this economy, you need employees who care about your business as much as you do. So how do you get engaged employees? Show them you care. Sometimes it’s as simple as saying ‘thank you’ for a job well done either verbally, with a handwritten note, or with a handshake with $20 attached. Or you might allow them to take a paid afternoon off and give them movie passes. One thing that worked well for me in my businesses is supporting the activities my employees’ kids were involved in. Also make sure your employees have what they need to stay engaged. For example, eliminate the frustrations in their job, make sure they have the latest safety equipment, and train employees to know how to handle emergencies or workplace accidents.
5. Set realistic, specific goals for the year ahead. Then, dial up the “aggression factor” just a little bit more. In other words, aim high but be specific. If your goals aren’t measurable, you won’t be able to gauge your progress and eventually you’ll stop pursuing them. Setting realistic goals, putting a plan in place, and routinely checking in with employees to gauge their progress — because what gets measured gets done! — is the best way to be successful. You have to constantly be setting and reaching goals to keep your business moving forward.
Bill McBean, author of The Facts of Business Life: What Every Successful Business Owner Knows that You Don’t, spent years as a successful business owner in the automobile industry, where he purchased several underperforming dealerships and turned them into a successful business with yearly sales of more than $160 million. Follow him on Facebook.