We are starting to see a shift in business. While things may still seem a little tough out there, we are optimistic. More of our clients are hiring and reporting higher profits. However, we realize that funding is still tight, government regulations are restrictive, and consumers aren’t spending at pre-recession levels.
This remains a difficult economic environment. But it’s possible to have a profitable, growing business in this economy. Follow these steps for a breakout 2015.
1. Develop a plan.
Had enough of the rollercoaster? Planning can help. Follow this simple process:
- Write down your goals. It’s simple, but many business people proceed without deciding what they want and are surprised when results disappoint. Be specific and determine ways to measure success.
- Develop a plan to achieve your objectives. Map out clear action items, completion dates and the name of the one person responsible for each step.
- Execute your plan and review progress periodically. Make the reviews a priority or the urgent will overtake the important. Don’t fall into this trap.
2. Start with good people.
Entrepreneurs often struggle with decisions about underperforming employees. It’s especially difficult when a loyal employee can no longer perform because the job has outgrown his/her abilities. Owners can be reluctant to remove such employees.
- As you begin 2015, review your goals and action steps. Imagine the roles, skills, behaviors and cognitive capabilities your organization needs to achieve its goals.
- Take a hard look at your team. Do your employees have, or could they reasonably acquire the skills and other attributes necessary to complete your plan? If not, make the difficult decision now. Delaying will hurt your business and the decision won’t get easier.
3. Avoid the insanity trap.
Are you doing the same thing expecting different results? Poor processes breed poor results. To do things faster, at a lower cost, and with better quality in 2015 develop better processes.
- Document your existing processes. It’s not sexy, but this is the only way to ensure consistency across the organization. You can’t improve processes until you agree on how things are currently done.
- Look for ways to streamline the operation. Remove wait time. Perform steps in parallel. Eliminate unnecessary steps. Automate where possible.
- When a problem appears, fix it. The customer is the priority. However, the work isn’t done until you fix the underlying cause. Fixing the root cause will improve quality in the future.
4. Measure performance.
Make effective use of your financial statements:
- Financials should generally be prepared on an accrual basis rather than on a cash basis. This will better match expenses with revenue and facilitates better decisions.
- Develop profit and loss statements that separate the cost of delivering a product or service from overhead.
- Separate expenses and/or revenue by manager or area of responsibility. This allows clear accountability.
- Produce financial statements within two weeks of the close of the month. Delays mean problems go unnoticed.
As the business grows, additional metrics become necessary. By the time problems turn up in the P&L, it can be too late. Develop the appropriate metrics.
Things are looking up for many organizations. Be ready to capitalize and have a banner year by following the four tips outlined above.