As each new year approaches, business owners should be taking stock of their businesses, evaluating new opportunities and setting goals & objectives for improving and/or repositioning their businesses for the future. These goals & objectives should be mindful of “where you are,” “where you want to be,” and “how you are going to get there,” and (like all goals) be realistic, achievable, time-specific, and data-driven.
The following fifteen- (15) questions are broken down into “planning,” “process,” “product,” and “people” considerations and reflects best practices I advise small business owners to embrace when creating a future vision to work smarter and maximize the potential of their businesses in the upcoming year.
A. STRATEGIC PLANNING QUESTIONS:
1. Do You Know Where Your Industry Is Going ?
Performing industry research can be conducted in many ways: talking to customers, vendors & outside consultants, using Google Analytics, networking at professional society meetings, perusing industry publications, reading local newspapers and listening to the local news. This past summer while working with an HVAC contractor in Alabama, the business owners learned about a new technology to identify leaks in ductwork systems that could be a new profit center for their business. This lead came from one of their suppliers.
2. Is Your Business Plan Still Relevant ?
Each section of your business plan should periodically be reviewed. These sections include your vision & mission statements, management team, operations, marketplace, marketing strategies, product / service benefits, customer base, financial projections, competitor analysis, and your unique selling proposition. Performing a SWOT analysis — which stands for “strengths,” “weaknesses,” “opportunities” and “threats” — can identify needed changes in these areas, as well as other areas of your business.
Revising your mission and vision statements can give you a renewed sense of purpose, motivate your employees to do their best work, ensure that your activities speak to one cohesive strategy, and put your business on the best path for growth and long-term profitability.
Don’t overlook significant economic trends and political changes when reflecting on your goals & objectives for the upcoming year. For example, this year there are tax law changes the current administration passed last year that could positively impact your business in 2019.
If you don’t have a business plan, its never too late to put one together. Business plans can be particularly helpful if you need a business loan, as statistics reveal that businesses with business plans are more successful in growing their business than those that do not.
3. Do Employees, Customers, Vendors & Outside Consultants Have Ideas That Could Improve Your Business ?
Early in the consulting process, I always spend time with the client’s key employees, company experts (like their CPA) and, occasionally, I talk to the client’s customers and vendors about ways the business can improve, because these people often have unique insights about the business.
Some businesses have employees complete an annual survey to identify ways the business can improve, and, I think, this is a great idea ! When you solicit input from your managers and other key employees, you are almost certain to get some very good suggestions and they will appreciate that you asked them for their input.
4. Is Your Exit / Succession Plan Current ?
If you don’t have an exit / succession plan you should create one, because you may not be in control of when you exit the business. Most business owners I meet with do have key man life insurance and/or a buy-sell agreement in place, which is a good start, but it’s hardly a formal succession plan. [For more information about succession planning, Google my article on succession planning.]
5. Have You Created A Budget for The Upcoming Year ?
When performing a financial review of your business, you should always be looking for ways to improve your business performance in the coming year. The best run businesses I work with compare the current year to the previous three-(3) years, and look for the “best demonstrated performance” against which to benchmark future performance as a way to continually improve.
Budgets should be tied to your strategic plan and serve many purposes: in addition to helping you establish areas for improvement, they can be used to identify standards of performance, allow you to check your overhead & pricing, and give you a way to think about employee incentives.
If you need short-term capital to invest in your business, you might want to consider getting a line of credit, or expanding your existing line of credit. If you have a line of credit with your bank and haven’t paid it off in the last 12 months, you should budget to do that to stay on good terms with your lender.
6. Have You Identified Qualitative Goals & Objectives for The Upcoming Year ?
When coming up with goals & objectives for the next year, think broadly. For instance, in addition to setting “quantitative” goals and objectives when creating a budget, you should also identify “qualitative” ones. Qualitative goals relate to the quality of something — for instance, improving the look of your web site. In addition, you should be coming up with both “tactical” and “strategic goals & objectives.” Strategic goals are goals that take more than one year to accomplish and considered long-term goals, as opposed to tactical goals, which are considered short-term and should be completed in a year or less.
B. PROCESS / SYSTEMS IMPROVEMENTS:
7. Are Your Corporate Meeting Minutes Current ?
Organized business records are required by attorneys, CPAs, bankers, state agencies, et. al. and provide important information about the business. Many businesses today are digitizing their information and improvements in automated record-keeping software solutions is making it easier than ever to stay on top of your business records.
In many of the businesses with which I work, it is common to see that their corporate meeting minutes aren’t current. At the beginning of each year, you should hold a meeting with the directors of the business to discuss things like how the business performed during the previous year, future goals & objectives, needed capital expenditures, legal issues, etc., and these meeting minutes should be documented in your corporate records. Remember, business address changes and changes with your registered agent need to be reported to the proper authorities in a timely manner.
8. Have You Taken Steps To Protect Your Information Technology ?
Performing regular software updates, downloading patches to combat cyberattacks, and ensuring regular backups to avoid a ransomware attacks are three-(3) things you should be doing to ensure adequate IT security. [As I am planning on talking about cybersecurity for small businesses during my next Price of Business broadcast, don’t miss my next broadcast to learn more about ways small businesses can strengthen their information technology.]
Looking at several operational software packages for your business is also important, as there are a lot of exciting things happening in this space to improve employee productivity and enhance real-time reporting — they are secure, and the costs for these solutions today are more affordable than ever !
9. Do You Have Any Business Risks That Need To Be Addressed ?
You should always be brushing up on the legal aspects of your industry and doing whatever is required to keep your legal risk to a minimum. Laws and regulations often change, and, while many entrepreneurs rely on attorneys, CPAs and insurance agents to deal with the finer points, understanding the major issues can keep you out of trouble. Entrepreneurs should understand federal, state and local laws, and the Internet is a great resource about legal and regulatory changes in your industry. As needed, you should update your company policies and procedures to reflect these changes, and you should be proactive in addressing any open legal issues.
10. Are Your Business Processes Both Documented And Current ?
Having a clear process that every team member understands is extremely important. As people, customers and work processes change in your organization, it is always a good idea to document these changes. I like using a “narrative process flowchart,” which is simply a list of numbered instructions, as this format is easy to modify and a great way to communicate your process to both new and existing employees.
C. PRODUCT CONSIDERATIONS:
11. Are Your Product & Service Branding, Sales, Marketing, and Customer Service Efforts Unified ?
It’s very important today for companies to create coherent brands that stay on message across multiple channels and throughout the sales process; thus, your products, services, branding, sales, marketing and customers should all be reviewed each year. Essential questions to ask include: How do we stack up against the competition ? How can we provide more value and better customer service to our customers ? And how can we get more sales from both existing and new customers ? Its also a good idea today to think about how you can improve your social media presence.
12. Are There Opportunities To Improve Your Inventory ?
Are you using the latest technology to manage your inventory ? Are you measuring your inventory turns ? Do you have obsolete inventory you can sell on E-Bay ? Do you need to change you inventory mix ? Can you improve your shipping costs ? There are also always opportunities to make annual improvements to your inventory.
13. Have You Set Realistic Expectations for Your People ?
Setting realistic expectations for your employees, strengthening management accountabilities, and incentivizing the achievement of the New Year’s goals & objectives can be very impactful on the performance of the business. Periodic meetings to discuss challenges and accomplishments are an effective means for soliciting feedback from your people and keeping the team on course.
14. Have You Performed Employee Evaluations And Set Goals & Objectives for Each of Your Employees For The Upcoming Year ?
Companies should be conducting quarterly employee evaluations and coaching employees to meet their performance objectives and to become even better. If an employee is not performing to standard and your efforts to correct their behavior is ineffective, they may need to be replaced. Those employees who are keepers, however, should have annual training and development goals & objectives to continually improve.
Evaluating your vendors each year is also a good idea. You should ask your suppliers how you can get more value from the relationship, and you should be checking prices on the Internet. In some cases, the relationship might have to get back on track; in other cases, you might need to find new vendors.
15. Last, Do You Have A Hiring Plan ?
Most businesses today are looking for applicants to fill open positions. You might need to create a hiring plan to either replace marginal employees or hire new employees. Make sure you have a good plan to find qualified candidate for positions you need to fill.
After brainstorming with your employees about the above, your goals and objectives for the upcoming year should delineated by organizational function, department, employee and profit center. Next, your goals & objectives should be prioritized. Some solutions will require a short-term solution, an intermediate-term solution, and a long-term solution.
Your strategic plan is completed by communicating your tactical and strategic action plans for the year to employees, assigning tasks & duties, agreeing on deadlines, and then working your plan. After rolling out your strategic plan, it should be reviewed at least quarterly.
In conclusion, a strategic plan provides clarity, vision, and focus for your employees, ensures proper alignment of your company’s resources, identifies future financial needs, improves unity throughout your organization, and makes sure that you remain competitive in the marketplace. It’s also an opportunity to reflect on your past successes.
Some business owners conduct their strategic planning meetings away from the office to help managers focus on the task at hand. Whether you conduct your strategic planning in your office or outside the office, every business should engage in strategic planning each year.
Why engage in strategic planning every year ? I think Yogi Berra said it best: “If you don’t know where you are going, you are certain to end up somewhere else.”