New Year's is traditionally a time to make resolutions for the upcoming months. Once you set your personal goals, it's time to get serious about your business goals. Here are ten resolutions you might consider making — and sticking to — to put you on track to prosper in 2019.
1. Compare 2018 financial performance to the budget. Did you meet the goals you set at the beginning of 2018? If not, why? Analyze variances between budget and actual results, and evaluate what changes you could make to get closer to achieving your goals this year. In some cases, you might need to look at several years' results to understand what's happening and how problems can be resolved.
2. Create a three-year capital budget. What large investments will you need to make to grow your business and maintain its competitive edge? Such investments can be both tangible (for example, purchasing new equipment and launching new product lines) and intangible (for example, training to develop employees' technical and soft skills).
The depreciation deductions reported on your income statement aren't just bookkeeping notations. Machines, equipment, furniture, vehicles and other types of capital equipment eventually wear out and become obsolete, so you'll need to maintain, update and replace these assets on a regular basis.
3. Assess the competition. Make an honest appraisal of the quality of what your business sells versus what competitors sell. Are you doing everything you can to meet (or exceed) customer expectations? Staying ahead of the competition is critical in a free market economy. Loyalty and inertia will allow you to retain some customers over the short term. But, over the long run, you'll likely be out of business if you lose your competitive edge.
4. Nurture vendor relationships. Many companies are so focused on building and maintaining customer relationships that supplier relationships fall by the wayside. At the start of each year, review your contracts with key vendors to find out whether their products and services are fairly priced. Long-term vendor relationships can be helpful if you need to ask for more generous payment terms or a rush emergency shipment. But periodically renegotiating contracts or even switching vendors can help ensure that you're getting the best possible terms and service.
5. Benchmark employee compensation. Look at your entire compensation package, including wage and salary rates and benefits. How does it measure up against competitors? In today's tight labor market, employees might be tempted to leave for greener pastures. So, review compensation studies and job listings — or talk to local recruiters — to gain some objective insight into what's reasonable in today's job market.
You might not be able to afford immediately giving workers a large pay raise. But you can react sympathetically if an employee asks for a raise, make gradual increases to improve below-market rates, or find low-cost ways to boost morale and prevent turnover.
6. Review insurance coverage. Don't assume that your insurance agent is on top of your property casualty and liability coverage. Property values or risks may change — or you may add new assets or retire old ones — requiring you to increase or decrease your level of coverage. A fire, natural disaster, accident or out-of-the-blue lawsuit that you're not fully protected against could put your business on a downward spiral. Along similar lines, be sure you have current operational contingency plans to stay open and minimize disruptions in case disaster strikes.
7. Seek independent feedback on marketing efforts. Companies often spend a lot on marketing. But are your efforts generating tangible results? Set up focus groups or hire outside professionals to evaluate the quality of your company's website, branding, advertising and social media presence. Then review the findings with an open mind. Address any shortcomings and consider discontinuing ineffective campaigns. It's easy to fall in love with your creative efforts, but your customers might have different opinions.
8. Conduct a personal time assessment. Business owners tend to be overachievers. But there comes a time when you need to delegate lower-level tasks to others. Controlling everything 24/7 can wear you down. It also sidetracks you from two critical tasks: 1) proactive, strategic planning, and 2) building a successful management team. Gradually transitioning managerial tasks to subordinates builds their confidence and improves job satisfaction. Employees are loyal to employers who provide opportunities for professional development.
9. Conduct a personal skills assessment. Do you (or other members of your management team) need to acquire any new skills or knowledge to help run the business more effectively? Highly effective people seek continuous improvement and renewal, both professionally and personally. Complacency is bad news for growing your business.
10. Analyze market trends. What direction is your industry heading over the next five or ten years? Consider trends in technology, the economy, the regulatory environment and customer demographics. Anticipating and quickly reacting to trends are the keys to a business's long-term success. Companies don't operate within a vacuum. Trends can be positive or negative, creating either opportunities or threats. Either way, it's important to give yourself time to formulate a strategic response to make the best of it.
This may be a daunting list. But as the familiar Chinese proverb states, a journey of a thousand miles begins with a single step. Happy New Year!
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