Getting the MOST out of Your Business in 2012: Four Tips to Have a Banner Year
By Doug and Polly White, Contributors, US Daily Review.
During the research for our book, Let Go to GROW, we spoke with more than 100 entrepreneurs and discovered that it’s possible to have a profitable, growing business in this economy. However, you may need to make changes. Follow these steps for a breakout 2012!
- Adventure is just bad planning – Had enough of the rollercoaster, planning can help. Follow this simple process.
- First, write down your goals. What do you want to achieve in 2012? It’s a simple question, but many business people proceed without deciding what they want and are surprised when results disappoint. Be specific and determine ways to measure success.
- Second, 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. When more than one person is responsible, no one is accountable. Don’t assign more than one person to any single action step.
- Finally, 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.
- Start with good people – Business people can struggle with difficult employee issues including underperformance, poor attitudes and mismatched skills. It is especially difficult when a loyal employee can no longer perform well because the job has outgrown his/her abilities. Owners are reluctant to remove or layer the employee who is no longer suited to a position. The situation is bad for all concerned.
In 2012, review your goals and action steps. Imagine the roles, skills, behaviors and cognitive capabilities your organization needs to achieve its goals. Finally, take a hard look at the individuals on your team. Do your employees have, or could reasonably acquire the skills and other attributes necessary to complete your plan? If not, you have some difficult decisions.
Don’t delay. We have never heard anyone say, “I think I let Mary go too soon. She deserved more chances.” However, we have often heard business people lament that they wasted time and opportunity by giving employees chance after chance. You need good people. Help your folks develop the skills they need or hire folks that already have them.
- 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 2012 develop better processes.
First, 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.
Next, look for ways to streamline the operation. Remove wait time. Can steps be performed in parallel? Can you eliminate unnecessary steps? Can you automate pieces of the operation? Answer these questions to identify faster, lower cost processes.
Finally, when a problem appears, fix it. The customer is the priority. However, the work isn’t done until you fix the underlying cause. Ask, “What will ensure that this never happens again?” Fixing the root cause will improve quality in the future.
- Measure more than once – First, for better management decision-making, financials should generally be prepared on an accrual basis rather than on a cash basis. Accrual accounting does a better job of matching expenses with revenue. Second, P&Ls that show revenue, several cost categories and a bottom line profit are less useful than they could be. Instead, separate the cost of delivering a product or service from overhead. Third, separate expenses and/or revenue by manager or area of responsibility. This allows clear accountability. Finally, produce financial statements within two weeks of the close of the month. Delays mean problems go unnoticed.
When a business grows beyond a simple structure, additional metrics become necessary. Most owners can’t possibly know everything that is going on in the business. By the time problems turn up in the P&L, it can be too late. For example, if shipments are late, this will eventually show up in the financials as lower revenue because frustrated customers have taken their business elsewhere. Unfortunately, the damage is done. What’s needed is a metric that alerts the owner to late shipments while there’s still time to make corrections.
Times are tough, but businesses can ensure that 2012 is more Pop that Poop by following the four tips outlined above.
Doug and Polly White are Principals at Whitestone Partners; a management-consulting firm that helps small businesses build the infrastructure they need to grow profitably. They are also coauthors of the groundbreaking new book, Let Go to GROW; why some businesses thrive and others fail to reach their potential (Palari Publishing 2011) which was named best business book for 2011 by the National Federation of Independent Business – NFIB. The book explains how entrepreneurs can avoid the most common pitfalls as their businesses grow and is available at www.WhitestonePartnersInc.com They have recently become US Daily Review contributors.