It’s the new year, and you know how you did last year. You’ve identified areas for improvement, which likely fall into the major categories below, discussed in the last post. Here are some typical ways to be better this year, for inclusion in your updated business plan.
1) Cash flow. Plan your allocations for both the predictable (taxes, lease buyouts, etc) and responsive (both opportunities and emergencies). This buffer allows you to smooth out the spikes. Implement tight discipline on invoicing and receivable follow-up. Develop a bad debt policy. Adjust your line of credit, as necessary. And examine product/service mix to determine how best to promote cash flow friendly offerings, as needed.
2) Business development. Too many owners tell me that their business is unpredictable, and maintaining a pipeline is makework. I don’t believe this, but even where it may be true, run rate history can be a substitute guide. Add new customer acquisition strategies, carefully targeted, and measurable. Monitor retention rate. Don’t spend significantly on customer service initiatives unless you detect an issue. Even so, determine which customers are leaving – it may be the ones you don’t want/need. If your business requires proposals to acquire new business, prepare a comprehensive template which allows you to customize, yet respond quickly with minimal effort. Target business with your highest close rate.
3) Gross Margin by product or service. Start protecting your most valuable resources – both in cost and in demand. Adjust processes to outline and delegate responsibilities. Determine if your enabling loss leaders actually result in profitable follow-on business, or if you are better off discontinuing these. Develop service packages which leverage your team’s best skills, and which best utilize plentiful resources.
4) Business Goals. Reduce risk with processes and infrastructure. These can include simple things like insurance & line of credit to new backup or security systems, staff policies and effective HR oversight. Plan your most likely areas of growth, even if you think the time is not yet ripe, because you will know how to respond when the economy or opportunity beckons. Determine easiest places to cut costs if necessary – again not necessarily to implement this now. Plan a new initiative which intriques and scares you at the same time – e.g. online sales, Social Media.
Here’s what Growth Path is planning this year in these categories:
Cash Flow: Develop plan for transitioning contract workers to full time. Increase allocations for emergencies and capital replacements. Review line of credit based on new run rates & staffing.
Business Development: Continue development of service packages. Completely re-design & restructure website to keep it fresh, reflect growing abilities, and meet current/predicted browsing trends. Assign oversight and monitoring responsibilities.
Gross Margin by service: Add new retainer based service packages, which allow effective use of contractors (and build contractor loyalty).
Business Goals: Establish a regular presence in social media – to build relationships, not business. Add new alliances, and implement quarterly reviews of existing ones. Review insurance options. Plan ability to manage transitions, vacations, medical leave, etc.
It doesn’t matter how good or bad last year was, there are always things to do to improve. Let’s get at it!