Do you set personal resolutions for yourself every year? How about resolutions for your business? Yearly resolutions are also known as strategic planning and goal setting. Whatever you call it, it’s smart for small business. Here are six recommended resolutions to consider.
1. Educate Yourself about Finance – How much do you know about finance? The more you know, the better choices you can make for your business. Take time to read and learn. Set a goal of reading one book each quarter covering the following topics: business finances, budgeting, accounting, motivation, sales, organizational efficiency, and technology. Your financial statements will thank you!
2. Don’t Expect Your CPA to Fix Financial Problems – CPAs and Accountants are in a reporting role for your business, not an advising role. They may be able to caution you about overspending, excessive expenses, and how increased revenues will impact your tax liability, but most won’t be able to discern how to configure your sales mix or how to improve your inventory turnover. These are areas you need to get a handle on and make necessary changes when needed.
3. Understand What Drives Your Cash Flow - Have you ever considered why some businesses succeed and others fail? One key ingredient to a successful business is understanding what brings in revenue. Have you ever watch Gordon Ramsey’s Kitchen Nightmares? If not, you may want to consider watching a couple of episodes. He can be a bit crass, but he offers good business advice. In his shows, success always boils downs to a few key actions. One of those actions is getting the restaurant to limit their menu offerings and being the best at making those items.
What makes In-N-Out and Fender Guitar so successful? Limited product offerings. They make and sell limited products, and they make sure they are one of the best! In-N-Out only makes burgers, shakes, and fries. They don’t make hot dogs or nachos. In-N-Out makes the best burgers they can. Fender makes guitars and a few accessories that go with them. They don’t make pianos, harps, or drums; just guitars.
4. Speed Up “Cash Conversion Cycle” – Look for ways to collect receivables faster. Look for ways to take advantage of payables. For example, can you extend payment on an invoice to 30 days instead of 5 days to decrease demand for working capital? Perhaps, a vendor offers payment discounts?
5. Develop Company Strengths Along with Weaknesses – Many business owners focus most of their attention on their company’s weaknesses, but neglect developing company’s strengths. For every identified company weakness, recognize a company strength and work on developing it.
6. Create a Professional Learning Network (PLN) – Professional Learning Networks (PLN) for business owners is building a network where you can learn and help others. It’s not marketing. It’s sharing ideas, being challenged, and staying tuned into your industry. Business owners tend to focus on producing and selling. Producing and selling is important because sales drive revenues and revenues keep the business operational. However, business owners forget to keep learning. Lack of learning can lead to a lack of innovation. New and disruptive innovations keep businesses moving uphill toward success instead of downhill toward liquidation.