This post is sponsored by Visa Business. For more information, please see the end of this article.
I’m sure you’ve heard of the classic entrepreneurial saying “Work ON your business, not IN your business”. For most of us, that’s not a real choice, we must do both… kinda… sorta… ok, so we never get to the “on your business” part.
Actually, the end of the year is a terrific time to grab a hot drink, sit back, and work on your business.
But how to get started? Well, if you have created a business plan, it’s time to dust it off. If you didn’t, never fear, there are some key points that will allow you to create an annual touchpoint (although doing this quarterly ain’t a half bad idea!)
There is no point in spending all your “on the business” time re-reading your business plan, we’ll show you how to pull some key elements out of it and create a template that will allow you to focus on the big thoughts.
First, grab your vision statement (what will my business look like in 5 years) and mission statement (why does my business exist). They are great ways to remind yourself of why you got into business in the first place.
Two questions to ask yourself are: “Am I still in the right business? Am I headed in the right direction?”
Right. That’s Done. Whew, that wasn’t so bad, was it? 🙂
Now on to the fun part.
Next we want to create a little matrix. It will involve a list of business objectives, ways to measure success, and a list of to-do’s that will lead to objective fulfillment. Let’s break that down:
Year End Business Health Check Made Easy
A business objective is simply a high level goal. An easy example is “Achieve Profitability” or “Be My Customer’s First Choice In Service Providers”. They should always be action-oriented, and the easy way to do this is to start your objective with a verb. You want to have objectives in each of the following categories:
- Financial – companies with high profit margins can just worry about sales, those with lower margins should worry about sales and profitability. Other options here include financial stability, or regulatory compliance (especially if you are a licensed practitioner)
- Customer – I prefer this terminology to Marketing or Advertising. If you do it right, marketing and advertising should be a function of providing your customer what they want (see “Operational below). Put yourself in your customer’s shoes. What would you want from your company? (Try really hard to be open and honest, don’t limit yourself to what you provide.) Megan and I have spent a lot of time recently talking about this, when you dig in, it can be a revelation.
- Product or Service – Ask yourself if your product or service is all it could be. Most products or services are focused on 1 or 2 of the following: highly personalized to customer needs, lowest cost or most efficient, and being on the cutting edge. Where are you in that spectrum?
- Operational – For product businesses this would involve manufacturing, delivery, the customer’s experience in using the product, etc. For services, objectives would include things like finding repeatable steps in your fulfillment processes. Marketing and advertising are operational items so your objectives for them would go here.
- Assets and Knowledge – These objectives are very foundational. Are you a marketing consultant? How do you keep up with the latest trends? Do you have a widget? Do you have the right engineering and design skills to foster constant improvement?
Although these categories may seem kind of random, they are linked. From bottom to top you could say: If I have the right assets and knowledge, it will allow me to do the things I need to do to deliver the product or service I need to deliver in order to satisfy my customer needs and make money.
Refrain from having too many objectives–your objectives are the items you focus on! You wouldn’t have an objective like “Keep my psychology license up to date” or “get my supplier to make my product”. You want objectives that take your business to the next level.
Now that you have your 8-12 objectives, you need to find a way to measure success. Let’s start by saying, for most of our objectives there is no good measure of success. For that reason, try to find a proxy of success. For example, if my objective is to “Be My Customer’s First Choice In Service Providers” I may choose a measure like “Number of repeat customers”.
Of course, just because a customer comes back to me, doesn’t mean I’m his or her first choice (the first choice could be too busy or sold out), but I can hope that if I am getting a lot of repeat business, my customers generally see me as their first choice. One or two measures for each objective should suffice. Sometimes the measure can simply be “did I complete my task?”
Remember to make sure your measure is measurable. You don’t want to pick a measure like a customer satisfaction score unless you truly plan to (or already have) surveyed your customers.
Also remember to set your target. If we are looking for the number of repeat customers, we should decide if we want 20% repeat customer, 50%, 90%? What’s right for our business based on where we are now?
Now you have a list of goals and a way to measure success. Almost there!
Lastly, you want to list the actions you will take to achieve your objectives. Again, you don’t want too many, focus is key.
To extend our example, our objective is to “Be My Customer’s First Choice In Service Providers” and our measure is “Number of repeat customers”. What actions will we take to be our customer’s first choice? Or at least, what actions will we take to increase the number of repeat customers? We may choose anything from adding more value to our product or service to focus our advertising on how happy our customers are.
Remember that a single action can relate to more than one objective. In fact, if it does, chances are that it is an action worth taking!
For most of us, this will be new even if we wrote a business plan. But if you put together a good set of objectives, measures and actions, you will get something like this:
If you’d like a copy of this spreadsheet, please email us at [email protected] and we will send it to you.
This will allow you to easily review your business objectives next year, calculate your score on your measures, and see where you stand. In a year from now, you may find that you didn’t complete some actions, but still met your goal. That’s ok.
You may also find that the measure you selected didn’t really represent the objective you set. You can change the measure. You may even find that the objective you set was wrong (often based on the wrong assumption – some businesses find that lowering the price doesn’t increase sales, but leads customers to think that the product or service is cheap and not worth buying). You can change that too!
Nothing is written in stone, but writing these things down now will: ensure that your goals, visions, and priorities are current; clarify where adjustments need to be made; enable conscious changes; and drive the growth in your business.
Check out Visa Business’s awesome infographic about wrapping up below! (Click on the image to see it in full size.)
I am blogging on behalf of Visa Business and received compensation for my time from Visa for sharing my views in this post, but the views expressed here are solely mine, not Visa’s. Visit http://facebook.com/visasmallbiz to take a look at the reinvented Facebook Page: Well Sourced by Visa Business. The Page serves as a space where small business owners can access educational resources, read success stories from other business owners, engage with peers, and find tips to help businesses run more efficiently. Every month, the Page will introduce a new theme that will focus on a topic important to a small business owner’s success. For additional tips and advice, and information about Visa’s small business solutions, follow @VisaSmallBiz and visit http://visa.com/business.
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