At the beginning of each new year we tend to review our business strategy. It is a perfect time to reflect on the year that has been, celebrate your successes with you team, set goals and revise your strategies for the year ahead. But what is the right way to review your business and set a new strategy?
You believe you're trading well...
If you believe you're trading well, how can you tell if your strategies have been effective?
Monitoring effectiveness comes down to reviewing what is working well for the business. To do this effectively you should have Reporting Systems in place to track your data and measure it against your key performance indicators (KPIs).
The data from sales and employee performance is particularly crucial in understanding if your strategies have been successful, but also in assessing whether one area of the business is carrying another and how this might impact you into the future.
Cashflow Management becomes key
Not only are your KPIs and employee performance important but also the revenue you are generating, the way you are Spending Your Money and also the way you are saving your money. Cashflow management becomes key. Regularly reporting on your cashflow, reviewing your agreements with clients and suppliers can go a long way to meeting your overall business strategies, not only for now but well into the New Year.
Make yourself an Outsider
One of the biggest challenges with any strategy is the unknown unknowns – we don’t know what we don’t know. For existing businesses historical data can be useful, but there are also other factors at play such as excuses for previous results and egos that get in the way. Removing yourself and perhaps your ego, and taking a 'bird's eye view' on your business and seeking an outsiders perspective could be business changing! You may have a perception that is tainted by your own experiences, vs market perception ie. Your clients, their users, competitors, influencers, disruptors....the list is endless. It's always important to re-calibrate and get different perspectives that help with improving your decision making and business strategy.
So here are the three steps you should take when tackling your strategy:
1. Having ambitious growth goals may seem like a good idea! Is it?
Having ambitious growth goals may seem like a good idea, but you need to look at what rates most other companies grow at. For example 20.6% of all companies and 9.6% of large companies manage a double digit growth. However the average base rate of growth is 8%. So you need to think about where in that you can realistically achieve for your growth and also what growth your business has experienced in the past.
Often we use the 90 DAY SPRINT METHODOLOGY when setting business goals. This helps breakdown your big audacious goals into achievable outcomes in a short burst. The sprint should be shared with your team and include improvements in all aspects of your business to help align to your big audacious goal.
The 90 Day Sprint will help you break down your large, long term objectives (or goals), into smaller, highly manageable chunks ie. steps. This often means you are working on your long term objectives regularly and continue to improve your business every quarter bringing closer to your vision.
2. Plans need to match aspirations
Your plans need to match your aspirations. Having a clear understanding of what everyone in your team should focus on is critical to the success of any organisation.
Each quarter try and concentrate on one bigger goal through different divisions. While we're not saying a company should only work towards solving one problem at a time, it helps everyone on the team to understand what their main focus is and where they need to be by the end of the quarter.
For instance if you want to achieve double digit growth when we know the base is 8% then you will have to have a bigger plan to match this. This may mean you need to spend extra on new sales employees or advertising or you may need to deploy new technology or processes.
3. Review performance
It is always good to step back and review your performance. Are you on track with how you thought you would be? Make sure you have a budget in place and consider re-forecasting so that you can update your expenditure and income against your budget.
In order to improve your business performance you may need to redefine your products/services and make any necessary improvements or changes or possibly even bring the business back to its core offering. The key is to generate income that can increase profits. Putting the right measures in place to maintain and improve your profits can make a huge difference to your business performance long term.
4. Educate yourself
Knowledge is a powerful tool. While we aren’t suggesting you get an accounting qualification, investing in your knowledge on that front will definitely pay off. Why do we say that? If you have trusted advisors and experts by your side you are better equipped for decision making. Working with knowledgeable and experienced advisors means you are armed with as much knowledge as you can be. We recommend that you start with understanding all the different reports that you can generate in your cloud accounting system and how they can help you make better decisions.
Have you noticed our #FridayExpertTips... here's one that relates to #Advisory
“As you start to develop your business, you’ll want to have an Advisory Board in place to help offer advice and guidance and help navigate the entrepreneurial landscape. Don’t be afraid to ask people to mentor you.”