Take the time to get a wider perspective and adjust your plans.
Here are some ideas to inspire you to do better than ever.
1. Check your numbers against the top performers.
You probably already know the key variables to manage profitability in your business - gross margin, sales per square foot or sales per employee, for example – but have you compared your numbers to the top performers in your industry lately?
How has the current economy affected their growth rates or performance ratios compared to yours? You will have to do some homework to get the answers. Be sure to find the most comparable companies by industry size or type of business and then try to select the top performers. You may get useful comparisons from available data on public companies, from trade journals or from industry data bases. Your banker likely has access to RMA (Risk Management Association) data that is used by the banks to assess your credit worthiness. It is worth knowing what they are looking at and how they assess your performance so you know what they know.
2. Ask for key stakeholder opinions.
In addition to the bank’s assessment you should also regularly solicit feedback from your other key stakeholders. Those would be your employees, your customers and your major suppliers.
The key questions to ask are:
- How would you describe our company relative to our competitors?
- What do you think we do best?
- Where do you think we need to improve?
- What opportunities do you think we are missing?
3. Listen and learn.
Often business owners are surprised to find that the perceptions of their employees, customers and suppliers are quite consistent, but very different from their own.
You may think that your business is best known for low prices and fast service, but others see you as having expertise that is valuable and worth paying the perceived higher price and accepting relatively poor service. Oops!
Now you have something to work on. First, try to ensure that your perceived strategic position in the market is the one that you want; then work on delivering what is expected. And finally, assess the feedback on perceived opportunities that you are missing. In asking customers that question, recognize that you will have now established receptive prospects for new initiatives, so follow-up quickly.
4. Verify your readiness for growth
In order to pursue new opportunities and grow your business it is also timely to verify that you have a solid foundation for growth. The foundation needs to be resilient, flexible, and expandable in all the dimensions related to organisation, facilities, financing, and infrastructure.
A fitness test on all these areas is a necessary first step before launching new initiatives.
5. Focus on maximizing long-term value.
During the performance review there will be some obvious and easy “quick fixes” to generate revenue or cut costs. But as Einstein apparently once said, “For every serious and complex problem, there is an easy and obvious answer that is wrong.”
For businesses the error is usually to focus on short-term profitability, rather than long-term value. In fact, the accumulation of short-term decisions to control costs or pump revenue may actually diminish the long-term value that arises from sustainable and profitable growth. Typical examples are under-qualified staffing, low cost facilities and equipment, cutbacks in marketing or product development and chasing big customers with low profit margins or accepting questionable credit risks.
6. Identify and select the priority opportunities.
After completing the review and assessing the opportunities, the list of potential action items may be long. A selection of priorities to address in the immediate future is required. And more than three priorities means you have not yet made a selection, only a ranking. Try harder.
7. Make a new plan. Then make it happen.
With a short list of priorities you can make a realistic and achievable plan to improve performance. Simply list the steps required with names and dates assigned to each step.
Take this opportunity to rethink your business and make something happen. Remember if nothing changes, nothing happens.
Be better. Do better.