Step One: Know, Through an Evaluation Process, Where Your Business Is Now
Evaluating where your business stands takes time. It requires that you be open and honest with yourself about the status, such as whether sales are meeting your projections. This, obviously, assumes you are working off a budget and have sales projections. What helps in taking the time to think things through, in my opinion, is to approach it as if you have to give a report to the Board of Directors or be accountable to the shareholders of your company, whether you have them or are a sole proprietor.
Consider where your business is in its life cycle. If yours is a start-up company, take a look at how it looks to the general public and to your existing customers, assuming you have clients. Talk to people about their perception of your company and the products or services it offers. That research is also valuable if your company has been in a growth spurt or is reaching maturity. How well positioned is your business when it comes to being focused on the consumer?
Think about how well your business takes care of customers. If they keep coming back to make additional purchases, you should know why they do. It’s also good to know why they may only buy from you once. Part of this evaluation is having a clear understanding of what you sell or offer as a service. For instance, an insurance representative may think she sells life insurance. From the consumer’s perspective, however, the benefit of adequate coverage is that they can sleep well at night, knowing their loved ones are taken care of when they pass on.
Take a look at your financial reports and get to know them. Your accountant should be able to offer guidance on where your retained earnings should be, how your cash flow looks, and where profit margins ought to be. Look at how well costs are being controlled. For instance, if your industry’s standard for cost of goods sold (COGS) is 30% and yours are running at 45%, there is work to be done to get those under control. The answer is usually revealed in an investigation of the numbers and looking at processes.
There is obviously more to compiling a current position statement, but the gist is that you — as the business owner — need to know where you stand. If the picture is less than rosy, the information will tell you and enable you to make decisions about the next course of action. That may mean shutting it down or selling it off.
Step Two: Plan Where You Want to Position Your Business to Grow
Once you have a clear picture of where your business is positioned, you can consider where you think it should be going. There’s a good chance it’s right on track for where you want it. If you’re operating and managing with a good business plan in place, odds are it’s close to your goals.
This step enables you to research potential new opportunities for your company. Perhaps it’s a complementary service that can be launched with minimal expenditure to meet a demand from your customers. Perhaps it’s a merger with a smaller competitor struggling to survive and looking for a savior. Be careful, though, and think the acquisition through completely. Consider a SWOT profile to weigh the strengths, weaknesses, threats, and opportunities involved in such a move.
Talk to customers. Find out what they like (or don’t) about your company and your people.
Talk to your employees. What do they like about working with you? What could be done to improve conditions?
Look at your advertising. Is it targeted to your audience demographic? Is the message, and call to action, clear?
Use this information to ensure your company is in the right position to grow and to be profitable for the next six months, year, or whatever time frame you choose.
Step Three: Implement Your Strategies for Moving Forward
When your position is focused and clear, you can move forward with confidence. You are less likely to be distracted by trends, especially those with little relevance to your company or customers. You will know what you offer as a product or service is something of value to your customers and prospective customers. You can monitor your monthly financial statements to keep the team accountable and on track to achieving the objectives you’ve established.
You will make smart decisions about advertising your business. You know your target audience and use media outlets that reach those consumers with a message they’re quite likely to respond to favorably. You save money that way. You are more accountable to your customers, your employees, your shareholders, and yourself.