In several previous articles, Ive used the knowledge and experience of Joe Reger and Roy Montague to address small-business issues.
We tend to see small-business owners who are facing problems related to the sustainability of their businesses. For the most part, the owners developed business plans when they first started their businesses, but almost without exception, few have bothered to revisit their original plans or develop new ones. The need for plan revision was a lesson learned by Joe and Roy. Both began to perform annual reviews of their businesses and redid their business plans based on the changing conditions of the previous 12 months.
Joe and Roy underscored the need for an annual review. Here are several key elements that review should consider:
Sales. Were they increasing or decreasing? Were there any discernable issues affecting sales? Were prices in line or were customers complaining?
Expenses. Have you performed a line-by-line review to identify any changes from prior years? Have you looked at trade association information to determine if your costs are in-line? Might any expenditure be reduced or eliminated?
Competition. An assessment is made of any apparent changes. Are there new competitors? Have competitors changed their products, services or pricing?
Marketing. Might this be the time to focus on social media and Internet marketing? Are there opportunities to increase web-based sales? What are your customers telling you in terms of their needs and your performance? Are you meeting customer expectations?
Operations. Are your facilities adequate? Should you be looking for more space? Is the workforce stable, or have you experienced greater turnover? Do you have a handle on quality, be it service, product or errors in shipping and invoicing?
Goals. Have you met your goals? If not, can you determine the causes? Do you consider stretch goals? Are you receiving input from your employees?
Succession. What do you want to happen to the business if you, the owner, become incapacitated or die? Is there a written plan? Should an attorney review it?
SWOT Analysis. Analyzing strengths, weaknesses, opportunities and threats is a valuable tool to identify action items to be incorporated into the plan.
Employee Involvement. Roy emphasized there is absolute value for a business as a whole (all the employees) to review the prior years performance to determine what to improve upon and set a team goal on how to achieve the improvement. Its so much easier to achieve progress when theres a buy-in by everyone.
There is an old saying in business that you must grow or you will die. To grow can mean more than to increase in size. It can also mean to grow with current or future conditions. A business owner needs to consider all of the items listed above and adjust focus on a regular basis.
It makes business sense to Joe, Roy and me for a business to have the discipline to perform the analysis, to digest the results and establish a definitive direction the business will take. Use your business plan and youll know which fork will lead to a sustainable, profitable business.
C. NORMAN BECKERT: Idaho district director for SCORE, the Service Corps of Retired Executives. email@example.com.