Become Fiscally Fit and See Your Business Grow
Many people vow to become healthier and more fit in the New Year. But that idea shouldn’t be limited to individuals a company can grow stronger and healthier with the right goals and a plan to achieve them.
Make 2014 the year your company is more fiscally fit. Use these ideas to build a more robust business that not only thrives, but grows.
Take time now to set strategic, measurable goals for 2014. We’ve found many business owners don’t set specific annual goals, or choose goals that don’t directly lead to success.
At Lucrum Consulting, we advise clients to use the SMART formula. Goals should be Specific, Measurable, Attainable, Realistic, and Time-oriented.
A real goal is measurable. Resolving to “get in shape” is not the same as resolving to run a 6-minute mile by December, outlining the steps needed to achieve that time, and choosing dates in the calendar for sessions with a personal trainer. A real goal is also realistic. Maybe the 6-minute mile is too difficult this year, so the goal should be fitting into that favorite sports coat or dress bought just a few years ago. The same concept applies to business goals. Quantifying them puts them in focus.
Some employers develop items they think are goals, such as “we’ll add a couple of new employees this year.” Adding new employees isn’t necessarily valuable for the company. Better goals would be “we’ll increase our margins above 30 percent,” then thinking through what is needed to accomplish that.
Break big goals into manageable pieces. To use our running example again, to run a mile under six minutes, one needs to do four laps around a standard track, so each lap needs to be one minute 29 seconds or less. If the runner concentrates on each single lap time, the bigger goal will be achieved. Breaking an ambitious goal into pieces can be the difference between making the goal and giving up.
Know your metrics. Of course, gross profit and gross margin are important for all businesses. But each business also has particular metrics that will indicate health or problems. Identify these for your business and study them carefully. Watch revenue per employee for businesses with a sales force. Watch revenue per service technician for businesses such as heating and air conditioning. Homebuilders track the ratio of the lot price to the price of house.
By monitoring important metrics, the business owner can know if the company is on pace to hit its goals, and how much cushion it has during slower times.
If the process of setting goals feels a little overwhelming, or it would help to have a trusted outside source to identify the most productive goals for your company in 2014, know that Lucrum Consulting stands ready to assist. Call us if we can be your partner in devising goals for 2014 that will energize your company.
Next month in the newsletter, we’ll look at additional strategies for setting meaningful goals, including how to measure accountability and assess executives and staff.