As a business owner, when the end of year is near, I start thinking about my goals for the near future. Every small business owner should take a look at successes, failures, and new things they can do to help their business thrive in the upcoming New Year
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Why Set Goals for the New Year?
You may think you had a great business revenue year, and perhaps you did, but don’t all of us want more? Wouldn’t you like to have a larger customer base, find a way to keep up your repeat customer rate or offer a new product or service? What about a new or revised website for your business?
Beyond these common goals, there are others to consider. Issues like revisiting your employees; your vendors, insurances, and operating expenses are also items that should be looked at when planning your goals for the following year.
Think of setting goals each year as a way to revamp your business or give it a feeling of starting anew. Failing to set goals could leave you in a slump if you aren’t prepared to make some new resolutions and changes.
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Put Goals in Writing
Whether this is your first time to set New Year goals or you are revisiting goals, put them in writing. Not only will this help you evaluate how well you did with goal setting, you can keep track of each goal and mark it off your list. Written goals can also identify areas that failed and provide opportunities for change.
Your current policies and procedures should also be reviewed and if you don’t have any written policies, now is a good time to begin writing some. Do you have an employee handbook? If not, set a goal to write one.
By putting goals in writing, it will give you a better opportunity to determine what works and what isn’t working as well as increasing sales revenues and profits.
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Start With Budgeting Expenses
Take a long hard look at what your current expenses are. Can you identify areas that are excessive or non-essential? Start with your Income Statement where you can quickly identify sales, cost of sales, and net profits.
What expenses seem high to you and what areas can you afford to cut? If you spent a lot on business travel expenses, did you receive a return on investment for those expenses? For example, if you attended a trade show, did you connect with new vendors and find ways to get wholesale discounts? If you did, then you did well in that area.
Analyze every expense including payroll. Remember that payroll includes wages, federal, state, and local taxes as well as worker’s compensation taxes, and department of labor taxes. Did your payroll expenses rise from the prior year? Normally they do because of wage increases or bonuses; however, did your sales volume warrant the increase? If sales volumes were down, set a goal for sales employees to reach to achieve bonuses or wage increases.
Telephone and utilities are often big expenses for businesses. Do you just settle for what the utility companies offer or have you visited your local utility companies and asked about discounts or programs to help you save money? If not, this is the time to do it.
Advertising is another expense to analyze. How well did your advertising campaign do throughout the year? While advertising is important, do your sales revenues reflect what you paid to advertise your product or service?
Take a long look at all of your expenses and see which ones should be decreased, stay the same, or changed.
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What About Employees?
In today’s world of employment competition, did your employees shine this year? Did they bring in revenues and offer great customer service? If not, consider making some changes in January. Try and keep your current employees through the Holiday season, however.
If you’ve never evaluated employee performance, now is a great time to start. Create a performance evaluation based on the type of business you are in. Use the evaluation to determine employee performance and individual goals.
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Sales and Profits
Did you sell what you expected and make the profits you wanted? What goals did you set for the current year and did you meet those goals? If not, set some sales goals and look at your cost of those sales. If the cost of sales is too high, determine why. Is it because your vendors charge too much or you aren’t saving dollars through discount wholesale buying? Use these to determine how to sell more at a lower cost to increase profits.
Even if you reached your sales goals and profits for the year, are there ways you can improve in the following year? Were you so busy that it was hard to keep up with inventory or orders and your customer service suffered? Think about a better inventory control system and creating great customer service. If you are doing well and are short-handed, why not hire a sales employee or two?
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Set Lifestyle Goals
The small business owner often works longer hours than people who don’t own their own company. How much time are you spending and is your lifestyle suffering? Ask your family about how much you work and things you can do to improve your family life.
Some small business owners feel their company will fall apart unless they are on-site constantly. If this is you, you aren’t putting much trust in your staff. If you trust your staff, consider shortening your hours to help meet family commitments.
When preparing your goals, set aside time to do it well. Ask employees for their input on what could be changed. Make an appointment with your accountant to help you identify expense areas that could be cut. Consider changing your advertising if your old campaign didn’t work. Failing to set goals each year can make your business suffer and in today’s economy, you need to stay on top.