Small businesses are often the product of the powerful combination of entrepreneurial vision and passion. While these can be helpful to penetrate markets and fuel the tenacity required to overcome challenges, a business owner can significantly improve their chances of success by supporting vision and passion with a solid, well-thought-out plan to actively guide decision making. To say that the pandemic has disrupted most small business owners’ ability to plan would be an understatement.
Yet, as understanding of the virus grows, vaccinations commence and consumer habits stabilize, the start of 2021 offers business owners a new opportunity to dip their toes into the planning waters once again.
Here are six suggestions of business goals you can set this year:
Understand what drives your profitability. If you have not looked at your financials lately, the start of the year is an incredibly powerful time to do so as it can help guide budgeting and decision making for the coming year and help avoid emotional or reactive decisions that can have a negative impact on performance. One key indicator that business owners can look for in year-end financials is profitability (especially critical for Sole Props and LLCs as this often dictates your take-home earnings). Do you understand what key factors are positively or negatively impacting profitability (revenue, cost of goods, expenses)? How has profitability changed from 2019 to 2020 and why? How does your profitability compare to others in your industry? (Unsure of your industry averages? The SBDC can help.)
Reduce ongoing business expenses. Given the economic climate, you are likely operating pretty lean already but something to consider: if a business were able to just trim $27 per day from the expense line, that would be the equivalent of almost $10,000 per year. For a business with annual profits of $50,000, an additional $10,000 to the bottom line would result in a 20% increase! So, look at your financials for 2020 and think about where you might be able to trim without sacrificing product or service quality or creating risk.
Increase revenue. There are several ways that businesses can increase top-line revenue. This is a wonderful time to rekindle that passion and think about what existing customers might buy more of, whether they could support a price increase for existing offerings or what kind of fresh offering might attract new customers. Schedule some time for brainstorming — and if you have a team, this is a great time to engage them as well!
Fix a broken customer-service process. All businesses have those nagging little snags in their customer experience that come up from time to time (or even worse, all the time). Unfortunately, it is easy to get so busy that these never get addressed and small blunders in customer service can turn into big problems. If there is something that has come up consistently in customer comments or feedback from your employees, this is a great time to commit to fixing it.
Grow your digital presence. The pandemic has opened new avenues of growth for companies who have leveraged the power of digital to drive engagement, reach new customers and increase sales. If your business needs an enhanced online presence, pick one channel (but just one to start), such as your website or a specific social media platform, this is a great time to set that goal and get moving — and the great part about digital marketing is that progress is easily measured with analytics!
Improve your financial health. The bottom line is, not monitoring how money is flowing through your company in a timely and accurate manner can be crippling to business success and often leads to failure. If goals one through three above were unattainable due to a lack of accurate financials, now is the time to solve for that by enhancing your bookkeeping skills and processes internally or outsourcing to a reputable professional bookkeeper.
Once you identify what you want to achieve in 2021, make sure you document your goal and that it is S.M.A.R.T., which means it is: specific (not vague), measurable (what metric will you use to track success?), achievable (set yourself up for success!), relevant (this goal should really matter to the vitality of your business), and timely (has a deadline). Also, do not try to tackle too much, especially right now, or you will likely burn out. Keep it simple and achievable.
If you need help analyzing your financial statements, developing effective goals or need support with planning, the business advisors at the SBDC are here to help. Always free and confidential.
Jessica Newhall is the associate director and Small Business Management program manager for the Clatsop Community College Small Business Development Center. She can be reached at firstname.lastname@example.org.