By Mandy B. Fernandez, Marketing and Office Administrator, Florida SBDC at UWF (As originally seen in Northwest Florida Daily News)
The New Year is here. Almost half of Americans make New Year’s resolutions at the beginning of the year; according to survey results in stasticsbrain.com, 45 percent of people make a mental goal to achieve these resolutions.
The most popular three are:
1) Lose Weight
2) Save Money
3) Reduce Stress
Although over-used and clichéd, these are still great objectives. In fact, small business owners can apply these same principles to their companies to help them be more successful. Now is the perfect opportunity for owners to turn these intentions into specific, measurable, attainable, relevant and time-based (also known as SMART) goals:
Be More Fit
In business, losing weight really means trimming down on excess assets and unproductive activities. Trim the overload in your business that is slowing you down, causing more work and not paying off in dividends. Refocus efforts on building a stronger brand and increasing customer service. Tom Hermanson, a business growth consultant and seasoned business planner with the Florida Small Business Development Center at UWF in Fort Walton Beach said:
“Production and operation methods can always be improved among businesses. Not all products and services offered by a business owner are proficient. We work with business owners to help them look at ways to consolidate activities which lead to lower cost and better efficiency.”
A new year is a great time to closely review the inventory in an organization. Lose the weight by getting rid of the burden of goods that aren’t helping business grow and succeed. Set a SMART goal such as reduce inventory by 10 percent within three months; assign a manager to track goods used and sold on a weekly basis then follow up with another review in the next quarter to make further adjustments. This is how a fitter, stronger business can be built.
Be More Secure
Business owners can save money by scaling down the fixed and variable costs. Fixed costs for a business would be things like rent, building space and equipment. These prices usually remain the same each month regardless of the output of sales. Although the fixed rates may not be negotiated, they are still controllable and may adjust over time. An annual critical review of all fixed costs can identify previously untapped opportunity for savings.
Variable costs change and are generally those associated with the ups and downs of operations and sales. Things like labor, materials, packaging, energy, warranty, delivery are considered variables. The best way to increase profits is to know and calculate the variables affecting business on an ongoing basis. Shaving a small amount of variable costs can make a big difference. For example, a business owner can make a goal to improve purchasing power by working with vendors and suppliers. Determine if buying in bulk and stockpiling items would be beneficial. See if a different delivery or packaging option is available at a better fee. Try this for six months to see if it increases profit margins.
Plan for Stress to be Less Stressful
Owning and running your own business will never be a completely stress-free venture but you can take steps to reduce the anxiety. Hermanson said:
“Reducing stress can be achieved by reducing business risk. The best way to reduce risk is to anticipate and plan for it... In business, your business plan contains the detail and strategy that helps you keep your resolutions. No-cost consulting services like the Florida Small Business Development Center at UWF can assist your business with an annual review and help with financial risks and business continuity.”
In the book “Great by Choice” by Jim Collins and Morten Hansen, the authors describe superior companies’ performance is often influenced by a key principle they dub as “productive paranoia.” To put it another way, even when things were going well for business, successful leaders, like Herb Kelleher of Southwest Airlines, maintain a “hyper vigilance, staying highly attuned to threats in the industry and changes in the environment. The owner assumes conditions will turn against them; therefore, he channels that fear and worry into action, preparation and contingency plans.” By planning for some chaos, business owners can then thrive in a certain chaotic situations because of that preparation.