Do you have a strategic plan for 2019? By this time, you should. Each business has its own unique challenges and opportunities. Whether starting a new venture or growing an existing business, we hope that these seven basic steps help guide you to a more successful year! Remember to keep the organization’s mission and values in mind.
1. Conduct a SWOT Analysis.
Do this exercise with managers and employees for the best insight.
List 2-3 key strengths. What is it that your organization is really good at? Is there something clients repeatedly compliment about your product/service?
List 2-3 weaknesses. Ego can sometimes make it difficult to do this exercise, but you’ll be glad you did. What needs improvement?
List 2-3 opportunities. Will you focus on upselling or new client acquisition? Are there new partnerships that you made this year that could be leveraged to grow revenue in the year to come?
List 2-3 threats. Are clients leaving you to do business with competitors? Maybe you have high-skilled employees that are approaching retirement?
2. Determine Key Performance Indicators (KPIs)
There are too many types of KPIs to cover in this article, but here are a few of our favorites.
- Gross Profit Margin
The gross profit margin equation can be used to evaluate whether your goods or services are priced appropriately. It is calculated as (gross revenue – cost of goods sold)/gross revenue. A healthy gross profit margin should be large enough to cover operating expenses and leave you with a profit. Most managerial accountants recommend a gross profit margin between 40-50%.
- Net Profit Margin
This KPI tells you what percentage of revenue was profitable. It is calculated as net profit/total revenue. 15% or higher is favorable. Don’t be fooled by focusing solely on increasing revenue without accounting for profitability. There is a “newer” concept in the business world known as the profit first method. Google it!
- Net Promotor Score (NPS)
This KPI helps answer the question, “How many of your customers like your product/service enough to recommend it to others?” This answer can’t be determined from your financial statements. Surveys are a popular method for gathering data on this KPI. You’ve go to ask, then ask again, and again! More yays than nays is obviously a positive result.
3. Use the S.M.A.R.T. goal approach.
This is a popular method for developing and reaching goals.
Set clear expectations. “Make a profit in 2019” is not a S.M.A.R.T. goal. Anyone
If you can measure it, you can manage it. Once you’ve determined what KPIs to focus on, decide next how well you want to score.
The objective should be probable yet challenging. Take a step back. Can this really be accomplished? Is it too easy?
Don’t get lost in the clouds. Does this goal correlate with your SWOT analysis and overall mission of the organization? Can you obtain the resources to reach this goal?
Establish milestones and set priorities. What steps need to be taken to achieve the objective? List tasks and determine checkpoints. What should be done first? Weigh milestones by importance and urgency.
4. Update Business Plan.
Update your business plan annually with new goals and strategy based on your analysis. If you don’t have one, it’s never too late to create one.
5. Take action.
Let's do this!
- Get others involved.
Why are we doing this? It is imperative that the team is all pulling from the same side of the rope. Explain the purpose of the objectives to those involved to get their buy in. This is easier for managers and employees if you’ve taken their input into consideration throughout the process.
- Do or delegate?
Who will do the work? Will you do it yourself or delegate tasks to others? Consider outsourcing basic administrative and accounting functions to free up time for yourself and staff to focus on what’s important.
6. Recognize performance.
How did we do? Did we meet he objective?
- Collect and review data.
Are we moving in the right direction? Use a cloud accounting software like Quickbooks Online that connects with hundreds of third-party applications to keep track of data and generate custom financial reports that are meaningful. Hiring a Quickbooks Online bookkeeper (like eBookkeeping Solutions) to manage data is one the most efficient ways to keep track of financial performance.
- Keep Accountability
Hold yourself and others to the goals that have been set. Consider a bonus structure that inspires employees to stay focused and contribute.
7. Celebrate achievements.
It is vital for overall morale to not only celebrate when you hit the ultimate goal, but to find small victories along the way.
So, there you have it – our seven steps for achieving success in 2019. Good luck!
Need to hire a bookkeeper? Contact eBookkeeping Solutions today to receive a free Quickbooks Online bookkeeping consultation that is specific to your business.