Whether you’re wrapping up a good year or a bad one, you can ensure 2014 will be a better one.
Setting broad goals regarding revenue and profitability are noble, but sometimes even making a few resolutions to do things differently in your business can move you on the path toward larger changes that will boost your business’ growth. It’s similar to the idea that if you can change a few things to improve your health – drink more water, park farther from the entrance to the bank – you’ll gain motivation to pick up the pace in addressing bigger goals.
Here are four good-for-your-business decisions to consider adopting as you head into next year:
Re-focus on customers. One of the biggest mistakes entrepreneurs make is to stray from that intense focus on what customers want – a focus to develop products and services that will be valued by customers because they meet a need. Resolve to take one or two small steps to get you closer to the customer — even if it’s a small, informal survey through SurveyMonkey (a free cloud-based software) or a 10-minute call with a valued customer to determine what they value in your product or service and how you can meet other needs or wants.
Don’t spend what you don’t have. Business owners are often optimistic; that’s how many get into business for themselves in the first place. But optimism can lead you to hire ahead of your revenue, and that can hurt your cash and profitability. Remember that you don’t have the revenue until it hits your bank account.
Track profitability. A lot of businesses keep a close eye on revenue and assume that a dollar in revenue translates automatically into more profit, but sometimes that’s not the case. When you track profitability closely, you start to see fluctuations that provide insight into what you’re doing right and can help you steer clear of making the same mistakes over and over.
Don’t be a bank. Remember that most businesses don’t fail because of profitability; owners inherently know they need sales to exceed expenses. But failing to collect receivables and manage cash is one of the most common causes of business failures, and the trouble starts when you offer credit terms indiscriminately. You may be convinced you have to offer credit to everyone, but you know in your heart that all customers aren’t created equal. Granting credit should occur when it will increase revenue and income, so revisit your credit policy from time to time and consider extending different credit terms to different customers based on the overall relationship and creditworthiness.
Mary Ellen Biery is a research specialist at Sageworks, a financial information company that provides accounting and audit solutions. She is a veteran financial reporter whose works have appeared in The Wall Street Journal and on Dow Jones Newswires, CNN.com, MarketWatch.com, CNBC.com, and other sites.