Driving a business is very much like driving a vehicle. You need to keep a close watch on what is happening up front while keeping an eye on the rear vision mirror. It is also a bit like crossing the road in that to survive, you need to look both ways
What has happened behind you that has influenced where you are heading? Did your business activities and profits perform as planned or did you not have any plans? If some things went wrong, then what were they? In addition, have you been able to overcome them? How was it, that you did not know what was happening, with the result that you were caught short? Did you not see the signs?
Looking back is not all negative, so ask yourself, “What went right?” and understand why. Why did your sales go up? Was it new business or more sales to existing clients? If it was new business, then do you know where it came from and why they chose to deal with you?
If you have had a rough year, do not simply be pleased it is over. You need to know what went wrong and why. The lessons from looking back will be a great help when looking forward.
Your map or plans for the way ahead need to cover the big picture as well as some detail. Without the detail, you will probably get lost but if you delve too deeply into the detail, you are very likely to lose track of where you are heading. It is all a matter of balance.
For the big picture, you need to think about what is happening in your industry and how it may be affected by changes on the political and diplomatic scene, economic forecasts and what is happening with your bankers.
If you get some broad understanding of what may be happening under those headings, you will have a better basis for the detailed work.
Examples of things that can make a real difference include whether there is an election due, and what could more free trade agreements do to your industry?
It is then a matter of down to the detail. Critical matters include cash flow, profit margins, staff, premises, plant and equipment, and working capital to name just a few. Let’s have a brief but closer look.
Do you have adequate staff for the likely workload? Do they have all the required skills? Are there any pending retirements? Is your plant and equipment adequate? Are there some essential changes in technology that you will have to acquire? If so, what will it cost, and how far ahead will you have to place your order?
Are your premises adequate? When is the next rent review and when does the lease expire? Check these things so that there are no surprises.
You will need a budget and cash flow forecast so that you can sort out any funding shortfall well in advance.
Recent experience shows that it is acceptable for bankers to surprise shareholders, the Government and the public. It is quite a different matter for you to surprise your bankers with a sudden need for a loan. They could get the idea that you are not fully in control.
You may have to alter your costings and charge out rates. Your budget may show that you need to increase the volume of business to trade at a profit. If so then where will that business come from? Keep in mind the fact that it is often easier to do more for existing clients than it is to find new ones.
Does your existing plant have facilities that you are not using to generate business? Are there any add on items you can incorporate in your processes to help keep your clients happy? Remember also that most business surveys rate service way ahead of the price so make sure everyone treats your clients as very important people.
Check to see whether you are paying to have work completed outside which you could now do in house. There could be major savings here.
Check all items and expenses.
Your personal wishes, retirement, possible sale of the business and health also need to be included in your plans. I guess it is all part of working on your business and not just in it. Learn from the past, look both ways and apply the lessons to the future.
