You say you want a resolution? Here are seven to tune up a business
It’s natural for small business owners and managers to take a moment to reflect on both the results of the past year and the prospects for the new year. For some owners, such reflection could cause a twinge of concern or perhaps even apprehension, especially if revenues are down and the business seems stale.
Here are seven steps — call them business resolutions — every business owner and manager should undertake annually to “tune up” the company for the new year:
Revalidate the business model: A business model could be compared to the foundation of an operation and the business plan the structure. The business model constitutes the main premise upon which a company is built. The RedBox business model, for example, focuses on a unique method of delivering its product — rental DVDs — to consumers through thousands of machines strategically placed at popular retailers.
Revalidating your business model means looking at the basic premise for offering a product or service. A business model addresses three questions: How does the company and its products and services create value? How does the company deliver the value it creates? How well does the company monetize the value it delivers? These three seemingly simple questions can lead to deep, contemplative thoughts — but only if business owners and managers are honest about where their companies stand. The answers that evolve from these three questions could fundamentally change how a business is structured, how it operates, what it sells and how it sells.
Refresh the value proposition: The value proposition provides the answers to three questions every consumer asks when he or she is in the market for goods or services: Why should I buy this? Why should I buy it from you? Why should I buy it now?
An effective value proposition encompasses the most important elements of a company and its products or services that motivate consumers to make purchases. Effective value proposition elements generate both rational acceptance of, and emotional attraction to, products, services and companies. Consumers who respond to good value propositions go from the I want to the I need stage and become customers.
Refreshing a value proposition involves re-examining each element the business has been highlighting and communicating for the past year and comparing those elements to the things to which consumers are attracted and emotionally responsive.
Update the marketing plan: The art and science of marketing is the ability to communicate that a business has the right product at the right price for the right consumer at the right time. A marketing plan reflects the strategies and tactics a company uses to communicate its value proposition.
Review the last year of marketing strategies and tactics and then look at how effective they were in generating revenues. This enables business owners and managers to evaluate whether or not changes are needed. If the value proposition is adjusted in any meaningful way, the marketing plan and communications component also will need adjustments.
Update the operating plan: The beginning of a new year offers a perfect time to look back and evaluate all the things that went wrong in terms of day-to-day operations. Whether it’s a bad hire, the accounts payables or receivables getting out of hand, a supply chain delay or other issues, everything should be examined.
An effective plan enables the company to operate efficiently, effectively and profitably. Written policies, procedures and protocols should cover everything from an employee handbook to how inventory levels are determined to how cash is handled. No detail concerning the operation of a business is so insignificant it shouldn’t be covered by some sort of policy, procedure or protocol. Of course, situations still arise that might not be covered. Taking a fresh look at the problems that cropped up and revising the applicable policy, procedure or protocol to address these issues will make sure the same mistakes don’t happen twice.
Re-energize the customer experience: Once the business model, value proposition and marketing plans have been updated, the next logical thing to examine is the customer experience. That’s where the end result of these three major business components has the greatest effects.
A truly outstanding customer experience results in three major outcomes: feelings of goodwill toward the company evident before, during and after a sale; committed customers who keep coming back; and customers who tell others of their positive experiences with emotional commitment and passion.
The key to creating and sustaining an outstanding customer experience is to look for ways to delight, surprise, reward and communicate with customers frequently and meaningfully. Find out what turns them on and turns them off and then capitalize on those things.
Remember: many small steps can combine to make a big difference.
Re-engage employees: Just as no two employees have the same talents, personalities or abilities, they’re all in various stages of motivation at any one time. After a long year of struggling to sustain a profitable business, employees might feel a bit strung out. Just as it’s important to re-energize the customer experience, it pays to re-energize the employee experience. Do something unexpected or unusual to shake up the routine. Consider a team building day away from the office or a gathering at a local getaway to discuss company strategy. Some companies hand out free movie ticket vouchers and restaurant gift cards to staff. The rewards of hard work should go beyond a paycheck and more hard work. There has to be enough variety, spontaneity and unpredictability to encourage the staff to want to come back every day for more.
Recharge your life away from the business: While this last resolution can’t really be classified as a business resolution, it can make a profound difference in a business owner’s or manager’s outlook, perspective and effectiveness. While there might be times an owner or manager must eat, sleep and breathe the business, doing so for extended periods of time is not conducive to productivity, personal morale or creating a desirable company or personal lifestyle.
No one wants to greet the boss on a Monday morning knowing he or she had been working all weekend and remains in a foul mood. By the same token, no business owner’s or manager’s family or friends want to deal with someone who’s so one dimensional they can’t have a normal life away from the business. The point of diminishing returns often engulfs owners or managers without the realization they’re taking two or three steps backwards with every perceived step forward.
Learning to keep things in perspective, finding a reasonable balance between personal and business demands and taking time to smell the roses away from the company fosters a better mental outlook, improves creativity and problem solving, renews optimism and increases productivity.
Daniel Hannaher, the U.S. Small Business Administration Region VIII administrator, works out of Denver. Reach him at (303) 844-0505 orDaniel.Hannaher@sba.gov.