Wednesday, April 16, 2014

How to turn your business around - Part II: Setting Goals

A successful turnaround plan can take a business from where you are to where you want to be.  To get to where you want to be, you need to determine what is working and what is not.  The ability to read financial statements is crucial to this task.  Every expense account needs to be reviewed and the spending levels questioned.  Can you save money by shopping around for a different vendor?  Have you done enough business with a vendor to ask for better terms or pricing? 
The key to the goal setting is to make them specific so having a budget is helpful at this stage as once you set your goals for spending levels, you can compare actual spending to your budget (goals.)   This comparison of actual to budget helps hold the business owner and staff accountable. 
You also want the goals to be reasonable, enough of a change to be a stretch but not so much that it is not achievable.  Cutting costs mindlessly does little good to a business as some spending is essential to the existence of the business.  Eliminating all marketing is not a good idea.  Paying for marketing and then not tracking the success of the various elements is not a good idea.  A good marketing plan requires the tracking of metrics to determine the success of each campaign.  Asking new customers how they came to the business is vital.  A business is throwing money away if it doesn’t track how customers find them or select them to buy from.
Revenue goals are also important and again should be specific and achievable.  Saying that you are going to double sales in the next year sounds far-fetched.  Saying you are going to increase sales 5% next month by initiating more cold calls to extend your sales area is much more reasonable. The key is to have specific steps to follow to achieve the sales growth.

Turning around a business successfully can be done with proper analysis and goal setting which includes the preparation of a budget and the determination of specific metrics to track, the comparing of actual results to the budget and the numbers of other metrics to determine the progress of the plan.

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