Jan
05

Important “To Dos” For Entrepreneurs To Start The New Year

As 2012 rolls in, business owners, small and big, need to do a few things to prepare for a successful ride in the new year.

Review The Past: Review of the past year is an important exercise in the new year. It includes identifying what were some of the accomplishments during the year and what made those possible, what were some of the misses and their reasons. Two important take aways come out of this – 1) opportunities for improvement in the future and 2) lessons learnt.

Set Goals: Just like making New Year’s Resolution, business owners should set goals on where they want to take their business in the new year. Having clarity on what that would look like, feel like at year-end is of paramount importance to the success of the business. Clear goals lead to better action plan around those objectives which in turn increases the probability of success.

When it comes to setting goals, care should be taken that the goals meet the following criteria:

S – Specific. Instead of a goal of having the business making more money, the goal should be set along the lines of increasing profit by X percent.
M- Measurable. The goals should be framed such that they are quantifiable and progress can be measured periodically without any subjectivity.
A – Actionable. A goal needs to be something that one can take action on. Hoping to win a jackpot does not invoke action.
R – Realistic. It is simply pointless to set the bar so high that the goal is simply not achievable. There is nothing wrong in having stretch goals but they should be realistic, within reach and most importantly believable. If not, the owners’ heart will probably not be in it and they will not do what it takes to achieve the goals.
T – Time bound. A goal must be set so that it has a time limit within which the set goal will be achieved. Breaking down the goals into major milestones at different intermediary time periods helps in action planning and taking corrective actions when things don’t go right. Most importantly, it builds momentum.

Focus On The Critical Few: Just as chasing too many rabbits results in catching none, having too many goals creates lack of focus and impedes success. It is advisable to limit the number of goals to no more than three or four at a time covering different facets of the business.

Don’t Forget The Long Term: While the focus is setting goals for the current year, business owners should also have line of sight on where they want to take their business in 3 to 5 years down the road. The overall objective of the yearly goal therefore should be to position the business to attain the longer term goals.

Define Sub-goals & Major Milestones: It is important to identify the drivers of the set goals, and establish targets (sub-goals) for them. For example, if the goal is to increase profit of the business by X percent. Sub-goals should be set for profit drivers, namely revenue, gross profit and overhead cost.

Document Goals: Research has shown (including a study at Harvard Business School) that documenting goals increases the chance of achieving them. While there are many theories, the simple fact is that documenting the goals, making them visible and reading them on a regular basis makes the mind unconsciously track those goals and reinforces the belief that the goals are achievable.

Develop Plan: Once the goals are set, the next step is to develop an action plan with completion dates. The plan should be written and the status reviewed periodically to ensure things are on track and corrective actions taken when things are not going according to plan.

Establish Key Performance Indicators (KPI): Once the goals are established and plans made to attain the goals, it is important for the business owners to monitor progress. This can be done by establishing Key Performance Indicators (KPI) which is similar to having dials on the car’s dashboard. They allow the business owners to know whether things are going according to plan and if not, what needs to be addressed.

Celebrate Success: Celebrating success is often a missing trait amongst small business owners. It is important to recognize success through celebration as it serves as an important reminder when things don’t go according to plan. More importantly, it provides momentum and builds staff morale.