A happier new year
Now is a good time to plan what you will do in 2010 to help you move toward your vision of your future business.
Much has changed in the past few years for all businesses in Nevada, and there is little chance that changes will be less dramatic over the next few years. We have seen significant changes in our economy, business legislation, financial policies, technology applications, and social behavior and expectations. As a business leader, it is your responsibility to plan how you will survive the challenges, how you will take advantage of opportunities, and how you will achieve your business goals.
We have found that while specific challenges and opportunities may differ across individual business markets, the approach to developing a plan is similar for any business. Businesses large and small, profitable and unprofitable, from farming to high technology can develop a strong business strategy for their future by asking and answering five simple questions:
* Where am I today?
* Where was I?
* What did I do to get here?
* Where do I want to be in the future?
* What do I need to do to get there?
Most businesses have found that a three-year horizon to assess their progress and to plan their future proves to be quite effective. By establishing annual goals for all three years, the ability to plan, implement actions and assess progress is enhanced. Too long a horizon or looking simply at the long term may limit the ability to respond to current trends or to focus on more immediate business opportunities.
While the questions are very simple, making an honest assessment is difficult for most people. Business leaders are so immersed in their business that it is often difficult to assess the impacts of the decisions, priorities and strategies (positively or negatively) because they have only a single perspective. It is also often difficult to make an accurate assessment because the answers to the questions do not provide enough detail and analysis. This will lead to applying generalities and making assumptions. The best way for a business leader to gain a broader perspective is to create a small team of key employees and professional advisors. At a minimum your team should include a senior manager, a financial specialist (chief financial officer, Accountant/CPA, or banker) and a professional business consultant.
The next step is to gather fresh market research data. If you are a small to medium size company without a marketing department, some or all of the research task may fall on you. If it does, finding time to gather the data will be a difficult challenge in itself. Focusing on the critical information is essential. The task of acquiring and assimilating the market data is a good place to use the professional business consultant.
No matter what your answers to the questions “How did I get here?” Where am I today?” and “Where do I want to be in the future?” the information, analysis, implementation and monitoring are all the same. Whether you are looking at growth or stability, gaining market share or entering new markets you still must address the question “What do I need to get there?” This critical information is needed to develop a plan and strategy that will allow you to:
* Identify the market segments with the greatest opportunity for growth;
* Define the most competitive products and services for these segments;
* Identify the best target customers for your products and services.
Your most valuable source for this “critical information” is the market that you currently serve. Talk to your customers! Talk to potential customers! Talk to industry experts! Ask them questions such as: How well are you servicing their need today? What needs do they have that are not currently being met by you? What will you need to do to win their future business? What products and services are most important for you to provide them? What growth potential do they see for your business with them? Who would they recommend for potential new customers?
The next step is to conduct a detailed financial analysis of your current business. By looking at your current revenue and gross profit by market segment and product line, you will have a good idea of where you can grow most profitably. If you are looking at adding new products or services, or expanding into new markets, you will have a good basis for comparison.
Your final decision will bring all of the information and analysis together to determine where to invest to reach your goals for the future. To grow your business you must get current or potential customers to spend more money with you. If you really want to achieve your vision for the future, don’t leave the outcome to chance. Set solid goals and develop realistic plans to achieve them.
Given the rate of change in the business environment that we are experiencing, you will be challenged to respond to current trends in the marketplace. Therefore, make your plan a living document. Review it monthly, make necessary changes quarterly, and continue to look out three years. Don’t wait for next New Year to repeat the process.
As Henry Ford said “Nobody can really guarantee the future. The best we can do is size up the chances, calculate the risks in-volved, estimate our ability to deal with them and make our plans with confidence.”
As the business leader, you must have the desire, energy and passion to make your business all that you want it to be. Success is not the result of spontaneous combustion. You must set yourself on fire!
Gary Smith and Steve Weich provide business consulting in northern Nevada and offer business courses through UNR Extended Studies. Course information can be obtained by contacting Jill Alcorn at 784-4759.
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