The new year is a great time for business owners to remember their mistakes and plan for the year ahead.
Margins: Many business owners with below-par results are often concentrating on sales volumes rather than margin per sale. In a tough operating environment, business owners try to out-sell the competition, but in losing their profit margin to push your sales volume, they end up going backwards.
Quality: A weakness of many firms is having too many slow-paying or non-paying clients in the receivables. I advise you spend the first quarter of 2012 reducing exposure to bad clients: they take your time and mess with your cash flow. One way to deal with these clients is to change your credit policy.
Pareto: The rule of Pareto was that a business will make 80 per cent of its income from 20 per cent of its clients. Your resolution for 2012 should be to find out which 20 per cent of your customers are producing the bulk of your revenues, and then do two things: find a way to keep them as clients and make a plan for how to get more clients just like them.
Staff development: In 2012, resolve to see your employees as assets who create revenues for your business. You need to develop these people because learning, growing employees who feel they are making a contribution are more valuable than those who just punch a clock. But you have to invest in them to make this happen.
Hire one expert: an excellent resolution is to engage the services of at least one new expert. In business we so often become engrossed in our own world, kidding ourselves that our problems are unique. An expert has seen your business issues many times before and knows how to address them.
The plan: I suggest a good resolution for 2012 is to pull out your business plan and read it cover to cover; have a look at your assumptions and your goals. Give it a reality check but also remind yourself of what you once wanted to achieve. Then either change the business plan to what it should say, or alter your operations to get back in line with what you originally planned for.
Leadership: All too often, business owners become bogged down in problems and they forget about their leadership role. But for more than half the Australian workforce, you are the predominant leader in their lives. In 2012, resolve to remember: the business owner is the leader and he or she sets the tone. If you want 2012 to be a winning year, you’ll have to lead the way.
* Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on mark.neos@ybr.com.au with any queries you may have or check www.ybr.com.au for your nearest branch.
