There is an old saying that states, “You can’t get there if you don’t know where you’re going.” Whether that’s on a road trip or in your business, it’s very true! So, where are you heading with your business?
With a full quarter of business and financials behind you, it’s time to look at those results to make sure your company’s bottom line is continually improving and that your business is headed in the right direction.
Review and assess financials
When reviewing your first quarter financials, first review last year’s figures to see how your business finished; this will provide a comparison base going forward. As you look these over, identify your key performance indicators (KPIs) that are basic to your business, and measure and review these month to month. Examples of common KPIs include profitability growth, sales increases, and expense reduction.
Compare year-to-date budget vs. actual and last year/this year, pull monthly and quarterly reports and assess, assess, assess! Look for trends that you can act on, especially if you are seeing certain expenses increasing.
- Are cost of goods rising? You might consider buying in bulk, switching vendors or spreading out vendor concentration.
- Review all your insurance policies and consider putting your account out to bid with another broker.
- Has there been a change in energy costs? Find out if employees are turning lights off in unused rooms or during off hours, check for open windows, or call in your HVAC contractor.
- Are overtime costs going up? Employees may be taking advantage of your OT policy or are being paid for unauthorized overtime. It might be time to give out raises or hire additional staff to cut down on OT.
Implement the new SOP
A key part of this evaluation is to implement the new processes you’ve worked on with your team. Let your employees know about the business’s direction and goals, and how you plan to reach those goals. Make sure everyone is aware of the changes you’ve made in recent months (and why) so they can be a vital part of implementing those changes correctly in order to build your business.
As the business owner, you and your management team must hold employees to the new standard operating procedures and, if something is not working as planned, make minor changes as needed.
Our next newsletter will give you some specific points to assist you in monitoring things… and one, possibly surprising, suggestion as well. Stay tuned!