Your First-Quarter Small-Business Checkup
The first quarter of 2013 has come and gone. Before you blink and it’s the end of summer — or worse, year-end — take time to do a first-quarter checkup.
Here’s are a few things you ought to think about while the year is young.
You set goals on Jan. 1. Where did you stand on March 30? “If there’s a performance miss, it’s absolutely critical to understand how much of the miss is due to an execution problem and how much of the miss is due to a strategy problem,” says Scott Engler, senior executive adviser for CEB Finance.
Every performance miss can be explained by answering three questions: “What things could we have done better? What things could we have planned better? And what do those answers, together, mean for how we should adjust going forward?” Engler says.
“The lethal mistake most businesses make is that they identify and treat a performance symptom rather than a cause. So they spend time, money, and energy treating the wrong thing; make everyone mad; and, in the process, ignore what are often simple solutions that could have easily fixed the performance issue,” he says.
For example, if your value proposition isn’t resonating with customers, pouring more money into marketing or pushing your sales will simply waste resources. “You can’t get back on track until you understand, as clearly as you can, why you’re off track,” Engler says. “Once you have clarity, business problems start looking like opportunities.”
What if you achieved some, but not all of your first-quarter goals? The answer starts with asking more questions: What did you learn from your successes? How can you exploit those?
Look at the goals you achieved and those you missed. “Take the lessons of what went right and determine if they can be applied to the missed goals,” suggests Greg DeSimone, a certified business coach for FocalPoint Coaching Excellence. “When looking at what went wrong, eliminate ineffective activities and reset your daily/weekly/monthly plan.”
Also consider whether you allocated enough resources to the missed goals. Sometimes goals are missed because they never had a chance. “Losing 52 pounds may be realistic if your time frame is a year, but not if your time frame is three months. The same applies for business goals,” DeSimone notes.
Your quarterly checkup should include an analysis of your finances, too. Use this actual data, instead of projections, to help you forecast the rest of the year. “If you’re exceeding expectations, this might be a good time to hire additional staff or prepare to produce additional product,” says Corey Ross, founder and director of BBC Easy, a financial services firm. “If you didn’t reach your financial goals, re-evaluate and consider scaling back.”
Every business implicitly or explicitly makes assumptions that underpin its expectations. At the three-month mark, see whether your assumptions were right or wrong. This exercise is important to moving forward, from both a risk and an opportunity perspective.
“One of our companies wildly underestimated demand for a product at the beginning of the year and failed to adjust as that demand began to build in the first quarter,” explains Engler. “They ended up with a spike in demand of 75 percent by the third quarter that they were unable to handle because they didn’t adjust their assumptions. That business went right into the pocket of their key competitor.
“Take some time to look that those assumptions, question them, and you’ll likely find new opportunities and avoid landmines that cripple small businesses.”
The company’s financial and performance goals aren’t the only aspects of your business that need reviewing. “It’s equally important to assess the current state of the people/culture of your organization,” says Mark Fernandes, chief leadership officer at Luck Companies, a building materials company.
Ask yourself: How is morale? If there’s a lack of energy and enthusiasm among your staff, find out why. Work to fix the environment. It’s tough to achieve your goals when your staff isn’t fully motivated.
Let’s say you’ve finished your quarterly assessment and you missed quite a few of your targets. How do you get back on track?
First off, says DeSimone, “Don’t beat yourself up. Everybody and every business misses goals from time to time. If you don’t, you’re not pushing yourself hard enough. Take the gift of experience and feedback and honestly reset your plan.”
Make a list of celebrations, no matter how small. Concentrating on the positive gives you the confidence to move forward, says Brian Miller, chief operating officer of AdviCoach, a business advising franchise.
Being flexible is key, Engler adds. “Stay solution-focused. Most business success doesn’t come from the original plan, but from learning and adjusting.”
A common mistake, says DeSimone, is to have too many goals or plan to do too many things to achieve your goals. He recommends that you “set three goals and three key activities that need to be done to achieve those goals. Then schedule those activities and follow through on your schedule. I call that my 3 x 3 plan.”
What you don’t want to do is stick with something that isn’t working and merely hope it will get better, Ross says.
Most importantly, says Fernandes, “Keep thinking and dreaming big. Everyone is watching you. Your leadership will impact your business and your people — remember that the organization will mirror you.”
Sheryl Nance-Nash is a business writer for Intuit and is passionate about solving small business problems.