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WNC Business

Understanding your business for a positive year

Jan 30, 2023 09:54AM ● By Randee Brown

There are plenty of considerations for any business as we begin a new year, and according to Roy Hill, a mentor with the WNC Chapter of SCORE, a network of volunteer expert business mentors, a full and complete understanding of your business is the best place to start.

“You’ve really got to understand how your business works,” Hill said. “Perform a self-assessment of your business in order to gather information about where it is, where you are spending your time, what your profit margins are, and if there is any seasonality related to the business. You’ve got to know where you are to figure out where you need to go.”

Hill said that this data will set the stage for any kind of business plan. “If you don’t have any data, you need to be thinking about how to get some,” he said. “You’ve got to be able to look at the cause and effect of your decisions.” Hill said that today’s technology allows for hundreds of resources for data collection. “There are so many possibilities within a huge variety of apps and programs, some are even industry-specific. If you can’t determine which is the best program for you, talk to others in your sector and find out what is working for them.”

Once you have a baseline understanding of where your business is, the next step Hill recommends is to determine your risk profile. “How big are your goals? What are you willing to risk to gain these? What can you sleep with at night?” Hill asked. “The answers will make a difference in how you structure your whole year.”

According to Hill, business planning needs to be continuous and across both the short- and long-term. “You can’t make a five-year plan without first planning for the next six months,” he said. “With a short-term plan in place, it’s easier to look at the long-term. You can always keep the long-term plan flexible to pivot and shift as needed.”

Once your plans are in place, Hill said that a business owner needs to see if there is room for expansion with the business’s current standing. “If not,” he said, “look for where you need to make adjustments if you are unhappy with your current results. Take a look at yourself, too. Check if you are aligned with the business and the right line of work, and check for where you may be able to pivot to more closely match your personal skills.”

Money, Hill said, is an important factor to consider as well. “A business owner has to know how much money they need to live on,” he said. “Make notes of where your money comes from and where it goes, and understand how your personal finances are interlocked with the finances of your business.” When determining the number needed to live on, Hill suggests also accounting for a business reserve for when things go wrong, for example, necessary repairs that may come up.

Once a business has the metrics in place and the business owner knows the dollar amount necessary to live, Hill said it’s then possible to determine if your business is doing well or not. “Don’t wait til the end of the month to look at your numbers,” he said. “Take a look at your key positioning indicators, and get a feel for how your business could do better. The goal should always be continuous improvement. Keep looking for where the train could leave the tracks. If you have a curve ahead – slow down. If there is a hill approaching – give it some power.”

Focusing on the tasks you are good at can help your business become more efficient, according to Hill. “First, make a list of all of the tasks that you are actually doing throughout the day,” Hill said. “Find out where the waste is, and determine what you can become better or more efficient at. Think about what you can have someone else do that may streamline these tasks.” Outsourcing certain tasks such as marketing, information technology, legal services, and accounting are professional services that are available to support businesses.

Larger businesses may be able to structure their company in a way that makes it practical to outsource some tasks, but it may be more difficult for smaller businesses. “A small business owner wears something like 25 different hats,” Hill said. “Since the owner may be the sole engine of the company, it may not always be practical to outsource different tasks.” 

When it is not possible to outsource tasks, Hill suggests taking a course on a particular topic to learn how to perform that task more effectively. Hill also suggests standardizing existing systems and processes to make them more efficient. “Make each step standard,” he said. “Instructions and training materials can be streamlined, as can communication. Make it easy for the next person to understand what is going on, where the company is in each process, and what the next person needs to do to complete the task at hand. This promotes continuity, teamwork, and saves time by eliminating the need for employees to ask repetitive questions and reduces chances for balls being dropped.”

Communication is essential for any system or process in any business, according to Hill. “The regularity and scheduling of team meetings can vary, but they need to happen,” he said. “It never hurts to start off the morning with a quick meeting, even if only 10 minutes long.” He said that one-on-one meetings with each employee are helpful as well. “It’s important to check in with each individual to keep up with what they are doing and how they are doing,” he said. “Keep notes of where there needs to be improvement, and also of where they are doing well. The good things need to be reiterated just as much as the bad things need to be corrected. Also, if there are problems, speak with that employee to find out where they are arising. It may be a problem that is handed to them instead of something they are doing wrong.”

When reiterating the positives of an individual’s work, Hill said that positive reinforcement can come in many forms. “Positive reinforcement turns into motivation,” he said. “Whether it be a raise, extra time off, a bonus, verbal praise, or a lunch, individuals will work harder if they are incentivized and know that they are appreciated. If you are in any position to reward your employees, you’d be foolish if you don’t.”

While all of the above can help a business get into a position to grow, Hill said that knowing who and when to ask for help can have a tremendous impact on any business or organization. “There are so many free resources around WNC,” he said. “From local colleges, county Chambers of Commerce, SCORE, small businesses associations, and other organizations, look at the focus of each of these resources and find the one that matches your needs. Knowing the key thing that you are looking for can help find the right resource. Know the key words, call around and ask, and keep looking until you find what you need."