New Year Resolutions: A Checklist for Your Business

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New Year Resolutions: A Checklist for Your BusinessNow that most businesses are gathering last year’s financial information it is a great time to review the results and make resolutions for the upcoming year.  To help clarify your resolutions I listed some choices. It doesn’t matter if you are focused on growth, profitability, or reorganizing the following checklist will provide options to consider.

I promise to value my customers more.

  • Identify the top 10 customers in sales and in gross margin. Upgrade that list. Is your company dependent on one customer or one industry? Are you missing an opportunity or industry? Where are their futures going? Are you going with them?
  • Identify the three reasons they buy from you and focus on that.
  • Describe your current ideal customer and find 5 more.  Is your advertising and sales staff targeted enough to focus on getting the best or just getting?
  • Measure the average lifetime of a customer and increase it by 3 months.
  • Calculate the average sales transaction amount and develop a plan to increase it by 10%.

I promise to coach and mentor the staff to become more productive.

  • Review the year-end wages and sort by highest paid. Does the value match the amount paid?
  • Measure sales dollars per employee and develop a plan to increase it by 10%. Include all employees: sales, operations and administrative.
  • Divide the staff into the top 20%, middle 70% and the lower 10% and resolve to improve the middle 70%. What can you do to build the best team?

I promise to work smarter not harder.

  • Review the training budget and adjust it accordingly. What knowledge does the company need to invest in to stay competitive?
  • Evaluate how the business is using technology.  How can it be used to improve your service?
  • We are moving to a culture of immediate gratification. How can you improve your process to decrease the time lag?

I resolve to increase working cash.

  • Plan cash needs….Start with last year’s income and expenses, adjust to this year’s expectations. Break it down by month.  Then draft a cash flow statement and note when the cash needs occur. Can you change vendor’s terms? Can you induce a customer to prepay? Adjust your plan to reflect current conditions and situation.
  • Calculate the day’s sales outstanding in your accounts receivable balance and reduce it by 10%. (Accounts receivable/(Sales/number of sales days)). Review customer sales terms and the process. Are you invoicing at the time of greatest value? Can the payment terms be shortened? Can you train the customers to pay on time? Do we put the due date or just 30 days? Do we give a discount for early payment?
  • Calculate the percent of gross sales that goes to the bottom line and create a plan to increase it by 10%. There are three ways to do this; sell more, increase prices or decrease costs.  Find the easiest way for you.
  • Measure how many times the inventory sold this year and plan to increase it by 10%.
  • Calculate how much gross margin each item contributed to the business, and then divide it into the top 20%, middle 70% and lower 10%. Improve the lower 10% by eliminating the product or raising prices.

By Mary Guldan Lindstrom

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