Time to Make Some Adjustments for the New Year
Happy New Year and welcome to 2015! I always enjoy the beginning of a new year. To me it’s like a fresh start, or in this day and age it’s a reboot, both in life and in business. Whether 2014 was great or not so great, you get a fresh start right now.
If you’re like me, you may have mulled over the past year: summing up victories and those yet to come; listing what went well and what may not have. You get the picture. So, for us, a new year is encouraging. Also encouraging is that economists are saying the business environment in 2015 doesn’t look to be changing much from 2014.
So I’ll ask you the same question I ask myself at this time of year: “What will you do differently in 2015?” If the selling environment in your market remains the same, it leaves only you to improve in order to grow. Resolve this year to: Put in place the missing pieces in your business and determine the actions needed to fill those gaps. Need some inspiration? Start with these:
Selling Price - You may be spending much of your energy and your money to advertise and make the phone ring. You have trained CSRs to book the call and sent all your technicians to training so they can sell that job. But, if your selling price is out-of-date, you may experience disappointing profits at month or year end.
When is the last time you determined your break-even point, or what I define as the amount you need to charge to cover overhead, profit margin and your own salary? It is a beneficial best practice to calculate your company’s break-even and determine your selling price quarterly, or at a minimum every six months. Remember, you may be priced right, but going through this financial exercise will ensure your selling price is based on fact and not fiction.
Weekly 1:1 Meetings - Do you have weekly 1:1 meetings in your company? As the owner, do you meet with your managers individually every week? Are these meetings held at the same time and day of the week? Were they consistent in 2014, like clockwork? Or are they hit-and-miss and not that big of a deal? When fires pop-up aren’t they more important than a 1:1? After all, you talk with your managers off and on all day, what more could you possibly talk about, right?
Wrong. There is nothing more powerful than 1:1 meetings when done right. These meetings should include a document the manager completes to give the meeting direction and hold the manager accountable on a weekly basis. Consider it your weekly present. Consistent 1:1 meetings will keep your managers on the same page as you toward achieving the company goals; flush out roadblocks to getting things done; and provide a deadline for accountability — accountability I feel every Monday morning while I fill out my own form!
Financial Acumen - How well do you understand your income statement, balance sheet and cash flow statement? Do you see these as your scorecards and use them to manage your business?
Many years ago I understood very little about what a well-structured income statement looked like, and more what it told me about my business. So I started a personal mission to learn business financials. I researched online, read a few good books and found resources geared toward understanding financial statements as managers gave me the most understanding without too much accounting details. I was a sponge and learned from everyone around me including co-workers and other contractors. If this is an area of opportunity for you, you are not alone. I encourage you to start your own mission. Understanding financial statements is critical to your success and there are many resources available to you to help you learn and become proficient in this area.
Managing by Measuring - You have no doubt heard the phrase, “You can’t manage what you don’t measure.” Here at Nexstar, we live this phrase and coach our residential contractors on how they can too. We track many things, but we don’t track everything. Why not? We track what is important in reaching our goals and the effectiveness of what we deliver to our customers. This is how we improve.
For example, as the Nexstar coaching manager, I support 11 coaches, more than half of whom do not work in my location. To help manage the remote coaches, we have tracking in place to measure the effectiveness and results of their daily work. In the same way, you probably have employees (technicians, installers and salespeople) who work outside of your company’s four walls. These folks are probably working hard and doing good work, but do you know how good their work is? Could it be better? If they asked how they could be more effective in what they do — would you know where to start, what to say or could you give them effective direction to improve? By establishing KPI’s (Key Performance Indicators) for their role, measuring and sharing the results with them — you could.
These are just a few ideas of what may be missing for you and your business. For some of us, the list could go on and on. In the spirit of the New Year, take some quiet time to focus on what is missing in your business today, commit to taking action and make 2015 a year of improvement!