The arrival of winter brings another year to a close (they seem to fly by faster as we get older). It is a time to slow down, appreciate family and friends, and celebrate the holiday season. 2019 has been an interesting year, the economy has performed differently than predicted and many dealers have experienced a significant uptick in business revenue. You’ve been busy and your people have been busy, but busy doesn’t always mean that you’ve had a good year. Now is a good time to reflect on your metrics.
Business review
Hopefully you’ve been tracking your profitability and having discussions with your accountant and business coach at least once each quarter; if you haven’t, it’s not too late.
Some questions that are helpful to start with:
What were our goals for the year?
Did you have a strategic plan last year? If not, this year is a good time to start.
Where did we succeed, and where can we improve?
Were you able to pivot in response to challenges and opportunities? Where did you fail, and what can be learned? When you succeeded, did you capture what helped to deliver the outcome?
Who needs to be recognized and rewarded?
Identify the members of your team that have earned special rewards, and be sure to recognize (appreciation is often worth more than money) every member of your team that contributed to success this year. For the slackers on your team…shame on you for not helping them succeed! Come up with a plan for each one of them so that they can shine, or find happiness with a new team.
How’s our company culture?
Are you creating and sustaining a supportive environment that helps all team members feel like they have opportunities to work, learn, and grow? Do you and the rest of your leadership team encourage the team to serve your clients by improving their lives with better water quality? Does your team understand your company’s vision for the future, and do you have a clearly defined mission statement to help guide them through the present? Have you defined a value statement to help the team understand what you believe in as an organization? If you don’t carefully build your company culture, it might evolve on its own into something that you don’t like.
What did it cost us to do business this year?
I still see too many business owners who have no idea what their total burdened labor cost is. Look at everything from advertising, marketing, commissions, wages, owners’ compensation and everything else it took to operate this year. Understanding actual overhead and true labor costs will empower you to charge the correct prices for your products and services, so that you can serve your clients better and provide fair compensation to yourself and your team.
Did we make any money?
You’ll need to review the three fundamental business financial reports:
Balance sheet – shows your business’s assets, liabilities and equity.
Income statement – helps you quickly see if your business is profitable by itemizing your revenue and expenses, and whether they ended in a gain or loss of money.
Cash flow statement – shows you where the money went. You’ll want to see:
Cash flow from operating activities – revenue and expenses
Cash flow from investing activities – assets purchased and sold
Cash flow from financial activities – loans and loan repayments
Once you’ve examined these, dig a little deeper by checking your current ratio, total debt ratio and profit margin. It won’t take long with a little help from your accountant.
What do we want to achieve next year?
Look at your own goals and align them with broader company strategic goals. This is good to discuss with your leadership team and then communicate to the entire organization so that they can understand the ‘why’ as much as the ‘how.’
Once you’ve completed your analysis, work on what needs to be improved, and don’t forget to assess your performance at least every quarter, and make appropriate adjustments as needed.
It’s been a good year, let’s keep it that way with a sensible, thoughtful approach to winter so that you and your team remain safe while providing your clients with the very best water. Remember to take a breath, relax and have some fun before we start it all over again!