As you kick off this new year, are you reminded of the early days of last year and all the promises you made to yourself, your employees and your customers?
- We’re finally going to track all our top metrics monthly.
- We are going to look at our budget more than once a year.
- I’m going to change sales incentives to better align with our target customers.
- We are going to surprise and delight our customers this year.
- We will re-evaluate all our marketing spend.
These are only a small fraction of the long list of things founders and managers are hoping for at the start of a new year. If you did, in fact, tackle all your resolutions, we are impressed. Most don’t.
Whether you’re a multi-million dollar company or solopreneur, we hear the same woes and challenges year after year. Time and money —money and time. Like a broken record.
The thing is that time and money are really quite similar, in that sometimes you have to invest it to make more of it. Obviously, time is finite, but the idea is to invest time into creating efficiencies that save time going forward. This is especially true at the beginning of the year. Invest time now that will pay out many times forward over the course of the year. And invest money to create processes and habits that will make you more money in the long run.
Nail Down Your Most Critical KPIs and a Process for Reviewing Them
Key performance indicators are the drivers of your business and keys to your growth. If you’re killing it on all your KPIs, then your business should be killing it. If you’re not, you should be able to dig down and figure out why. As your company grows, you have levels of KPIs: your company KPIs, specific departmental KPIs and even team and individual KPIs.
And you should want to review them constantly to see how your business is performing — not just a gut-level review, but a real, hard numbers review. Make your company-level KPIs crystal clear to all your employees so they can make sure their KPIs ladder up. So many businesses fail to even define them. So, give yourself a leg up and don’t just define them; live and grow by them. If you need a push in the right direction, this article might help.
Compare Your Budget to Your Actuals Every Month
Use a budget like it’s meant to be used: to compare what you thought would happen with your business to what actually happened and iterate along the way. You’ll learn more about what is and isn’t working and be able to shift gears accordingly and quickly.
For example, one food and beverage client wanted to understand how they were tracking against their goals month-over-month, so we helped them build a budget variance. Two months into the monthly budget review, they realized their cost of goods sold (COGS) had increased 15 percent compared to budget (and not because of production increases). It turns out one of their suppliers had raised prices without warning. Because they caught the issue early on, they were able to substitute ingredients and bring their margins back up quickly. Had they not done a monthly variance, their bottom line would have suffered badly.
Start Preparing for Tax Season on January 2
Does that feel early to you? It shouldn’t. We recommend clients first get in touch with their tax professionals in October to see what they should be thinking about as they close out the year.
Here’s the rationale for getting on your taxes early:
- Tax preparers are less rushed early in the year, so you’ll get platinum treatment.
- You’ll pay less. Because your bookkeeper, accountant and tax preparer have ample time to collaborate and exchange relevant information, you won’t run into having to pay the higher hourly rate of a tax preparer for tasks that your bookkeeper could have completed. You‘ll also avoid rush fees that can add up when you’re tackling things last minute.
- Decreased stress. Scrambling to get all your documentation together, reconcile months of financial data that was neglected, send 1099s and do the myriad of other tasks required during tax season in the last week or two before filing can cause serious mental and bodily stress.
Outsource Your Finances to Someone Who Will Hold You Accountable
The right finance team will work with you to identify your needs and proactively provide the information you need to make better business decisions. Increased insight and efficiencies, lower costs and improved profitability are only the measurable metrics a finance partner can provide. The confidence you gain in your financial data, the weight that’s removed from your shoulders and the time you get back to focus on other more important things is less measurable but more important.Thank Your Team, Your Clients and Your Vendors
Good relationships are so important to running a great business, but we often take them for granted. Invest the time and some money into making your people — your team, your clients, your contractors and everyone else you work with — feel good. We’re all people but we don’t always treat each other that way, especially at work. We start thinking of people as their functions or deliverables or generally as objects that you can sub in and out. Don’t let yourself fall into that trap. Kindness and empathy, like time and money well-spent, are two investments that pay back many times over.