There are many reasons why New Year’s resolutions don’t work. They are things we think we “should” do and therefore don’t have the vested interest; and we try to make too many changes at once. They also tend to be too general.
It’s still good to have New Year’s resolutions; it’s an opportunity to grow and improve. And for business owners they are probably better restated as goals. To make these goals stick it’s important to craft them in a way that’s achievable and has an action plan for follow through.
The most common guide (and one by which I abide) to crafting effective goals is referred to by its acronym: SMART. This guide suggests that goals should be:
Achievable (or attainable)
For example, let’s say your goal is to write a business plan. Re-writing it as a SMART goal might look like this:
“I will write a polished 10-page business plan to expand my product offerings by March 31, 2015.” This statement covers the Specific, Measurable, and Time-bound aspects. You also need to be sure that the goal is Achievable (does the technology you need to expand your product lines exist?) and Realistic (do I have the capacity, time, and motivation to dedicate to this?).
Once you have your SMART goals, it helps to outline a strategy to attain them and give yourself a budget, if necessary. Writing a business plan is a pretty big goal, so it’s important to break it down. Part of the strategy could be setting aside time each week to work on it and creating a timeline for each section. If you want to hire an outside consultant to work with you, then give yourself a budget.
Below are seven New Year’s goals that I recommend for any entrepreneurs. As you contemplate which of these you want to adopt, be sure to adapt them to your individual situation and make them SMART!
1. “I will review last year’s financial statements.” As you know, there is a lot more than just numbers in your business’ historical financial statements. I recommend making time early in the year to compare your most recent year’s financial statements to previous years to see what changed, analyze trouble spots and strong spots. Some questions to ask: Did revenue grow? How come, and how can you replicate that this year? Were expenses too high? What happened, and how can it be avoided this year?
2. “I will revisit and revise my business plan.” Whether you wrote your business plan three months ago or three years ago, the beginning of the year is the ideal time to revisit your goals and plans to see how you have fared. Now is also the time to update your plan based on how reality is treating your business and any changes in operations or goals. If you don’t have a plan; make the time to at least chart out SMART goals for your business.
3. “I will create a cash flow plan for the upcoming year.” Even if you’ve been in business successfully for a number of years, it never hurts to lay out expectations of cash inflows and outflows for your business for the coming year. Having benchmarks to compare to actuals throughout the year will alert you if anything starts deviating significantly. For newer businesses, I recommend a monthly cash flow plan, but for established businesses, a quarterly cash flow plan should be just fine. Our Quick and Dirty Cash Flow Projections are a great internal tool just for this purpose.
4. “I will create a plan to get out of debt.” Having debt isn’t any fun. Drowning in debt is even less fun. Make sure you have a specific plan for paying down each loan. For help, check out our Quick and Dirty Cash Flow Projections.
5. “I will review and understand my business financial statements each month.” Don’t rely on your bookkeeper to alert you to potential problem areas. As the entrepreneur, it’s your responsibility to observe your business’ health each month by comparing your revenue to your target goals, and expenses to your target ratios and benchmarks. By reviewing your finances every month, you can identify trouble spots before they become glaring problems.
6. “I will aim for work/life balance.” By far the most difficult resolution to keep, as it seems all entrepreneurs are much heavier on the work side of the equation than the life side. Remember, burnout isn’t a business plan.
7. “I will attend at least one major industry event.” A big part of success in any business comes from learning from and partnering with others. Industry events are wonderful places to seek out new ideas and keep your finger on the pulse of market trends. These are also spaces to form new partnerships, which are important for your business, no matter how small scale.
What are your goals for this year? If you need help, give us a call or send a note.