Business has so many moving parts. You have to manage systems and money, motivate and lead your staff, find an effective marketing mix and tweak it as times and consumer whims change. Plus, you have to make sure you’re not getting in your way as you work to grow your company.
To balance between the here and now and stay ahead in business you have to be focused on today and the future at the same time. This constant ebb and flow makes it easy to get lost in the minutiae of your business. The New Year—and the first quarter of business—is a good time to make strategic changes that will keep your business healthy. (The very first step in this process is taking stock of yourself: Check out the five questions you need to ask yourself in order to lead a successful business.)
To cut to the chase and get rid of anything that is preventing bigger revenues and profits, ask these four questions about your business:
- Is my business profitable? Having an amazing product or great service is wonderful, but the business infrastructure that supports and propels the sale of that product and service is most crucial. As a matter of fact, you could have an average product or service with a solid business infrastructure and still be a business success. Entrepreneurs tend to focus more on the product offerings and not on the business infrastructure that causes the business to earn money. This is a mistake. The measure of whether the business is sustainable is whether you are profitable (or trending toward profitability if you’re start-up). The bottom line is: Does your business have money left over after all expenses and commitments are taken care of? If it does, you are profitable. If it does not, you are not profitable. Don’t let your business go unchecked heading into the New Year.
- What are my numbers? If you are not profitable, you need to immediately figure out why. Sometimes loans and investments provide a false sense of financial stability in a business; but the real question is: What is the business earning? On a weekly or monthly basis you need to know at least three numbers: Your gross profit (revenue minus cost of goods or services), operating profit (revenue minus all the expenses to run the business except interest, taxes and depreciation) and net profit (revenue minus every expense including interest, taxes and depreciation). Reviewing these numbers every month will tell you the health of your business and whether your business success is trending up or down. You should also check on the typical profit margins for your industry. Are you performing in line with other companies in your field? You should know.