Is Your Small Business Too Busy For Strategy?
As the busy owners of small businesses, it’s easy for the months, weeks and even years to slip by without us noticing. Our businesses may continue to run, and everything may seem fine, but are we really on course for where we want to be in the next few months, or years? It is important not to forget about business strategy, no matter how small your business is, and to review where you are at and where you are going from time to time.
At Float, we’re just back in Edinburgh after taking a few days out (in the wonderful setting of Balone Castle) to think through our own strategy for the next few months, and year, and it’s been really helpful for us. We are better aligned as a team and have a much clearer focus on what is important to us over the next few months. If you haven’t thought about where you are at or where you are going for a while, now is a great time to make a start, before the pre-Christmas crunch kicks in!
But where should you start? Here are a few thoughts and tips based on what we’ve learned about thinking strategically.
Your first strategy session
First up, assemble a small team, ideally one or two other key people from the business, and an honest outsider. You want to have people who can all be open and honest about both the business, and their personal goals.
Give yourselves plenty of time to go over it all – perhaps two or three seperate sessions over the course of a couple of days if you can manage it. This gives you time to reflect on the discussion, and come back with new questions and suggestions.
A simple way to structure a strategy session is for each area of your business:
- Review: collect data, thoughts and notes on what has happened over the last 3/6/12 months.
- Analyse: based on what you have collected, discuss how you feel it has been, what was good and bad, and what could be worked on.
- Plan: look forward to the next 3/6/12 months and decide what you would like to change, and how, and how you will measure the results.
Five areas to focus on
1. Metrics
It’s hard to improve what you can’t measure. As you are doing your review of the last 12 months, think about what questions are hard/impossible to answer. Are there any simple things you can do to track the information that you are missing. You don’t have to be a statistics junkie, but it can be useful to know whether you win 90% of contracts that you pitch for, or only 10%. If you are a web/software development company perhaps you could start an internal project to improve your metrics.
2. Financials
Clearly, a key part of doing business is making money. Tools like FreeAgentand Float make managing your finances much easier, but it is still important to review and question how things are going.
Think about:
- How visible are your finances? Are you keeping on top of your numbers from week to week, or are you just leaving everything for your accountant to deal with at the end of the year?
- How has the cash flow been? most businesses cash flow peaks and troughs, but did you have any significant crunch points, and what caused them? Did you get caught out by a big tax payment, or a client who never paid their invoice? How much profit have you made? Were any specific projects particularly profitable, or unprofitable?
- Is your income too reliant on one or two key customers?
- Are you charging enough? As inflation raises your costs, and your business gets more efficient at delivering it’s services, it’s okay to raise your prices. Think about how much you could raise them by, and how you would introduce the price increase to new and existing customers.
3. Marketing
Are you actively marketing your business, or are you just relying on word of mouth from your existing customers to bring in new leads? Which marketing channels have been effective at bringing in new leads, and which ones haven’t? If you have a blog that is sitting on your site never being updated, would it make more sense to just remove it?
4. Personal and business goals
Is running the business meeting the personal goals of you and the other directors? How is your work/life balance? Are you happy, or are you just busy? Do you want to grow the business to be something bigger, or are you happy with where it is at now?
5. Culture and Employees
Even in very small businesses, culture is really important. A great culture hopefully means happier, more productive people. And happy staff are also less likely to jump ship for a new job, meaning you have to re-hire, which can be a disruptive and expensive process for small businesses.
- How is the office mood? How about on a bad day?
- Are your employees learning, growing, getting pay rises, and other good benefits?
- Are you concerned about any employees in particular?
- Are you keeping your staff in the loop with how the business is doing, and where it is – going?
