The New Year has kicked off and this is a good time to take a look at your business and make changes or adjustments to your business operates. You know the saying “ the definition of insanity is doing the same thing over and over and expecting different results” Well, that’s how a lot of businesses operate when going into a new year. When my wife and me ran our business
we would find a nice place to go and hide for a few days between Christmas and New Year and layout our business plan for the next year.
We would look at things like:
1. Employee evaluation (Who do we hire and who do we fire)
2. Employee payroll (Who gets raises who does not)
3. Do we need new trucks or fix the old ones
4. How much money do we need to implement the changes
5. Who are our best customers and which ones do we want to give to our competitor
6. What additional services can we offer to our customers
7. What new revenue streams can we implement
You get the idea. I can’t tell you how helpful this get away time was for us. When the New Year started we hit the road running because we knew exactly what we wanted to do. So far this year I have four business owners I am working with to help make their business successful this year. Two of them are new startups and we know how hard it will be for them. We are sharing ideas
so we don’t reinvent the wheel as we go.
You‘ve heard the old saying “If you don’t know where you are going, how will you get there?” Too many business owners start their business without a plan. They simply “open their doors” for business and then expect to succeed. I know it’s hard to find time to make a plan for the year, but I assure you it’s the most important thing you will do this year. Simply write down a few
things you want to accomplish this year and put them where you can look at them every day. Here are a few things to help you get started:
Many businesses will have problems in the first few months because the owner runs out of money. That’s why it’s important to know what you want to accomplish before you start, so you know how much money you will need to accomplish your goal. It’s important to know how much money you are spending each month, and how much money you are going to make each month. If you’re a big company you probably use some sort of accounting system to keep track of this for you. The question is how often do you look at your books and make changes necessary to increase your profits. Running out of money is a result of poor planning.
Goals and Objectives
In your planning process create goals and objectives for your business. Break down goals and objectives by quarter – in other words, identify all of the things that must be done during the first quarter, the second quarter, the third quarter and the fourth. Look at the things I listed above and make them some of your goals.
Measure Goals and Objectives
All too often, once a business starts operating, the owner becomes too busy in the daily operations to take the necessary time to assess the progress of the business. It is fine to establish operational goals and objectives, but you also have to measure how well your business is performing against those goals and objectives. Measuring against the identified goals and objectives will tell the owner whether or not changes are necessary. Keep in mind that you goals can change based on business activity. That’s ok, that’s why it’s important to monitor your business operations monthly.
Watch Your Cash Flow
There is an old saying in business “Cash is King”. None holds truer than in towing. It’s important to know where you are making your money and where you are spending your money. That’s why monitoring cash flow is extremely important. It is really as simple as this: if you continue to spend more money than you bring in, you will soon be out of business.
Cash flow is all of the money that you take in each month minus all of your expenses.
Cash inflow is cash sales and accounts receivables collected.
Cash outflow is all monies paid for inventory purchases and operating expenses (rent, heat, hydro, salaries, marketing expenditures, etc.). Watch your money.
Knowledge is Power
Knowing where the industry is going will determine how you meet your goals and make money. Join an association, attend a trade show, or subscribe to “Tow Professional Magazine”. These are great ways to know what is going on in the industry. Its changing and you better be prepared to change with it.
What are the trends in your industry – is it growing or declining? What are new opportunities that can help you grow? Where can you position your business in this industry in order for your business to succeed? Will new technologies have an impact on your industry? I’m always surprised how many companies don’t know where they are making their money. Know who your best customer are and reward them. Know who your worse customers are and give them to your competitor.
Understand your industry will determine where you are going in 2015
Customers need a reason to come to, or to want to do business with your company. If your products or services are the same quality and prices as your competitor(s), why will people use your service? They already have an existing service. If you can offer a different or better service, better quality, lower prices, broader selection, faster delivery, better location, etc.), prospective customers will want to do business with your company.
Every business owner must objectively ask this question “If I were a customer, why would I want to do business with this (my) company?” If you cannot identify two good reasons, then rethink your positioning and your strategies.
Know Your Competition
Some business owners underestimate the competition. When I ran my business I always knew who my competition was and what they were offering. I never copied anything they did but it was important to know what they were doing.
The best way to get new business is to offer something new. Don’t ever let price determine your business. If you compete in price you will be out of business soon. You are a service provider and the best service wins all the time regardless of price. Make one of your goals to provide a new or improved service. Simply wearing uniforms, or driving clean trucks or improving
customer service will put you ahead of the competition.
If one of your goals is to increase your profit margins it’s a simple formula. Lower you expenses and raise your revenue. Don’t spend more than you make. You would be surprised how many business owners don’t know their expenses or their revenue it’s hard when you are running calls all day. One of your goals for this year should be to increase profits. The first thing you want to
do is identify all your expenses. I have some forms you can use to do this just give me a call. Once you know your expenses you will know how much money you need to cover your expenses. I will be happy to help you with this.
Pricing your services will determine your profit. Remember you are a service provider and if your services are good your customers will pay for it. Don’t compete with your competitor concentrate on providing the best service in the industry. If your selling prices are the same as your competitors and their operating costs are lower, their margins will be higher. If that is the case and you get into a price war with a competitor, you will not survive. You will have to find ways to reduce the cost if you plan to last in this industry. The lowest cost producer will always win a price war.
Poor Management Skills
I teach this in all my seminars, your employees are you biggest asset. If you plan on meeting your goals your employees are the one to make it happen. Frequently customers do business with companies because they like the people that they deal with in that company. If you do not treat your people fairly and with respect, you may have a constant turnover of employees. After a while, due to constant turnover, customers may become wary about dealing with your company.
I fine managing employees is the hardest job for most business owners because they never got educated in the skills necessary to manage. My website could be a good solution to improve your management skills. Treat your employees well and they will enthusiastically help to grow your business.
I hope this helps you know what you want to be in 2015.