Ask SCORE: Once again, it's time for New Year's resolutions
Once again, it's time for New Year's resolutions
A format for business review and resolution
By Richard Walton
Assistant District Director for SCORE
The start of a new year almost always brings up the issue of resolutions, things we want to start doing or stop doing, in other words, what we want to change in our own behavior. We don't hear about businesses making resolutions, but it may very well be the best time to think in terms of change for our businesses as well. Every business needs to periodically review its past performance and assess what has been accomplished, what has not been accomplished, and what we want to do now. Hence, the time for reflection and decision making based on this central question: 'What do we want to do now to change our business?'
I have developed a framework for Review and Resolution, which is specifically designed for the small business. A key feature of this Review and Resolution tool is the recognition that resources are limited and many objectives and goals of desired change cannot be accomplished in the short term, Nevertheless, incremental steps forward to realize parts of a plan can be instrumental in showing the value of change and also maintaining enthusiasm for the efforts to realize the long term objective. The Review and Resolution tool focuses upon several key areas of managerial concern. They are: 1) Management and Human Resources, 2) Finance and Data Management, 3) Operations Management, and 4) Managing the Future, Complexity and Change. Let's take each in turn. The section on resolution is merely a guide to where attention can be focused over the planning period. You should add your own resolutions as they pertain to your individual situation, but be sure to be specific about the changes you want to make, and the time and effort needed to 'make it happen'. And most importantly, create milestones that will show the incremental effort that has been made and the results that have been obtained, even if small. Remember that in the business of change, it is the journey that we spend our time on, not the destination.
1) Management and Human Resources
Review: Organization Strategy, Objective Attainment, Motivation of Personnel, Time Management, Personnel Development
Resolution: To develop and focus upon a sustainable strategy with incremental goals and objectives, to motivate personnel through creative incentives, to utilize time more effectively through delegation, work simplification, and a focus on the outside of the business as well as the inside (commonly known as working on the business rather than only working in the business), and personnel development through delegation, training, and new experiences. Above all else, don't say: 'If I need this done right, I'll have to do it myself'.
2) Finance and Data Management
Review: Financial Statements and comparison with Budgeted Goals, Cost Data
And Profitability, Cash Flow Analysis, Comparison with RMW (Risk
Management Associates) ratio data, Analysis both by summary and detail, Level
of Marketing Success or the lack thereof,
Resolution: To Manage Financial Data both in summary and detail format using
Ratio analysis, to create and maintain a Financial Plan for Resource Availability,
Utilization and Harvest, to effectively use Financial Resources to produce desired
3) Operations Management
Review: Operating Costs both Direct and Indirect to determine both Summary and Detail Costs, Quality Performance in all aspects of operations, Leverage for Potential Growth or Necessary Cutback
Resolution: To exercise greater control over all costs for improved performance, To improve all aspects of Quality Management and to Develop Change Plans as needed to Grow or Shrink Operations (GSO).
4) Managing the Future, Complexity and Change
Review: Preparation for the Future, Product Life cycle, Business Model for the Future, Organizational Capacity for Change, Dealing with Complexity, and Organizational Maturity (it's not just about time in grade, it's what you can do now as an organization that you could not have done before)
Resolution: To focus on the Future, To Monitor the Outside Environment for Needed Change, To Deal More Effectively with Complexity through a balance of Exploration and Exploitation.
So there you have it, a blue print for this year's R&R, Review and Resolution. As the New Year begins, every business should take a clear and unbiased look at where it has been (The Review) and where it wants to go (The Resolution). It is only through a carefully designed Review and an equally well thought out Resolution (could be more than one, of course) that real change can be made, whether it be for an individual or a business. These ideas and more are available through free counseling at SCORE, your Partner in Small business Success.
Mr. Walton teaches Financial Management, Operations Management, Corporation Finance, and Entrepreneurial Finance at Frostburg State University. He is also Assistant District Director for SCORE, Western Maryland, and the President of ERMACORP, a Hagerstown based Management Consulting Firm. He may be reached at 301-462-9850, or by email to Richard@ermacorp.com.