The older I get, the faster time flies, and here it is again, time to close the books and review the accomplishments of last year. Did 2015 end as you hoped or expected back in January?
Like many small business owners, you probably were mildly optimistic in January. Between 42 and 49 percent of small business owners felt the year would be slightly or even significantly better than 2014. However, recent polls are saying small business owners have less optimism about what’s ahead in 2016.
How can we feel optimistic and in charge when it’s such a volatile and unpredictable world? We know when we feel positive, we try new things and tackle bigger challenges than when we are worried or fearful. We also feel we can make a difference vs. be a victim. What can we do as we begin 2016 that will give us this sense of hopefulness and power in the year ahead?
Before I suggest what you might do in 2016 that will matter for you, your business and your people, let me suggest what you shouldn’t do.
- Blame someone ‘out there’: the government for over-regulating and high taxes, big business competition, poor quality of the labor pool.
- Blame something ‘out there’: the trend to online purchasing, the speed of change, global turmoil or weather conditions like drought or flooding.
- Call it quits in frustration — and maybe exhaustion — without first putting an exit plan together.
Here’s a strategy for 2016 so that when the year ends, you will say, “What we did really mattered.”
Wear Bifocals to Focus on the Right Stuff
In recent radio interviews about my book, EXIT SIGNS, I’ve talked about the need for business owners to wear bifocals, and not because we are all aging! Instead, we have competing goals that require us to concentrate on two very different focal points: the urgent day-to-day and the long-term, profitable transfer of ownership.
Like over 75 percent of owners, I bet you are counting on the proceeds of your company sale to fund your retirement. Growing the value of your business is essential. So, like many smart owners, you have an operating plan to achieve annual financial goals. But like too many small business owners (more than 85 percent), you probably don’t have an exit strategy for ownership transfer. Why is this? Because what’s Urgent trumps what’s Strategic. That’s why you need bifocals to run your business.
How to construct your ownership bifocals
In real life, I wear clear transition trifocals. When I’m driving, they let me read the Google directions on my phone, see the mileage on my odometer, and make out the street signs a block away. Most people just wear bifocals. But any of these special lenses let us get where we are going without a lot of fumbling with multiple glasses or the hassle of taking them on and off.
Business owner bifocals do the same thing by letting us see what’s Urgent AND what’s Strategic with more ease and focus. Here’s how you construct your personalized bifocals.
What’s Urgent: List the five factors that impact your company’s quarterly and yearly profit and growth. These probably include your marketing and sales plans, your cost containment goals, key talent or technology acquisitions and so forth. Then list your 3- to 5-year growth goal, either in dollars or as a percentage.
What’s Strategic: List the five factors that impact the sustainability, value and salability of your company. (In EXIT SIGNS, I list these as: Growth Strategy, Financial and Operating Efficiencies, Customer Base, Management Depth, Assets Price and Financial Terms). Then answer this: How much longer do you plan to own and run your business?
Find the AND: Now create a line of sight between these endpoints: annual targets, long-term growth goal, and exit timeline. In other words, how does what you do this next year drive short- AND long-term business goals including your exit? How does filling the gaps in what will drive your salability and value to a buyer help you also achieve this year’s goals? Reinforce the connection in how you measure and review progress each period, i.e., it’s all part of the same meeting.
An example:
In my former business we had an operating plan each year — overall revenue goals of X dollars; 15 percent profit margins; usually two process improvements such as IP protection or partner acquisition; and business development targets for each partner that impacted their year-end payout.
We also had a fairly outrageous long-range growth goal. And in the background we had a four-year exit strategy for me, the founder. Only by merging these three focal points could we expect to arrive at our destination.
Each yearly operating goal and plan also had to impact the long-range business growth target and work toward eliminating the threats we saw to our company value, financing the buyout, and retaining clients and revenue streams once I left.
By looking at the urgent and the strategic, the operational and the exit plans, we leveraged the impact of our work. AND, we never had to have a separate, full-blown “Exit Plan Review” meeting once our strategy was clear and integrated into our real work.
The Right Stuff in 2016
The year ahead will be your friend regardless of its potential volatility when you attend to the right stuff. By focusing on what keeps you busy — running and growing your business — AND on what keeps you awake at night — how to realize a profitable transfer of ownership — you will find the sweet spot that lets you reach both destinations.
Build your bifocals, and as 2016 closes, regardless of the national polls on business optimism, you will be part of what brought the average rating up.