It’s almost the end of a business year and the beginning of another. And, as the old saying goes, insanity is doing the same thing over and over and expecting to get different results. If you want better business results, especially in a slow-growth economy, you’ll need to adopt some fresh new resolutions.
The key to improved results is innovative actions that, while they stick within the limits of your budget, also take you in exciting new directions. Here are some resolutions to help your small business innovate in 2011.
1. Be proactive
Things change, but do you? If your business is simply reacting to declining sales, then you are not being a proactive innovator. Be the one who makes change happen, instead of a victim of change. Resolve to take the proverbial bull by the horns in 2011. But how? You will need a few more resolutions in order to be practically and profitably innovative.
2. Stop doing anything that no longer makes a profit
Most businesses are a mix of break-even activities, loss centers, and one or more sources of profit. For example, a gas station owner may have three properties, one of which is in a high-traffic area and makes a solid profit from pump sales, while another makes a profit only on its large convenience store and food court. The third used to make a profit from both gas sales and repairs, but now barely breaks even. Add it all up, and you have a low-profit business that takes a lot of management effort. Sell the property that barely breaks even, concentrate on the two that have profit centers, and you are heading toward a stronger bottom line with the ability to focus more management attention on building those profits.
It is hard to sell off or close parts of your business that do not make money, especially if your business is small or mid-sized, because all its parts tend to be interlinked. However, by taking this hard step early in the year, it becomes much easier to move ahead with growth-oriented innovations before another year gets away from you.
3. Find your most valuable asset, and make it the core of your business
Resolution 2 focuses on improving your cash flow. This third resolution helps with your makeover by getting the right strategic mix of hard assets such as property and equipment, and soft assets such as know-how, name recognition, customer lists and reputation. Because assets are illiquid (don’t change easily), they tend to lag behind strategy, and hold the business back. Don’t let your assets become an anchor to future growth. Ask yourself, Which are our most vital assets for the future, not from the past?
To identify your best assets for growth, look at your business as an outsider would. What would someone else be eager to pay for? This question narrows the list — sometimes to an alarming degree.
For example, a high-end restaurant and bar specializing in the well-to-do dinner crowd was no longer making a good profit for its owners. The menu and the name, both sources of pride, were no longer valuable assets because they had stopped delivering crowds and profits. The most valuable asset turned out to be the lease because the location was good with ample parking and high visibility in a popular downtown area. The owners promptly jettisoned the menu, costly chefs, sophisticated name and upscale decor, and reopened as areasonably priced beer and burger joint that immediately started to post triple the profits of the old restaurant.
Nostalgia is not bankable. Be practical about what your best asset is and how to put it to use in today’s economy. Sell off or discard any asset that won’t work hard for you in 2011.
4. Take some time away from your business to think about it
Fresh eyes help immensely. You could hire an expensive consultant with fresh eyes but with little or no practical knowledge of your business. However, you are more likely to find a new approach that really works if you invest in freshening your own perspective, instead of hiring someone to do your seeing for you.
5. Implement something by midyear
Innovations, at least successful ones, do not always spring fully-formed from the owner’s mind. They often take a period of experimenting and refining before they work well. So, get started as soon as possible in 2011, and try to have the major kinks worked out of your new strategy by the beginning of 2012. Then you won’t have to repeat 2011′s resolutions. Instead, you can resolve in 2012 to refine your new business model and harvest a higher levels of growth and profits.
6. Become a seasoned innovator
Innovation is a specific business skill that takes some study and practice to get good at. Pick up a good book on the subject, quiz entrepreneurs and other innovators you admire, and spend at least a half a day each week using the tools innovators use, such as brainstorming (which, contrary to skeptical press coverage, is the only way to produce a rich stew of potential new strategies or designs). Also, make sure your team of employees, distributors, or co-owners is innovative at heart and willing to try new things with the persistence it takes to make them work. If you have some stick-in-the-muds who simply won’t consider anything new, then get rid of them. Jettison the naysayers who rain on every new idea, so that you can approach your new business year with optimism and openness.