A. It’s a new year with new challenges, but there are many lessons from 2013 that you can use to ensure 2014 is a better, more productive year.
It’s also an excellent way to evaluate and approach challenges.
Here are eight questions to get your creative and strategic juices flowing.
1. What were the breakthroughs?
Hopefully you had a few: Grand slams, epiphanies and victories. Don’t move so fast that the lessons of those breakthroughs don’t sink in. Not only should you make time to enjoy them, you should deeply reflect on what enabled those breakthroughs and what principles, strategies or tactics can be applied to other areas of your business.
2. What were the breakdowns?
There is no upside in brooding about breakdowns, but there is an advantage in doing post mortems to find the causes. Look for the whats and the whys that contributed.
No breakdowns in the past year? Good for you. But certainly you had some moments where you came close to experiencing disaster. Look for hidden lessons in what almost happened and why.
3. Who delivered?
To he or she much is given, much is expected. Are you taking commensurate care of your best performers and business partners? Do you even know who they are?
You can ensure the longevity of valued relationships by giving them the appropriate appreciation, time and care. Sometimes we take for granted those who deliver and inadvertently damage the relationship. And maybe those who delivered in 2013 need new opportunities and rewards in 2014.
4. Who disappointed?
In a perfect world we could count on every business partner to do what he promised. In reality, not all partners perform equally, and we often waste time with those who disappoint us. Evaluate who you need to improve or replace to make your business more efficient and profitable. Don’t go to disappointing people out of unexamined habit.
5. Where do you need to persist?
Results aren’t linear. They arrive in fits and starts. Because we haven’t seen a gradual payout from some efforts, we begin doing them less and eventually stop doing them altogether. It wasn’t that the effort was misplaced: The problem was our lack of persistence.
Evaluating what to persist at is both science and art. If evidence from others who have benefited is compelling, don’t quit prematurely because you haven’t seen a pay off yet.
6. What do you need to let go?
Don’t stubbornly cling to practices, relationships and projects that have never reached critical mass. We persist in the wrong things out of habit and fear of admitting failure. For instance, if you’ve had an important ‘to do’ on your list for months (or years), it’s time to ‘let it go’.
Now is a good time to free up needed resources by letting go of the unproductive, vexing or wasteful. You’ll find the practice freeing.
7. What are the biggest threats?
Don’t you, like me, see threats well in advance and yet refuse to deal with them until it’s too late? Most of us buy our home alarm system after the break in. It’s human nature to play by the belief, ‘It won’t happen to me.’
I’m not suggesting paranoia, but if you know it will eventually rain, what are you doing today to prepare? Identify that most serious threat that could derail your business. Take steps to avoid what you can and develop a contingency plan for what you can’t.
8. What are the greatest opportunities?
Just as we can ignore threats, so can we miss the opportunities around us. We are sometimes so busy trying to create opportunities that we don’t see the ones that already exist. Where are the biggest opportunities for you and your team going forward?
Reflection is powerful when it leads to recalibration. Once you’ve identified the what, consider the why, but don’t get stuck on it. There are insights to be gained from understanding, but in an imperfect world, you won’t always determine the reasons something did or didn’t happen (or determine them correctly). The money question is “What to do now?” Recalibration is a change in attitude, behaviour and/or direction. And therein lies your great opportunity in the year ahead.
Read Next: Seven Signs of Trouble to Look Out For
B. Top tips for dealing with business disasters
Now that you’ve evaluated 2013, you’ve got a clearer picture of where you’re at. Is your business performing as well as you’d hoped? Remember, no business is ever safe from harm. Your strategy for growth might be in place, but what about dealing with unexpected crises? This guide will show you how to plan for and bounce back from an unexpected crisis — and keep your customers in the meantime.
It’s going to happen some day: A key employee is badly injured in an accident; a power outage knocks out your computers; a fire takes out your warehouse.
Unexpected emergencies can momentarily shut down operations, or even worse, put you out of business for weeks and force your customers to go elsewhere – and stay there. Are you prepared for this? It’s not as difficult as you think. Here’s how to plan for the inevitable.
Step 1: Determine what can go wrong
The first thing you should do is complete what’s commonly referred to as a vulnerability or risk assessment. This assessment will identify what could go wrong, the effect on your business if something does go wrong, and what priority you should take in minimising your risk exposure. During this assessment, you should:
Learn the threats and risks your business faces. Threats are anything that could happen to your people, processes, infrastructure or reputation, including natural threats (hurricanes and tornados), technological threats (machinery malfunctions), or human threats (stealing and strikes).
Once you’ve identified the possible threats, determine how vulnerable you are to them. How reliable is your data back-up system in the event of a power outage? Are your employees properly trained for an earthquake? What about your security system – how capable are you of preventing customer or employee theft? Determine what your most vulnerable areas are and what mitigation measures are needed to protect them.
With threats and vulnerabilities identified, start prioritising.
Rank your threats in order of frequency. Now rank your vulnerabilities to these threats by the impact they’ll have on your business; for example, inventory results show employee theft is R50 000 per year, computer failure costs R1 000 per hour, and so on. Apply those numbers to the prioritised risks, and now you have a risk exposure for each threat. The higher the risk exposure, the more it’s worth your while to protect yourself from that threat.
Step 2: Develop a plan
An emergency action plan is a written procedure manual for dealing with the threats you’ve identified in step one. Some of the components of your plan will be prescribed by law, regulations or good business sense.
When there’s a legal requirement to do something, you’re usually – but not always – told how to comply. There are a number of different ways to create your emergency plan; however, all emergency plans tend to have the same basic elements. Emergency actions plans should contain the following minimum elements documented in writing:
- Clear, written policies that designate a chain of command, listing names and job titles of the people or departments responsible for making decisions, monitoring response actions, and recovering back-to-normal operations
- Names of the people responsible for assessing the degree of risk to life and property, and who should be notified for various types of emergencies
- Specific instructions for shutting down equipment and production processes and stopping business activities
- Facility evacuation procedures, including a designated meeting site outside the facility and a process to account for all employees after an evacuation
- Procedures for employees who are responsible for shutting down critical operations before they evacuate the facility
- Specific training, practice schedules and equipment requirements for employees who are responsible for rescue operations, medical duties, hazardous responses, fire fighting and other responses specific to your work site
- The preferred means of reporting fires and other emergencies.
- Finally, ensure that you have a way of contacting your customers should you have the need. A press release, an email or a sign that directs them to a new location or provides them with information on when you’ll be back in business go far in reminding folks that your reputation is dependent on taking care of your customers.
Step 3: Be ready to respond
Once you get the basic emergency action plan written, tell your employees. Make sure they know what’s expected of them in an emergency – any kind of emergency.
If they haven’t been involved before, give them an opportunity to ‘dry run’ the plan and talk over how things might go in an emergency scenario (this is called a tabletop exercise). You might find that there are changes you need to make to some of the plan’s details. That’s good. No plan is perfect, and it’s not even a plan until it’s been tested.
Be sure to share your response protocols, especially your evacuation procedures, with the local fire department, emergency medical service and police department. These are likely to be the first type of assistance to arrive on the scene, and they’ll need to know what actions you’ve taken.
When they’ve been apprised of your emergency action plan ahead of time, they’re better prepared to help. They’re also experienced with these kinds of plans and can provide valuable insight that you may want to incorporate into your written plan.
Some other areas of training for your employees that’ll help mitigate the effects of an emergency and provide huge returns in employee satisfaction and business reputation include:
- Emergency equipment shutdown
- Emergency notification procedures
- Building evacuation procedures
- Fire extinguisher use
- Basic first aid
- Cardio-pulmonary respiration (CPR).
- Training is an important and relatively inexpensive part of emergency preparation that may save a life. More important, proper training can prevent an emergency from becoming a disaster and make all the difference between closing down operations for a few hours and being out of business indefinitely.
Step 4: Get back to business
Once you’ve implemented the first three steps, take the time to think about the worst-case scenario and make some plans for how you’ll recover. Some questions to think about – and answer – include these:
- Where will you find a new location to work?
- Where can you get replacement equipment and computers?
- Who will help clean up after the storm/fire/disaster?
- How will you recover your critical data – the computers or original documents damaged by water or fire?
- How will you reach your people?
- How will they reach you?
- How will they get to work?
- What if your suppliers aren’t as prepared and something happens to them?
- What programmes are available to help your business or help your people (Red Cross, Salvation Army)?
- There are many more questions you could ask yourself, but I’m sure you get the idea. What will it take for you to get back into business quickly? You might be very proud of getting your operations back up in three weeks, but if your competitor does it in one, where will your customers go? How much will your reputation suffer?
Remember, there’s no way to guarantee that once you’re in business, you’ll stay in business. It’s up to you to plan ahead and be prepared by creating the most resilient business possible.
Read Next: Can Your Business Survive If You’re Gone?
C. See if you score high on the financial fitness quiz
The current economic environment creates a dilemma of sorts for entrepreneurs. Due to the economic slowdown and a lack of sales, businesses have seen their balance sheets deteriorate to the point that they’re no longer a viable credit risk.
Thus, banks have restricted their credit and lending policies, severely impacting entrepreneurial firms. What’s the solution? Entrepreneurs need to focus on the big three: Cash, sales and debt. Alongside is a simple quiz; the higher your score, the better you are financially.
1. Cash flow: How long can you pay your current monthly bills using the cash you have on hand?
- 31 to 60 days +3
- 7 to 30 days +1
- Less than 7 days -3
2. Monthly cash flow divided by interest expense:
- Greater than 2,0 +3
- 1,01 to 1,99 +1
- Less than 1,0 -3
3. Revenue growth over the past year:
- Increased +3
- Held on to customers +1
- Decreased -3
4. Percentage increase in new customers (from last quarter)
- Greater than 10% +3
- From 1 to 10% -1
- Lost up to 10% of customer base -3
5. Debt to assets ratio:
- No debt +3
- 01 to ,79 +1
- Greater than ,80 -3
6. Business credit card debt:
- No debt +3
- R10 000 to R25 000 +1
- Greater than R25 000 -3
Remember, the solution to surviving tough times is balancing the three-legged stool: Cash, sales and debt. Pay attention to all three and you should do okay. Add up your score below to see where you are:
- Severe risk of failure: -11 to -18
- High risk of failure: -3 to -10
- Elevated risk of failure: -2 to +3
- Guarded risk of failure: +4 to +11
- Low risk of failure: +12 to +18