I spend a decent amount of time in my truck driving by myself in remote places. I think that has something to do with being a fisherman in Montana.
I was on a drive somewhere in the middle of Montana when the song "Road to Nowhere" came on my radio by the Talking Heads. After a while, especially on a long road trip, Montana starts to look the same; wide open brown grassy rolling hills and mountains. I thought to myself, "Yeah where the heck am I? I'm on a road to nowhere. Kind of like some businesses."
I don't know why I think about business so much, its kind of annoying, but a habit nonetheless. Let me explain what I mean when I say that some small businesses are on a road to nowhere.
A business on a road to nowhere
A business that is on a road to nowhere doesn't know where it is going, nor where it has been. I think the biggest correlation is the financial aspect of the business.
Too many businesses just flat out don't know their numbers.
It is pretty amazing that so many businesses operate with bookkeeping systems that are not kept up to date. That is what I mean when I say that many businesses don't know where they have been. They don't know their past or current financial status.
How can you run a business and make strategic decisions without updated and accurate financial reports?
No vision, strategy, or exit plan
Another thing I think some small businesses lack is some of the fundamentals of being in business; a vision, strategy and exit plan. When people decide to start a business they don't want to plan, they just want to go. They want to sell and bring in revenue. Believe me, I get it, but it is important to understand where you are trying to go.
Business vision - A vision statement for your business is an important part of keeping your business on track. Your business mission should be thought of as what your business currently does and your vision is where you want to go with the business. A vision will set up big picture goals that you constantly need to align your business toward.
Business strategy - Developing business strategy should be an ongoing activity for you as an owner. Your business and market are constantly changing and so will your strategy to stay on track with achieving your vision.
Exit plan - One major mistake that business owners make is not developing an exit plan. You should create an exit plan right from the beginning of your business and reevaluate it at least every 6 months. An exit plan will encompass your vision and also give you a clear direction of where you are trying to take the business. An exit plan also puts in place "triggers" so that you know when to execute on your exit strategy. Don't assume that an exit plan automatically means selling the business; that is just one of many exit strategies.
Going through the motions
I went on a river trip once with this guy Greg who was really good at "going through the motions." On a river trip, there is a lot to do with unpacking your gear, setting up tents, kitchen, cooking etc. Greg calls it going through the motions; its just kind of his instinct and he knows exactly what to do without thinking about it.
Some business owners just go through the motions on a day to day basis. They get comfortable with a routine and stick to it. Check email, make some phone calls, take a lunch break etc. The problem is that if you get too comfortable with your daily routine you may not be effective and efficient.
I call this syndrome busy being busy. When you ask a typical business owner how things are going what do most of them say? "I'm just so busy."
Of course, everyone is busy, but that doesn't mean you are working on stuff that matters. The truth is most people are working on things that do not matter, they are busy being busy.
An accountability partner can be huge for your small business. I always recommend that this is an outside 3rd party that is not invested in the business and that does not work in the day to day operation of your business. This person should be an ass kicker keeping you focused on things that matter in your business.
Get on track with a plan
So, if you are nodding your head, how do you get back on track? If your business is on a road to nowhere you need to take action.
1. Make sure you have a clear vision and business strategy that is communicated throughout your organization.
2. Write an exit plan and set up a recurring calendar event to review your exit plan every 6 months.
3. Find an accountability partner that is not an employee or investor in your business. This can be a paid or unpaid role, although my preference is that they are paid. Once you are paying for something you tend to care more.
4. Keep your bookkeeping regularly updated. I would suggest daily, but if you can't pull that off at least twice per week. You can use an outside bookkeeping service, but make sure that you are involved with the books on an intimate level.
5. Create an annual budget by month and make sure to review budget vs actual on a weekly basis.
6. Create a forecast by month, which is different from your budget. You should create a forecast for the next 3 months at the close of every single month. Take your actual performance and your knowledge of sales and expenses to make a really good educated guess about your future financial performance. It is important that this is a monthly task, every single month! Make sure that you look at actual vs forecast on a weekly basis.
7. Use your bookkeeping and forecast to make good strategic business decisions.
That's it. It's actually a pretty simple process. However, the majority of business owners don't and will not run their business this way. They would rather stay busy being busy.
Don't put your business on a road to nowhere. Follow my process and take your business to a whole other level.
Need some help getting there? Need a good accountability partner?
