How to Improve Your Business Faster Than Your Competition
If you run your company as most business owners do, you might take a deep look at your business numbers once every three months. Frankly, that’s not a terrible strategy. You have time to see how things are going and you aren’t spending too much time on the books. At least you’re actually looking at your numbers — which puts you well ahead of many other small business owners.
But, reviewing your key numbers only once a quarter can limit the opportunities you have to evolve your strategy and grow your company.
If your company closes its books quarterly and only looks at results quarterly, you’ll have a hard time adapting and evolving quickly to situations that arise within your business. That’s because you are only stepping back, reviewing your strategy, and course-correcting your business four times a year.
Thankfully, there’s a simple solution to make your company more nimble and agile than your competition.
1. Review your business plan and financial strategy every month
By simply switching to a monthly financial and strategy review process, you have 12 opportunities per year to evolve and make changes instead of just four. So, if you’re thinking about the number of times you take stock and improve your company, monthly goals provide three times as many chances to improve your company compared to companies that are only looking at their metrics on a quarterly basis.
Of course, there is a bit more work to closing your books more frequently and reviewing your key business numbers, but the payoff of being able to adjust your business strategy and set new goals for yourself and your team is invaluable.
In fact, this is how we do it here at LivePlan. We have a monthly process for everything in the company. We report on everything monthly and everyone has monthly goals. We have 12 times a year to look at our numbers, make changes as needed, and optimize our business.
This has been a huge benefit for us. As we learn more about our customers, what they want from our products, which marketing campaigns are working, and which aren’t, we can quickly adjust and make changes.
At the very least, we save money by not wasting time and cash on programs that aren’t working. At best, we’re able to make timely changes to our product and our company that positively impact our customers, and avert problems down the line.
2. Identify ways to automate and streamline your process
Here at LivePlan, we use a series of monthly meetings to review our progress and set new goals.
First, we have a senior managers’ meeting where we review our overall financial performance and other key metrics for the business. We discuss the overall strategy and high-level things that are working and not working. Major projects also get a quick review. If you need a refresher on what financial statements you should review, take a look at our article on business plan financials.
Separately, each team within the company meets to review the metrics that are critical for their team. For example, the customer service team reviews how long it took to respond to customer questions. How quickly did they answer the phone? What was the average hold time? How fast are emails responded to? How did customers rank our service?
These team meetings aren’t just about reviewing what happened, they’re about setting goals for the next month. Based on what we’ve learned from the previous month, we set new goals to reach for.
Special meetings, called “retrospectives” are also popular, especially with technical teams. These meetings are all about process improvement. The goal is to review the work that was done in the last month and decide on ways the team can be more efficient.
Retrospectives are all about addressing things that went well and figuring out what made those projects go smoothly compared to projects that didn’t go well. Coming out of a retrospective meeting, the team has a series of changes they plan to make to their process in the next month.
This sounds like a lot of meetings, but with focused agendas, they don’t have to be time-intensive — give or take an hour each. The benefits you’ll see will far outweigh the time commitment that goes into these meetings.
3. Define the key numbers you should be tracking
The key numbers that you should be looking at will most likely be specific to your business, but here are a few important numbers that all businesses should be monitoring, plus a few suggestions that will help you figure out the other metrics you might want to track.
Of course, this is pretty obvious. But, make sure you’re not just looking at the overall sales number and instead are drilling down into individual product lines or sales channels. Inside that overall sales number, you might find some big changes for some products.
Perhaps one product is way up, and the other is way down. That might make your overall sales number look nice and stable, but it’s hiding a major success and potentially a big problem.
Make sure you take the time to compare the actual revenue you made to your sales forecast. Are you doing better than your plan or worse? Why? Asking these questions will help guide your business strategy and uncover potential areas for growth.
Again, don’t just focus on the overall expenses. Look at the details to determine if you should be making any changes to your budget. Again, comparing your actual spending to your budget will highlight where you’ve overspent and may need to slow down, or areas where you haven’t spent as much as planned.
Probably your most important metric. Without cash, you can’t operate the business. Even if you are profitable, you might be running short on cash, so keeping a close eye on this number is critical. We have a detailed explanation of the difference between cash and profits if you need a quick refresher.
Here are some suggestions for other numbers you might look at depending on what kind of business you run:
- Visitors to your website
- Sales calls you received or made
- Quotes that you delivered to prospective customers
- Client meetings you’ve taken
- New leads
- Prospecting emails sent
How to determine what metrics you will track
Whatever you choose to measure, make sure you track that number and that it’s a number that tells you how well you are doing in your business.
A good rule of thumb is this: Will you change your business strategy if the number you are tracking goes up or down?
If you wouldn’t make changes to your business based on the metric you are tracking, then don’t track that metric. Only track key numbers that you will use to make real changes to your business.
4. Adjust and prepare forecasts
Part of your monthly review process should be used to look forward. You need to take the insights from current results and use them to anticipate your sales, costs, and anything else of consequence. Then in your next review meeting, you can check these forecasts against actual results to see how well you performed.
Developing forecasts not only prepares a roadmap for your business but helps inform what goals you set. You’re answering questions about sales expectations, customer interest, and a number of other factors that you’re anticipating over the next week, month, a year, or even five years. But the key to using your forecasts successfully is actively adjusting them to how your business actually performed.
Doing this on a regular basis ensures that you’re not surprised about the future. Instead, your forecasts are more accurate and refined thanks to the adjustments you make. If you underperform for 2-months and miss your projected sales numbers, you account for that and now have a realistic expectation for the rest of the year. You also know, depending on the health of your business, that there is something affecting your profitability and now have an effective method to find out what that is.
5. Make key results and goals readily available
As you make adjustments to goals, trackable metrics, and your forecasts, the best thing you can do is be transparent with your team. Bring them in early on to discuss what they’re seeing and if they have any insight into why your business is exceeding or dipping below expectations. Someone may be seeing gaps in productivity, communication, or a number of other factors that you have simply overlooked.
If you’re a small team, being inclusive is much easier. As you grow, it can be much more difficult to keep everyone in the loop. But by shifting to a monthly review process it can be easier to manage and address any questions, concerns, or difficulties before they become detrimental to your business.
Improving your business is a constant process
To improve your business and beat out the competition, you have review your results more often. At the same time, you need to do this efficiently and be looking ahead at the next steps you should take after each review. If you find that you’re having difficulty updating and managing your financial documents upon each review, we have plenty of free planning resources to help you keep everything on track, including:
But if the thought of directly maintaining every single document and spreadsheet has you worried, we recommend that you check out LivePlan. LivePlan keeps all of your planning documents in one place and easily allows you to make adjustments, test multiple forecasting scenarios, and actively review the current health of your business with one simple dashboard.
Whichever option you choose, just know that reviewing your business plan and financials takes time to get right. The more often you do it, and the more dialed in your metrics and routine are, the easier it will be. You just have to take that first step of doing it monthly.
Editors’ Note: This article was originally published in 2019 and updated for 2020.