What's Your Grade?
Are You Passing or Failing?
We’re at the end of the school year and half way through the calendar year, so it’s an appropriate time to grade our business, to identify the goals from your 2018 business plan and decide if they are passing or failing. Running a business is challenging on many levels, and to do it successfully, you must have to have goals and stay focused on achieving them. Unlike many phys ed classes, it takes more than showing up and dressing out to pass.
You could assign a letter grade of A to F, but it doesn’t have to be that complicated. Pass/Fail is a straightforward, quick way to assess the status of your business goals. Quantifying your success or failure with an honest assessment is key.
Let’s start with your sales objectives. Regardless of the business from retail store to doctor’s office, driving sales and revenue are keys to the short- and long-term success. How do your sales compare to last year? What is your profit margin? Perhaps your plan was to increase sales by 5% over last year, and your actual increase is 3%. That’s a good increase, but you must give yourself a fail on meeting goal. Perhaps your margin goal was 40%, and you achieved 41%. Congratulations. You passed!
If you failed at a goal, investigate why. Remember in school when you report card reflected how you did on homework, quizzes, and tests. Each of those was a component of your overall grade. Utilize the same thought process in understanding why you passed or failed on each of your goals.
Perhaps your business plan included adding 10 new members each week to a membership program. Upon review, you averaged 5 per week. That’s a fail.
Also included in your plan was to also have weekly staff meetings. You started the year off being very consistent with meetings up until around April. You didn’t intend for it to happen, but several mini-crisis events occurred, and before you knew it, the meetings were off the schedule. With that, you must give yourself a fail for communication.
Now let’s look at how these objectives feed into the bigger goal of improving sales.
We know that members spend significantly more than non-members, so missing our new member goal was a component in missing our sales goal. Now look closely at the trends over time. Were you are meeting your membership goals in the early part of the year, perhaps until April? There might be a connection to those meetings falling off the schedule.
The communication and collaboration component of achieving goals cannot be overstated. When you made time for staff meetings, and discussed sales and membership goals, your staff was engaged. Regardless if your staff is two people or twenty-two, providing an opportunity to share information with them is critical to achieving your goals and earning a passing grade.
Intuitively, I believe that owners and leaders understand the importance of sharing goals, but it can feel redundant. And it may be to some extent, but if you are truly collaborating with your staff, then you must communicate with them.
Don’t be too hard on yourself if you are failing more goals than passing. Evaluating your goals and grading yourself is a HUGE step towards success. Learn from it, and next time, you’ll graduate with honors. Just don’t forget your shorts for PE.