Whether it’s a year when our reality was something we once knew as “normal,” or an unprecedented and unimaginable year of a global pandemic, the abiding management question for all small business owners is always the same: “What’s the best use of my time – right now?” And at no other time in any year are we more time-management challenged than in December.
The twelfth calendar month is the only one where two powerful imperatives converge against a hard stop, each demanding a full measure of your time, attention, and resources:
- The perennial push to close out sales performance as strong as possible;
- Simultaneously setting up the business for a fast and clean start when the New Year dawns.
Pardon the football metaphor, but in the marketplace game your business plays all year, December is the final goal-line stand of your two-minute drill. And in this tight transition period, now further compressed by a pandemic, that fierce competition for precious time and resources requires discipline and devotion to fundamentals.
Of course, focusing on sales is a year-end intuitive. Focusing on next year? Not so much. Consequently, let’s spend some time on the latter.
Our grandmothers practiced the fundamental of spring cleaning every year when the weather broke warm. In the marketplace, in order to kick off the New Year right, your spring cleaning should be done by January 1. Here are a few ideas to get you started with your December cleaning and preparation for 2021 performance and profitability.
Reimagine Your Stuff
Let’s get the hard one out of the way first. Even if you’re not a packrat like me, you’ve accumulated stuff you don’t use anymore. For example, one of the markers of a 21st-century office is a digital graveyard. Unused or broken computers, monitors, etc., may have some value, so call a tech recycler and convert them into cash.
Regardless of what it is, if you can’t sell it or give it away, throw it away because it’s in your way.
Re-think Expectations
Customer expectations: Yes, I’m going to beat that drum again. Whatever you’re supposed to do in 2021 is inside the heads of customers right now. Unfortunately, they’re not likely to wrestle you to the ground and demand that you listen to them – there are too many other shiny objects swirling around them. If you don’t know the top five things that customers will expect from you – next year, not last January – you’d better start asking, face-to-face. Yes, Zoom qualifies – for now.
Your expectations: Classify customers into four groups by gross profit, from the most profitable As to the least profitable Ds. Worship the As, cater to the Bs, encourage the Cs and teach the Ds self-service. If any customer’s expectations encroach too much on your profit margin, either raise your price or allow them to seek shiny objects elsewhere. (“Huh? Did he just say ‘fire a customer’ in the middle of a pandemic?”)
Reload Talent and Training
At the end of this year, perhaps more than any other, you know exactly which employees have demonstrated leadership and engagement when you were up against it. Shining a light on the performance of leaders this year will motivate them to start fast in the New Year.
The same light will expose non-leaders. You owe producers the most effective organization possible, which means letting the unproductive pursue their careers elsewhere. (“Huh? Did he just say ‘fire people’ – during the holidays?”).
As I’ve said dozens of times this year, your business model for 2021 will require different execution from a year ago. That means new training. Anticipate future gaps in execution based on post-pandemic customer expectations and invest in your people by training them. Yes, Zoom training qualifies.
Rookie question: “What if I train my people and they leave?” Veteran answer: “What if you don’t train them and they stay?”
Re-think Inventory
The pandemic has accelerated e-commerce by five years (IBM survey). Even if customers still buy the same stuff as last year, count on different expectations about how to find it and take delivery, which impacts your inventory strategy. (Online tech is a whole other article.)
As with customers, stock the most profitable As, a few of the Bs, and maybe a couple of Cs. But never let a D spend one night under your roof unless it’s paid for. Remember, profitable inventory management is just-in-time, not just-in-case.
Now get your broom out. In 2020, a higher percentage of businesses will post a net operating loss than in a typical year. If that fits you, this is the year to write off obsolete and damaged inventory (I know you have some). Next year will thank you for taking the hit this year.
Rejuvenate A/R
Same net-operating-loss song, different verse. Take another hit by writing off uncollectable accounts receivables now so you can start January clean. If it turns out that you collect some of it next year, 2020 grease becomes 2021 gravy. The only thing more troubling to a banker than uncollected A/R is not demonstrating the discipline to deliver a clean and accurate balance sheet. And here’s a prediction: You’re gonna need an untroubled banker in 2021.
Finally, don’t saddle a hopeful 2021 with the dust bunnies of the horrific 2020. By taking these proactive steps – and others from your own list – you’ll prove to yourself, your team, and your banker that you have the discipline to make the critical decisions for which successful managers are known.
Write this on a rock …
While pushing the current year over the goal line, have the discipline to set up your New Year for a clean and fast start.