For many businesses, an annual review of their strategic goals is completed only once a year. This is simply not enough, says Jannie Rossouw, head of Sanlam Business Market who adds that businesses should use the half-year mark to check their progress against individual goals and to tweak the parts of their strategy that are not working for the second half of the year.
Roussouw recommends that businesses look at three different areas: the overall market, their finances and planning.
“Considering these three main elements of your business dashboard will give you an excellent gauge of progress against your strategic goals. Depending on what you find, you may need to redefine both your goals and your targets for the second half of the year,” says Rossouw.
Here are the 3 areas all SME owners should consider.
1. A market check, which consists of four aspects:
- Economic and other trends: Factors such as the exchange rate, interest rates and changes to labour legislation could have a huge impact on your business, to the extent that you may need to change tack mid-year. For example, if you import goods and the Rand falls markedly against the currency of the country from which you are importing, you may need to consider changing to a local supplier.
- Competitors: You need to know at all times what your competitors are doing. But it is not only about price – value proposition is also important. Do you know how well your product or service is addressing your target market needs?
- New opportunities: Even in tight economic times, there are always opportunities, and you need to capitalise on them to the benefit of your business. Before you know it, your competitors may have seized them and used them to your disadvantage.
- Threats: Be aware of trends in your local environment, such as increasing crime in the area surrounding your business, for example. Other threats could include new competitors entering your market, either locally or from abroad.
2. A financial check – here you also need to look at four factors:
- Turnover:Â It is important to consider your actual turnover over the last six months, compared to your anticipated turnover at the start of the year. If there are discrepancies, you need to determine the cause.
- Profit: You may have a great turnover, but your profit may still not have met your expectations due to various factors, including increased expenses.
- Expenses: Changes in the macroeconomic environment may have led to expense creep over the first half of the year, in which case you may need to adjust your financial forecast for the remainder of the year.
- Management of your debtors’ book: One thing you need to keep a very close watch on, especially during challenging economic times, is your debtor days – the number of days it takes your debtors to pay you back. Cash that you need to run your business could otherwise easily become locked up in your debtors’ books.
Read Also: The Importance of a Business Mid-Year Review
3. Planning and progress against your plans, which can take different forms:
- New projects:Â How has your business progressed on new projects you have introduced? Are you getting the results you expected? If you are not on track with your projects, you need to decide how to remedy the situation or, in the worst-case scenario, scrap a non-delivering project altogether.
- Marketing plan: Are you achieving the expected output of your plan, either in terms of advertising value equivalent (AVE) or sales? You may need to adjust your marketing mix. The success of each avenue over the past six months, for example, radio or online advertising, will inform how to put your marketing mix together.
- Client feedback: What can you learn from client complaints or clients returning goods? How will you respond? Remember that positive references from clients are also valuable – they can be used as a marketing element, for example.
The role of the team
Roussouw adds that it is important to remember that someone in your senior management team needs to accept responsibility for the implementation of specific goals. “You also need to carefully document the expected output, allocate resources for implementation, and create regular feedback cycles to measure progress. Lastly, it is good business practice to reward people and teams when they perform exceptionally in terms of reaching or exceeding your strategic goals,” he concludes.
