As accountants, we strive to help business owners build resilient and successful businesses
In the current business environment, there are both challenges and opportunities.
One component of resilience is to have a clear vision for the business. That means everyone should understand the business ‘destination’, the ‘why’ or the ‘rationale’ for the business. Without this, the business may limp along from project to project from year to year and not provide the best environment for leaders, employees, customers and other stakeholders.
In times of change, challenge and opportunity, a clear vision can be exactly the tonic a business needs to distinguish itself and achieve success. Let’s consider some examples of vision statements.
Focusing on the broad impact of the business. At the time of its establishment, Microsoft set out to provide “a computer on every desk and in every home”. We get a sense of the scale and impact this business can have.
Focusing on what you make. A business called Honest Tea exists “to create and promote great-tasting, healthy, organic beverages“. Their product is central to this statement.
Focusing on the benefits. Many readers are probably using LinkedIn which sets out to “create economic opportunity for every member of the global workforce“. Is this working for you? If so, LinkedIn is probably achieving its vision.
Focusing on HOW you go about your work. Financial services business American Express “works hard every day to make American Express the world’s most respected service brand“. Notice there is no reference to their products whatsoever.
Focusing on an underlying philosophy. Eyewear provider Warby Parker sets out “to offer designer eyewear at a revolutionary price while leading the way for socially conscious businesses”. We sense they have an interest in matters beyond their products and customers.
What’s your business vision? Has it stood the test of time and the test of the COVID-19 pandemic? Does it need to be refreshed? You may feel this is not a priority as you deal with other important matters but it’s critical to set a common direction for all stakeholders and seize the opportunities available. Resolving that into a clear vision statement is a really good start.
Now let’s talk about goals.
Goals may be more tactical but are critically important to achieving that vision. They may be short-term (three to six months) or long-term (one to three years). Here are some guidelines on setting goals:
Most businesses seek to grow their revenue, though business conditions may require you to stem the loss of revenue. Setting revenue goals requires a good understanding of your market: which products you will sell, which customers will buy from you, price, and time frames. Care should go into this analysis, rather than just adding 5% each year and hoping for the best.
You may want to distribute more money to shareholders or generate surplus cash to re-invest in the business. Profit enables this and is a function of BOTH revenue and the associated costs of running your business.
Leaders of resilient businesses ensure they get the best possible returns on their investment in plant, intellectual property, and human resources. That implies maximum capacity or efficiency. Most businesses can improve in this area so specific goals should be set.
Your business exists in a market or ecosystem. It contributes and also benefits from the community at large. Some businesses volunteer team members to participate in community projects, some donate cash and some provide resources to help others. There are business benefits to making these contributions and it’s sensible to set specific goals.
Everyone has lifestyle goals and leaders of resilient businesses set out to make these happen for themselves and for their employees. Some people want to ‘work differently’ to take advantage of their skills and interests. Some people want to ‘work less’ so they can enjoy non-business activities. Setting goals in this area will increase the chance of success.
Every business will eventually experience some kind of succession event. That means a change in shareholding or liquidation of the business. This may seem like decades away and not a priority right now but it’s sensible to control the process of succession rather than have it thrust upon you. Setting goals to regulate how you deal with succession brings clarity and raises questions that stakeholders eventually will need to address.
These goals are not all equally important at all times. Some may be irrelevant right now but critical in one or two years from now. Resilient businesses get really clear on their goals, hold themselves accountable, and track progress meticulously.