I started working with a new client last week who wants to re-energize his business. In our initial meeting, I asked him his goals for the strategic audit. He replied, “I want to make a profit.”
I responded, “How will you measure success?”
To achieve his goals, my client needs to first define what success will look like. With a clear picture, we can create a road-map to get there. Success means different things to different people and businesses. Here are some examples:
- Being Voted Best “Best Neighborhood Bistro” by Boston Magazine
- Selling 200 subscriptions to your CSA
- Making a net profit of $200,000
For my client, success will be purchasing the building that houses his business.
Each of these definitions will require different strategies.
Success: Best of Boston Award
This strategy will focus on improving the quality of service and food. It will be followed up with a PR and media campaign to ensure the public and press are aware of your quality.
Success: Revenue Target
If your goal is to increase sales (for a farm, this may mean selling more CSA subscriptions, for a restaurant it may be reaching a sales target), then you will need to create a strategy for sales and marketing. A restaurant may want to consider special promotions to bring in new customers. A farmer may want will want to explore to increase awareness about the farm.
Success: Net Earnings Target
And if your goal is to increase profits, then your strategy will focus on increasing revenues (see above) and also evaluating all the business expenses for opportunities to trim them.
For my client, we will take a multi-faceted approach. We will explore ways to increase revenues and decrease expenses. In addition, we will put together a capital plan to determine his financing needs. With that in mind, we can evaluate his options to purchase the building and get his finances and business organized so that he can successfully get the funding he needs.
How do you define success? And what are your strategies?