At the beginning of each year; begins the dreaded year end closeout of the previous year’s bookkeeping tasks. No more estimates, guesses or hidden costs. The final accounting is due to the IRS and state tax authorities.
I’ve written a lot on basic bookkeeping and how you keep your books accurate. Let’s talk about taking it to the next level.
One: After your final bookkeeping is done. Take a day off from bookkeeping/business. Goof off.
Two: After you have cleared your mind of would of, could of, didn’t do last year; let’s do something a bit creative. Imagine how you would like your business to be doing. Be specific. Don’t say; increase revenue by 20%. Say, you would like to increase the sales of product #1 by 10%; Product 2 by 15% and Product 3 by 25%. Be specific in why you would to do that. Not — I want to make more money. But — By increasing my revenue, I can afford a nice Disneyland trip for the kids at the nicest hotel.
By being specific in your goals and in your desires; it’s way, way, way easier to produce those results. I’ve had conversations with people where they have a wide range of products. Successful ones worked on categories; developed brands; and eliminated the unsuccessful products. They have never relied upon general unspecific goals that meander around like a lazy valley stream. Laser focus helps you communicate those goals to employees and team members.
Three: Now that you have specific and reachable goals; do a cost analysis of your current product mix. How much does it cost to create those products? Create a column next to the current cost. Multiply those two numbers. Ouch, Can you afford to do that?
Four: This is where the creative part comes in. What is your current process? Do you have a manufacturing map? Draw out a process map for your products. Figure out specifically which step is costing what?
Five: Compare and reevaluate. Now consider your suppliers prices and current production machinery & Labor. Is there something that would improve the process? Perhaps a different machine? What about your factory setup? Are your employees over ordering supplies and materials? It’s very common to go into small manufacturing plants and see a year’s worth of supplies sitting on the shelf.
Six: Make sure you don’t explode at your employees if you find that you do have a year’s worth of supplies. Perhaps they were following your instructions; they got a price break; or this is how things have always been done.
Seven: Outline some general ideas on how the process/production could improve. For example, producing christmas products could be problematic if they were manufactured in January.
Eight: Take another day off the problem/solution.
Nine: Set your goals. Have a team meeting with your managers and discuss your ideas for improving the process and increasing revenue.
Ten: Be prepared to listen but perhaps don’t bend to their opinions. They will have some valuable input as well. But if you want to shake up the status quo; be prepared to respectively disagree. After all, you have done your homework!