It’s that time of year again. It’s time to sign up for a gym membership only to cancel it in February, or register for that triathlon you’ve always wanted to do, but only the one with a refundable deposit. Additionally, it’s time to discuss New Year’s Resolutions versus business goals.
The reason is simple. Goals are things that you can set milestones for, measure, and achieve. In contrast, resolutions without real goals are things we often surrender early in the year. What does all this mean? As we enter a new decade, what will your resolutions and business goals look like?
Resolutions vs. Business Goals
The difference between resolutions and goals comes down to a few simple things. Resolutions are often vague, significant, and long-term in nature. For example, “I want to lose seventy pounds this year.” In business, there are often objectives such as “We want to increase profits 20% YOY” or “We want to reduce production costs by 7% this year.” There are no milestones and actionable items yet. Instead, we are dealing with large ideas with a long-term timetable.
Instead, goals involve action items and can also include a resolution. Using the weight example, a goal would be, “I’m going to lose seventy pounds this year by increasing my exercise by 10 minutes a day until I am exercising an hour every day. I will also reduce my intake of sugar and processed foods by 10% each week. This will continue until less than 10% of my calories come from those foods.”
Note that there are steps that must be broken down into milestones, including daily, weekly, and monthly goals. Long-term goals can also be measured. For example, to increase profits, you may need to cut costs and increase revenue. However, you must set individual goals and milestones within these methods for them to be effective.
The point is that resolutions, written on paper and put in jars, but without goals, are seldom accomplished.
Motivation vs. Inspiration and Passion
So what drives you toward your goals? I would argue that two possible drivers are very different: motivation vs. passion and inspiration. What’s the difference, and why does it matter?
First, an example. A person can be motivated to escape from a burning building. But eventually, as the heat fades, they will lose their motivation to run. If someone chases them from the building with a stick that is on fire, they may sustain motivation longer. However, it will fade. Generally, motivation is often doing something out of necessity. Motivation gets things done, but it does fade and is only renewed by another need.
Passion and inspiration, though, are doing things because you want to. Remember when you first started your business and it was your “baby”? You probably even cleaned toilets, washed windows, and performed various tasks to ensure everything was in perfect order. As your business grew, you no longer wanted to do those things or had stopped doing them. You probably hired others to do them for you.
But you need something in your business that inspires you. Those things need to be part of your business goals to feed your passion. Additionally, money is rarely enough reason to continue doing what you’re doing. However, doing what you love keeps most entrepreneurs in the game.
If you have lost that passion and inspiration, it is either time to get them back or to sell your business. You can move on to something you can genuinely be invested in.
Business Goals that Allow for the Unexpected
There is one thing that is sure in the business world, and that is the unexpected. Sometimes this can be a good thing. For example, you may experience a significant influx of business that requires adjustments to handle. Alternatively, you may face a decline in business due to a natural disaster or an unexpected shift in your industry.
You might also experience personal changes, both positive and negative, that might impact your business. If you look at the last couple of years, you can probably point to some instances that fit this pattern. While you can’t plan for such things, you can structure your business goals to account for natural fluctuations. In this way, you can ensure you are prepared.
This means tracking and planning for cash flow, building savings and emergency funding, and using credit wisely. It may also mean that you need to have a contingency exit plan in case of illness, injury, or other unforeseen circumstances.
Long- and Short-Term Exit Planning
Every business owner will eventually leave their business. Most want to sell it as part of their retirement plan or as a means to transition to another phase in their lives. However, they are often terrible at planning for that exit, especially when making just-in-case plans in case something goes wrong.
However, regardless of how and when they exit, the sale or closure of their business will be one of the most financially significant events in their lives. For companies that plan thoroughly for nearly everything else, creating an exit plan is critical. This includes both short-term and long-term planning.
One of the critical components of that plan is determining the value of your business. At Rogerson Business Services, we offer a complimentary seven-step business evaluation tool that provides a general assessment of your business’s value. If you require a more thorough valuation or the process is too complex for your needs, we offer these services at a reasonable rate. Feel free to contact us for a valuation today.
Often, this process will reveal things you need to do with your business. These changes can make it more marketable and profitable in the long term. However, if the unexpected did happen and you had to leave your business sooner than planned, you could be better prepared.
For some business owners, though, looking at the next year or the next decade may tell you that now is the time to sell your business. If this is you, and your business is located in California, contact Rogerson Business Services today. We’d love to discuss the next steps in selling your business.
There is nothing wrong with New Year’s Resolutions. They are more achievable when backed by goals. If one of your goals this year is to sell your business based in California or to learn what your business is worth for whatever reason, we’re here to help.
Andrew Rogerson is a certified business broker based in Sacramento, California. Call Toll-Free at (844) 414-9700. If you prefer, email him at support@rogersonbusinessservices.com. Andrew services the whole state of California.