Phew, you have made it through another year, the holiday chaos is over, and now it is time to sit down and get your business in order for the coming year. Is your business model ready for the New Year? Being methodical in reviewing the previous year's business is an important step in keeping your business fresh and moving forward. As you go through the daily stages of your business, you take on additional customers, offer different products and services, along with the occasional tweaking of prices. It is important to take time to analyze all changes and determine which ones put your business in a more competitive position and what areas were holding you back, both financially and in consumption of time.
Marketing dollars can eat up a large portion of a company's budget. Last year's allocation of funds may not apply to this year due to changes within your business. Where you advertise and how much you spend will change as your business model changes. Start-ups tend to hit marketing hard, thus requiring a large budget. If you are introducing a new product or service you may need additional funds to promote in the early stages. Also, if your competition has changed, so may your target advertising.
Technology is constantly changing - many times faster than we can keep up. Your business model should remain current with these changes. Technology can improve the services we offer our customers, but at the same time, may also reduce the value of the services we offer if our customers now use technology to reduce their dependence on us. The United State Post Office is an example of a business that had to make an about face to their business model because of technology changes. Only a few years ago, we were dependent on them to deliver our letters and bills. Since technology has evolved, we now use e-mail and send payments electronically. Staying on top of trends and industry standards is imperative to staying ahead of the game. Knowing when to scale back services and when to add new ones is the key to a business's success.
Changes in employee needs also fluctuate with changes in business activities. When you started your businesses, you probably wore many hats. But as businesses grow, a time comes when we cross the bridge and hire a contractor, an employee or begin to outsource some of our duties. A few questions to ask yourself when assessing your business model:
1) Looking back at 2007, were your current contractors or employees productive, overworked, or underworked?
2) Or do you have duties that could be combined into one employee due to improved technologies or work changes?
3) In 2008, will you be implementing new training programs that may increase productivity or add a skill that you can now market, which will bring in more business?
"Show me the money!" Or in other words, how did you make your money? By breaking down each area of your business you can assess where you earned the most and what areas had your biggest expenses. In essence, what was your return on investment for each area of your business? If the majority of your money was generated off of one product, but you had the smallest return on investment on that item, the decision should be whether or not you want to continue to carry it in the coming year? Should you expand or decrease your services and if so, how will this impact your resources.
Evaluating your competition should also be a key consideration in your business model. Competitors may be adding different services, changing their prices and enhancing their products and services. Therefore, do you need to make modifications to remain competitive?
Analyzing your business models is sometimes a painful process because you are looking at issues that you may not want to face - eliminating a product that introduced you to the marketplace. Or you may need to put our more marketing money in order to generate more income. But revisiting your business model can also be a refreshing process and energize you and your business for the coming year.
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