By Bruce Hakutizwi
If your family was anything like mine, you’ll remember some point early each spring—for me, it was usually the first warm Saturday afternoon of the year—where a list of projects was decided on and everyone pitched in to get the house, garage, and yard cleaned up.
Inevitably, we wouldn’t finish everything on the list. And I have to admit that the first day’s sense of excitement and novelty wore off by the time we got to our fourth or fifth labor-intensive weekend in a row. But on that first Saturday afternoon, you just couldn’t beat the sense of hope and accomplishment that came from spring-cleaning!
Many people take advantage of the warmer weather and longer days to open up and air out their homes after a long winter buttoned up. It’s a great opportunity to get rid of belongings you no longer need, organize those you want to keep, and generally get a clean, fresh start to the year.
But, did you know that you can do the same for your small business? And, you don’t even need to wait until the first warm Saturday. Let’s discuss three different spring-cleaning tasks you can start chipping away at right now in to give you a clean, fresh start for your business.
1. Review the books
The beginning of the calendar year is a great time to take a long, hard look at your finances. After all, you or your accountant are probably already doing so for tax purposes, so why not make the most of that effort?
Go beyond the basics of last year’s balance sheet and P&L statement. Remember, this is spring-cleaning. Give some thought to what you may be able get rid of and how you can best organize what you need to keep. Then clean everything up. From a financial standpoint, you’ll want to ask yourself:
- What expenses or investments were paid last year that turned out to be unnecessary or unprofitable?
- Which expenses or investments yielded the best return? And why?
- What were your sources of revenue? And how profitable were they over the long term?
- Are any of the assets you’re currently maintaining—inventory, real estate, vehicles, equipment, etc.—adding enough to your income to justify keeping them?
- Are there any new or replacement assets you could purchase that would likely offer a healthy return on the investment?
With the answers to these and similar questions, you and your accountant should be able to make some really valuable decisions about what your small business spends money on this year and which purchases or expenses are just dragging your profit margin down.
Air things out, get rid of what you don’t need, and clean up the rest.
2. Go over your customer list
Your customer list is probably one of the most valuable assets you own. But, like any other valuable item, it needs regular maintenance to make sure it’s working best for you.
If you have anyone working for you who’s more customer-facing than you are on a regular basis, it would be wise to include them in the discussion. You’ll want to brainstorm using these kinds of questions:
- Who is currently on your client list that you simply don’t want to do business with anymore? Is it feasible to let them go?
- Who are you already working with that has a lot of potential for additional business? What can you do to encourage that?
- Which of your customers are most likely to send you referrals, pen a rave review, or otherwise sing your praises? How do you encourage or facilitate that?
- Which clients on the list were less than thrilled, but could be won over through some creative value-added effort on your part?
The point here is to really analyze your client list with a focus on continual improvement and optimization, not just growing its size. In most relationship-based businesses, like consultancies, manufacturing, and professional services, 20 optimal clients can bring in as much revenue as 80 mediocre clients.
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