Positioning Your Company For Success In 2022

Small businesspeople too often neglect the performance analysis and solid planning that can take a company to the next level. You don’t need an MBA to get a handle on your business finances or to translate your aspirations into measurable, achievable goals and action plans.

•  Financial Analysis
•  SMART Goals
• Action Plans

Financial Analysis

It’s always smart to lean on expert advice, like your controller or CFO, your accountant or even the software you use to manage essential business functions. Below are some financial analysis tools that help businesses of all sizes understand their financial position and give bankers important insight into your business.

Balance Sheet: A snapshot of what a company owns and what it owes at a specific point in time. It is called a balance sheet because it weighs a company’s assets versus its liabilities and shareholder equity in order to arrive at a net profit or deficit for a specified period of time (often year-to-date or a 12-month period).

Your accountant or accounting department may already produce this report or should be able to produce a balance sheet. You might also have accounting software able to produce these reports. Check out our template.

Income Statement: An income statement shows a company's income and expenditures over a specific time period (often year-to-date or over a 12-month period).

Your accountant or accounting department may already produce this report or should be able to produce an income statement. You might also have accounting software able to produce these reports. Check out our template.

Cash Flow Statement: Summarizes the amount of cash and cash equivalents entering and leaving a company over a period of time. The report shows cash from operating activities, investing activities and financing activities. Use it to evaluate how well the company generates cash to pay its debt obligations and fund its operating expenses.

Your accountant or accounting department may already produce this report or should be able to produce an income statement. You might also have accounting software able to produce these reports. Check out our template.

Financial Analysis

Financial statements and simple ratios can help small businesspeople gain important insights into how well the company operates or where the company could improve.

Check out our simple financial analysis document.

How To Set SMART Goals & Create Action Plans

Businesses and people need purpose and direction to excel. Goals provide businesses focus, clarity and the spark to succeed. When you reach your goal, you can celebrate and identify the factors that worked. When you miss your target, you can examine what went wrong, identify new strategies with potential and get back on track.

Many businesses of all sizes use SMART goals, an easy-to-recall acronym that aids in developing goals you can measure and targets that will drive your business. Use the information below to help develop SMART goals for your company or for yourself.

First, jot down a priority for the company’s growth, profitability, culture or general stability. Then, step-by-step, reword and rework the priority so you end up with a SMART goal.

Specific:

Get to the point. Don’t just say, I want to improve my health. Name a specific strategy for improving your health. You could name a diet plan you plan to follow. State your plan to run daily or work out four times a week.

Measurable:
Define success in definite terms. Do you want to lose a specific number of pounds or inches? Do you want to reduce your blood pressure or cholesterol levels? Do you want to run a 5-minute mile or finish the Flying Pig Marathon in 2022?

Achievable:
Is the goal achievable? How likely are you to lose the weight you’ve identified using the diet plan and exercise schedule you’ve outlined? How have other people your age and gender lost similar amounts of weight? How did they do it? Does your doctor back your weight loss goal?

Relevant:
Do the specific action items and measurements relate to your overall goal? For instance, is losing weight critical to improving your health? Are the types of exercise you’ve identified going to address the changes in health you want to experience? How will improving your health change your life?

Timely:
Deadlines drive priorities and create urgency. Sometimes, big goals require more than 12 months to accomplish. Break big goals down into several smaller goals so you can ID deadlines and measurements for every milestone.

Examples

Midsize organization ready to automate

Specific: Empower the finance team to identify Treasury Management Services at Heritage Bank designed to reduce expenses and improve cashflow.

Measurable: Identify solutions that can reduce expenses by 15% within 12 months of launch and reduce our monthly withdrawals from our line of credit by 10% in the same time period.

Achievable: Our accounting firm works with many small businesses like ours and assures us the Treasury Management tools Heritage Bank offers can help us streamline our operations and improve our cashflow.

Relevant: Not only will reducing expenses and leveling cashflow help our margins, it will enable us to scale operations as we grow.

Time-Bound: Identify the Treasury Management tools to implement by the end of February 2022. Complete launches by the end of May 2022.

Sole proprietor ready to work smarter, not harder

Specific: I will reduce the time I spend on banking this year by identifying and using digital banking tools.

Measurable: I will use digital banking tools at Heritage Bank to save 4 hours per month and use those recovered hours to improve my website.

Achievable: I know if I make ongoing improvements to my website, I will generate more clients cost-effectively.

Relevant: It’s always hard to work on long-term new business projects when I have immediate projects to finish and bill, but I also know that regularly working on my website is the best way to ensure a steady flow of new clients.

Time-Bound: I will identify and start using digital banking tools that will save time by January 30, 2022.

Small company whose strong growth trajectory is threatened by turnover and slow recruitment.

Specific: Identify short-term incentives to stabilize turnover while building a long-term strategy for attracting and retaining the workforce essential to sustainable growth.

Measurable: In 2022, slow turnover by 15% and reduce the time to fill key positions by two weeks. By the end of 2023, score above average on five key factors to job satisfaction.

Achievable: At a chamber meeting on the topic, many small businesses offered solid, proven ideas for improving their short-term turnover while improving their overall culture. Also, the HR consultant with whom we’re working has many clients with measurable results.

Relevant: I know the long-term success of my business depends on a great workforce.

Time-Bound: By the end of February, we will identify two incentives to improve retention and reduce the time to fill open positions. We will measure success every month and be prepared to test two new ideas by June 1 if these incentives are underperforming. By the end of March, we will have a long-range, measurable plan for building a culture aligned to our growth goals.

What’s Next?

When you’ve developed your 2022 SMART goals, be sure to talk to your Heritage Banker about those goals. They can explain how Heritage Bank products and services can help you reach your goals. Also, our bankers work with many small businesses from a range of industries, so they have accumulated a lot of knowledge about how other small business owners address key moments in their business lifecycles.

Check-in with the other professionals you turn to for business advice. CPAs and business attorneys are essential agents in small business success.

Don’t Just Aspire, Act: Creating Action Plans

Create action plans around your SMART goals. Start by outlining the steps you need to take and task that need to be completed on the road to reaching the goal. Consider the people you’ll need to pull this off. Some might work for your company. Some might be available on loan (consultants, virtual assistants).

Check out our Action Plan template.

Keep the action plans where you can reference them. Input the action items and deadlines into your business calendar. Make time every month to note where you are on track and where you’ve gotten off course or need to rethink your course. Don’t get discouraged when the day-to-day business disrupts the action plan. Just revise and recommit to making time for the work that will take your business to the next level.