Step Up Your Peformance - A Guide for Manufacturing Entrepreneurs: Year End Review
Patrick Chester
A serial entreprenuer with talent to break things down into their most simple form. Creating companies where I couldn't see a suitable solution in the market.
As a serial entrepreneur, running several small companies, each year, I perform a year end review for all companies. They are all a little different, but manufacturing is always the most complex - the nature of the beast. This guide is based on what I do and I hope it provides some ideas and useful information for your own business.
My general approach is to think and behave as if the company is larger than it is and the shareholders/stakeholders want to see real evidence of my ability to run the company and lead it for the next year. I need to demonstrate a real understanding of the company, the current issues and have a solid plan for the year ahead.
You probably don't have to present to a board or to anyone for that matter, but it's a useful mindset. This is a similar idea to the personal board of directors.
01 TIMING
The time between Christmas and the New Year is when the calls, emails and day to day really do stop. This is by far the best time for me to conduct my annual business reviews. You don't have to stick to any particular time, but this time really works for me. A quiet weekend to focus is, at least, my minimum recommendation.
02 ENVIRONMENT
I need a few days to be really focused on this task and to have time to reflect, think and get creative. Pay particular attention to your location - getting out of the normal environment is ideal. Even taking a break for a couple of days is a great idea or adding it to a trip - something that will create a sense of space between you and the day to day.
You can work anyway that suits you..whiteboard, laptops, notebooks, just make sure you are comfortable with it.
03 FIGURES AND DATA
In order to get started, I will have my results for the year prepared, covering items like:
?? Profit and loss, balance sheet, revenue breakdowns, OTD, margins, quality costs...
?? Customer acquisition, sales by customer...
?? Subcontact and outsourcing costs...
and anything that is a useful metric for that particular company.
I make a basic summary of the figures - where they as expected/on target? If they were better or worse than expected, ensure I know why it happened and write down the issues.
04 SUCCESSES
Take a look at what has been successful - a list of key improvements and significant steps taken by the business during the year. These may not have yielded any results yet, but might be laying the foundations for the year ahead. These will be needed when forecasting for the next year.
A list of these successes will be important when it comes to celebrating progress with your team. I find this very useful in creating a continuous improvement culture.
05 PROBLEMS
Spend some time to reflect on the problems during the last year and try to rank them in significance. Paying attention to issues such as staff changes, moral, customer service or?reputation for example, the problems might not have been costly to the PnL, but might have caused some damage that needs attention. Once ranked - start thinking of the remedies starting with the biggest first.
06 MY ROLE
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What have I enjoyed working on and what do I hate doing?
You became an entrepreneur to take control of your decisions, your life, your routine. Therefore this is a very relevant question, even when running a sizeable company. You have to maintain your own motivation and confidence in the business and doing what you love is likely going to impact the business the most. There are limitations of course. Small operations with fewer resources means you are doing a lot of the hard work and difficult tasks that no one really enjoys, but are essential to the business.
What work do I need to reduce or stop doing?
I review my own workload (usually way too high) and consider what are the easiest, most repeatable tasks that I can hand over, train someone or hire someone to do for me, and probably do it better than I can! I need to have capacity spare to deal with problems and also opportunities.
Where am I at risk?
Which employees/suppliers/contractors put me at risk? I am considering this not as a well planned transition, but a shock to the system, an unexpected set of circumstances. My own experience includes the loss of a director from a heart attack. He was also a critical employee and overnight we went from steady and comfortable to crisis mode. A simple list of risks helps focus your mind when building out your plans.
07 HIGH LEVEL PLAN
I will create a forecast for the following year, based on historical performance. Some adjustments will be made for increases in labour, materials, rents etc that might be required.
Revenue will increase based on price increases that we can pass on to clients and some expectation for growth depending on where we see or have been developing opportunities. It might come directly from quote pipelines, customers on trials of software or number of warm / hot leads. This is really the starting point for planning ahead and then to consider how is it going to happen?
Goal Setting
Goal setting is something of a interesting topic for me.
I believe in high level goals and targets that help formulate your plan. For example - a simple sales revenue target can be used to start working backwards to create a plan - "what do we need to do to achieve target X?" Those plans then become the tactics or "to-do lists" to acheive the results. Goals based on doing more of the same, but working harder, longer or applying more pressure to your team, I don't think serve the company well.
Another consideration for long term goals are that things will always change - opportunities and problems will arrise. I want to be able to pivot to deal with the circumstance, so one of the goals for me is to stay flexible and respond when needed.
I think cultural, qualitive goals are more valuable to me as a business owner, compared to the popular SMART goals. I am thinking of goals that define the company culture, environment and type of business I want to run.
I maintain a high level list of goals and something of a strategy or plan of to-do actions. The to-do list for the company strategy is prioritised and stays flexible. I can add, re-prioritise, remove and modify the scope and time frames at anytime.
08 DO I HAVE THE RIGHT TEAM?
This is a tough one! As companies grow, the culture changes, new people join and there are transitions to make from solo working to a small close-knit team to a larger team.
Companies have to continually adapt to growth and sometimes you might be trying to get your team to work at a higher level than they are experienced or comfortable with. This might require development or it might be a case that you need to bring in more specialised and experienced personnel. Look up the Peter Effect to read more about this.
It is a very debateable area and could be risky in practice, but it can be a useful mental exercise: what would happen if I removed the the lowest peforming 10% of employees? First you will need to be clear as to who this is and why they are in this group. It might open up ideas and thoughts for changing job roles, responsibilities, training and development. It might push you into performance management you have been avoiding, or it might even be that removing or replacing them could be a serious consideration. Tread carefully!
09 SHARE IT!
This is vitally important for me to show the thinking and analysis behind the actions that will be coming down the road for my team. I want to ensure ensure transparency of the business performance and ensure everyone knows why things are happening.
Just listing out actions without any reasoning or analysis is not nearly as effective. It is also a great time for your team to ask questions, critique my analysis and make their own suggestions.
I hope you have found this useful and given you some ideas for your own business reviews.
Patrick.