Now that the holiday season is drawing to a close, get ahead with preparing your business for an amazing first quarter post holiday season. Q1 brings with it so many changes for channel partners as business plans change, new targets are set for the coming year and there is an opportunity to reflect on the previous year's performance. Preparing for Q1 well in advance will put you in a position to succeed even in the first few months of 2023, so it’s vital to start planning and implementing these common practices as soon as possible.
In today’s modern world, there is pretty much an automation for any task that does not require critical thinking. Investing in technology to automate menial tasks can reduce operational costs and give you the time to focus on customer service. Running a report on your business will allow you to establish which simple yet time-consuming tasks are taking up the majority of your time. Creating a digitized routine for these tasks can reduce operational costs of your business and allow you to drive more sales.
Acquiring new clients is considerably more expensive than improving client retention which allows for repeat business and consistent revenue stream. Improving customer retention will not only save your business money but will also guarantee a steady flow of future clients and enable you to deliver a more personal and better overall customer experience. Building customer retention is based on focusing on the human connection and building long lasting, strong relationships with your customers. This will allow you to understand the specific needs of your clients and help deliver a personalized service, which leads to more renewals when the time arises.
As we begin the new year, now is the perfect time to audit your labor force to enable your business to operate at its full potential. It’s important to ensure that your employees' time is being maximized within your business, and training is a great place to start when it comes to measuring the effectiveness of your employees. Examining your training methods will allow you to ensure employees receive adequate levels of training on their specific work requirements, company policies and the structure of your organization. Meet with senior management to ensure that new employees receive proper orientation and regular training, which sets the standard for employees to meet the company’s expectations.
Your employees are the lifeblood of your business, so it’s vital to ensure that your workforce is operating to the best of their ability. A great way to ensure this is to hold monthly and quarterly reviews for your employees to track their progress and get a chance to speak with them as to any issues or suggestions that they may have. Using this method of performance measurement will require you to sit down with your team members and set realistic goals. Goal setting through conversations with your team members allows them to have more of a say in their job, which will make them more likely to maximize their output and quality of work. Other metrics such as attendance, time management, creativity and innovation should all be considered when reviewing employee performance.
As 2022 draws to an end, it can be very beneficial for channel partners to look over the past economic year and see how your business grew quarter to quarter. Setting goals on a quarterly basis will allow you to plan your business goals in more detail for a shorter time period, rather than planning for the entire year. Start by visualizing your main goals for the year and the processes to help achieve these goals. Break these goals into four parts, each segment will represent one quarter of the year. Within each quarter, set key milestones you wish to achieve, along with required team members and a deadline for completion.
During each month, it’s useful to set weekly milestones. Holding weekly meetings with your team to inform and update them on information regarding each milestone can help your team get an understanding for who is responsible for what tasks. These weekly meetings will allow your team to share their wins from the previous week, share what they are currently working on and allow them the opportunity to discuss any challenges they may be facing. Communication and collaboration will ensure that your team is staying on track to meet deadlines and ultimately reach your quarterly goals. It can be very useful to use online tools to help you meet these goals such as online scheduling on Buffer or project collaboration platforms such as Asana. These tools make the process of developing and managing quarterly goals more efficient and help keep your team informed about what progress has been made and what needs to be completed before the given deadline.
Key Performance Indicators (KPIs) are metrics used to measure the performance of your business. Depending on the goals, you may have different KPIs to track and monitor your business. It’s important to start evaluating the KPIs that monitor the health of your business, which will include net profit, net profit margin, quick ratio and customer acquisition costs. It’s vital to ensure that your business liabilities can be covered, and for channel partners, this will be the capital that has been loaned out to your clients.
Net profit is a metric you should be using to track the performance of your business over time. This will allow you to assess the health of your business and determine whether you’re headed in the right direction. It tells you whether or not your business is more or less profitable during a specific time period.
Net Profit = Revenue - Expenses
Any channel partner is of course seeking to make a reasonable return on their investment. Net profit margin measures how much profit you’re generating from the money your business is taking in.
Net Profit Margin = Net Profit / Revenue
Cash flow is essential for any business in order to pay the bills and keep your business running smoothly. Your business's quick ratio will allow you to see whether your cash on hand and receivables from your partners are enough to cover your outstanding liabilities. If your business's quick ratio is less than one, you’ll be required to cover these liabilities as soon as possible.
Quick Ratio = (Cash + Securities + Account Receivable) / Current Liabilities
The lower your customer acquisition costs, the more profitable your business will be. For channel partners, this will help determine the ROI of your marketing efforts, and will determine whether you need to make changes to how you acquire your partners.
Customer Acquisition Costs = (Advertising + Marketing Costs) / Number of New Customers
Retaining your existing clients will increase your company revenue with minimal costs compared to acquiring new clients. It’s 6-7x more expensive to acquire a new client than it is to retain an existing one. Measuring your client retention rate will help identify the number of loyal clients and gauge customer satisfaction.
Client Retention Rate = Current Customers - New Customers / Beginning Customers x 100
Monitoring your budget will ensure that the financial, operational and capital plans for Q1 are being adhered to. For channel partners, it’s vital to ensure that your budget is being properly monitored in order to guarantee you have enough working capital available to meet the demands of your clients. Monitoring your budget will help you keep sight of where your business is making most of its money and point out which areas of your business produce money and which ones use it. This will force your management to consider whether they should reduce some areas of the business or expand others in order to have an amazing Q1.
We understand that Q1 can be an uncertain time of year for many channel partners and business owners. Making a plan for your business in Q1 can really help propel you into 2023. If you are not already a channel partner of ours, Backd offers working capital and line of credit products to meet all of your clients needs for the coming year. Become a partner of Backd today!