Finally … 2011 has come and gone and you’re looking at a fresh new year. The doors are still open, but for how long? What lies ahead for your business? Will you survive another year? Those who listened to me last year would have a plan in place. For those who didn’t here’s how to still be standing at the end of 2012.

Looking at Your Business in a New Way
January is the month to gather tax information. What happened last year? Did you just get by? Break-even? Have a loss? It’s time to review your business as objectively as possible. By that I mean that you stop glossing over the things you know were bad decisions. Try to justify them if you must, but you know they were lapses in judgment. Maybe you waited too long to let a bad employee go. Perhaps you overbought inventory because there was a price reduction and it seemed like a smart idea at the time and now you’re stuck with product you can’t move.

Look at each month. Were sales up or down from the previous year? Yes, there was/is a recession and that would skew the numbers somewhat. But look at your average sale vs. number of sales.
If the average sale is up, but the numbers of sales are down, are you pricing your products or services correctly? If the average sale is down, but the number of sales is up then you are working harder and possibly underpricing your inventories.

What about margins? Are you selling products or services that are not that profitable? Some “loss leaders” are OK to bring in customers in now and then, but you can’t live in a down economy as a discounter. Just ask Circuit City. In addition, if you drop prices to “buy the business” it’s going to be very tough to raise them again. Just ask Netflix.

What Should You Be Doing?
Doing an in-depth analysis of your business is just the beginning. Your accountant or CPA can often spot some red flags from your P&L, Cash Flow statement and Sales Projection sheets. But what outside forces might be having an effect on your business? If you had a bad January last year do you know why? One thing to keep track of is what your primary and secondary competitors were doing at the same time.

NFL coaches get films of their next opponents last couple of games. They review those films and look for weaknesses. Start a file of your ads, promotions, and sales for each month. Start a file for what your competition did during the same time period. Did your competitor take business from you due to a sale, promotion or pricing? Did they change their advertising message? Did they change their image? Did they run negatives about you or your products? Most of us are creatures of habit. If it worked once we’ll do it again. This is a weakness you can exploit but only if you know what was done and how it affected you.

Be Proactive, Not Reactive
I am adding this thought because the above paragraphs might sound like I’m asking you to react to your competitor. What I am suggesting is that by becoming a student of your business, and your local business climate, you will be a stronger, not weaker competitor, and you will put your competitor on the defensive to try something new that may or may not work. Your proactive stance will force them to be reactive.

Plan for 2012
Profit keeps the doors open. What are the five most profitable things you do? Are there enough potential customers in your market to support these five profit centers? It not, it matters little how profitable they are. If so, then you have the beginnings of a successful marketing and advertising campaign.

Simply match up your most profitable products or services, with the target market that has the resources and desire for those products and services, and you will be on your way to a profitable year. Your year-end review should give you some indication of what worked and what did not. You and your accountant will need to weigh whatever role the economy played in the final numbers.

If there is any positive in a recession it’s this. When times get tough the weak and poor business people are taken out of the market. The customer however is still there. You have a prime opportunity to cultivate those customers searching for a new company. They will make 2012 a happy and prosperous new year.

Tom Egelhoff, www.smalltownmarketing.com, is the author of, “How to Market, Advertise and Promote Your Business or Service in Your Own Backyard.” Listen to Tom’s weekly radio show, “Open for Business, 11-2 PM Mountain Time every Saturday at http://kmmsam.com. Click “Listen Live.” Also, check out Tom on Twitter, Facebook and LinkedIn.