Retailers enjoyed a solid 2009 holiday season considering the economic climate, but estimates indicate consumers will return to reduced spending habits in early 2010. Small businesses in general are still hurting, with the Small Business Optimism Index decreasing 0.3 points to 88.0 in December according to the National Federation of Independent Business.
Although business owners cannot control how much consumers are spending or how the government handles the economic crisis, they can implement simple strategies to maximize their employees' efforts. One way to remain competitive and build on 2009 sales numbers is to use sound accounting principles to motivate employees and improve revenues in 2010.
The key to a successful year is a detailed accounting plan complete with weekly goals and targets. Whether you have an in-house accountant or use an outside bookkeeper, remind them that monthly accounting practices are not sufficient, especially with other holidays approaching such as Valentine's Day, Easter, and Mother's Day. In particular, consider employing the following accounting principles to motivate employees and ensure a successful year:
1. Use past sales numbers to create a 2010 plan based on specific sales, volume and net income goals. This may sound obvious, but too many small businesses fail to set sales and income goals every year. Keeping your 2009 numbers in mind will help you set realistic goals.
In his book, "Attitude is Everything," Paul J. Meyer says goals should be SMART—Specific, Measurable, Attainable, Realistic, and Tangible. By setting SMART accounting goals for the year and sharing them with employees, your business is much more likely to find success instead of wandering aimlessly.
2. Share weekly and monthly performance goals with all staff and provide incentives and rewards for achieving those goals. It is essential to include your employees in setting and achieving sales goals. Explain the goals to them, why you think they are realistic, and then provide a monetary incentive if they meet those goals.
Consider holding a monthly meeting and rewarding successful employees in front of the entire team. The reward doesn't have to be expensive—employees will appreciate the recognition in front of their peers with just a small token of your appreciation such as movie tickets or lunch with the boss.
3. Compare sales performance goals to actual performance on a weekly and monthly basis and review the results with employees. Again, you would be surprised how many retailers simply use accounting to track sales, rather than as a tool to improve sales. By comparing goals to performance, and reviewing the results with employees, you will be more likely to meet or even exceed them.
When you meet with employees to compare goals to actual results, consider holding a brainstorming meeting on how to improve the numbers next month. Including employees in the planning process empowers them, and you might hear some great ideas.
4. Determine sound accounting policies for promotions that will increase store volume and revenue per customer. Free offers such as free shipping, gift wrapping, gift with purchase promotions and complementary product packages can have a big impact on sales, and a small impact on the books.
You can extend these promotions to your employees by offering incentives. For instance, if you offer a free gift with purchase, offer a reward to the employee who issues the most free gifts.
5. Promote your gift card program. Estimates indicated more than 10 percent of holiday sales were for gift cards. More and more retailers are offering gift cards because they promote their specific brand, and commonly result in increased revenues when the consumer wants to avoid leaving a balance on the card.
Train your employees to suggest gift card purchases, and even consider offering a reward to the employee who sells the most in gift cards. If you set specific, measurable gift card goals for 2010, your employees might be more likely to suggest them to customers when they are searching for a gift.
More than 28 percent of businesses declaring bankruptcy cite problems with the financial structure of the company as the main cause of failure, according to a Small Business Administration study, "Financial Difficulties of Small Businesses and Reasons for Their Failure." With a good bookkeeper or CPA, you can ensure a successful 2010 by setting realistic goals for the year. Then, use those goals to inspire employees and reward them as they meet expectations and help your business prosper this year.
Allen Bostrom is the CEO of Universal Accounting and an expert in business management. He is the author of "In the Black," and "Red to Black in 30 Days." For more information, visit www.allenbostrom.com.