A lot has been made about the DOW crossing 11000 the first time since 9-11. The most encouraging fundamental point is that many companies have used the years between 2001 and today to put themselves on much more realistic plans than they were immediately following the .com bust. The basics are in place for growth, however modest, and 2006 seems to be starting off with significant potential.

We are all just off the heels of 2005 and the drama which undoubtedly surrounded year end. Maybe you were one of those companies scrambling for the last few deals to hit the target, margins be damned. Or perhaps a big deal or 2 came in at the last minute bringing high fives all around on new years. Plenty of companies didn'’t get lucky though, going through the motions of chasing after targets which were known to be an unspoken fiction last summer. It doesn’t have to be like that. Now, in January, is the time (if you haven’t done it already) to get proper targets squared away. Often, an honest assessment of what sales can really sell based on the as recent as last year is the most effective way to set the top line number. As for getting your margins right, spending a few days going deep into what the service and product delivery actuals for 2005 were is time REALLY well spent, as it is the best indicator of any real profit potential in 2006. Changes made now, at the beginning of the year can have a real impact. Getting reactionary summer to sluggish delivery performance in the first half will have little impact on ’06. You may not like what you see when you set realistic targets, but that is a different issue altogether. Nothing can galvanize a company quicker than setting realistic goals. It gives everyone a sense of assurance that management knows what it is doing and that they are being asked to do the possible – all healthy attitudes in an OK market.

Reductions In Force and cuts of one type or another have been commonplace in most industries over recent years. As things improve, it is always tempting to take a break from the difficult work of cutting, don’t give into temptation. When growth is in swing, keep an eye on weak performers and don’t let them slide by. The strength of top performing product and service lines will be sapped by weaker lines. No getting around it. They take up a disproportionate amount of management and corporate time, they drain away capital, and perhaps most damaging to the business, the create tension between employees and are a constant drag on morale.

There is a scene in the recent film Master and Commander which illustrates this point well. Set at sea during the Napoleonic wars, the intrepid Captain Aubrey (Russell Crowe) of the British Royal Navy is taking his ship through an extremely violent piece of weather, through a series of events a mainmast has been struck away and it, all of its rigging, (and a popular ships officer who had been at the top of the mast when it gave way) are all now dragging behind the ship, the collective weight and pull slowly causing the vessel to founder. If the drag is not cut away the vessel will sink, if it is cut away a popular officer and friend of the crew will be lost. Time for a decision. Captain Aubrey, gets out the axe… A growing market is no reason to stop cutting where it must be done. Keep making the hard decisions, by cutting back the weaker lines.

We all know how attracted foreign businesses are to US markets. The US is, generally speaking, the most desirable market in the world. If you are not American and you want to do business here, the potential is certainly in the cards. Over the generations this attraction has built a very sophisticated set of foreign business people who are quite comfortable building businesses both here in the US and abroad with geography, currency, language, regulation presenting little or no barrier.

Conversely, outside of large multi-national corporations, many American business people can easily get caught up in a view of the world outside the US as hopelessly complex and an irrelevant market. To compound the issue, due to the growth of international outsourcing, Americans, when we think internationally, often limit our thinking to cheap labor and low cost manufacturing.

Given the rapid pace at which the world is continuing to shrink, it is a competitive advantage to be looking for market opportunity cross boarders. I won’t belabor the point that for mid-sized companies (let’s say $100m – $750m in annual revenue) expecting a modest expansion of basic of international business as part of your revenue mix in 2006 will go a long way to opening up new markets in the future. The American market is vast; no question about it, but to use the hackneyed phrase, in the world economy, success will be boarder-less. 2006 may be a good time to dust off the passport.

2006 should be a strong year of building. For many industries, the markets are healthy and growing at modest rates. More importantly, success in the past few years has required a fiscal discipline which has allowed many companies to enter the year on solid ground. By setting realistic targets – both top and bottom, by continuing to cut back weak performers and by stepping out internationally 2006 has all the signs of a good year for business.