There are exactly two weeks left in the year. Unless you are a retail business, your business is probably in a bit of a lull right now. Sales have slowed, there is less to do around the office and a lot of your employees and co-workers are out of the office traveling for the holidays. For all those reasons the hustle and bustle around the office slows down. Instead of gliding through this calmer period, use it to your advantage!
Now is the time to start planning for next year. A strategic growth plan will help you figure out how next year is going to be even more fantastic than this year!
If you’ve ever worked as a manager or department head at a business you’ve certainly had to turn into your boss some kind of business plan for the next year in December. They want to know if you plan to hire anyone, what your budget is for next year, how you plan to spend that money, what areas you are going to work on, what areas you are going to scale back on, etc.
And although we shun mostly anything corporate in the home based internet business world, there are still a few gems we take with us to our own businesses. Strategic planning for the upcoming year being one of them.
To do this you’ve got to get your business’ financial books in order. You’re already dealing with the books, preparing for tax season, so why not do some analysis and make some decisions to ensure that your business prospers over the coming year? No matter if you’re the type of business owner with a shoebox full or receipts or have a bookkeeper on speed dial you’ve got to do this first before you can do anything else.
It’s important to have your books up to date because you need to determine your business’ current state of affairs. You can’t know where you want to go if you don’t know where you’re starting from.
To figure out your company’s current financial position you’ll need to take a look at three documents; the balance sheet, profit and loss statement (P&L) and cash flow statement. The balance sheet will tell you how your business is doing financially at that particular point in time. It shows all your business’s assets, liabilities and equity. The P & L statement lets you see at a glance whether or not your business is profitable by itemizing your revenue and expenses. The cash flow statement reconciles your opening cash with your closing cash, showing you where the money has gone. From these three statements you should be able to gleam if your business has any debt, what your profit margins are, how much cash you have on hand, how much you’ve spent in every category, and which investments have given you the biggest returns.
With this information in hand you can then begin to compare where you were this time last year to where you are financially this year. You want to find out which areas you’ve done better in and which ones you’re doing worse in. If you created a 2012 business growth plan now is the time to pull it out and review it.
Take stock of any differences you see between the end of 2011 and the end of 2012. Look at your marketing and product development categories especially hard. Did you create more products than you did in 2011? Did you try out any new marketing channels this year?
Once you’ve noted where you fell short and where you achieved more, try to figure out how that happened. Don’t allow yourself to make excuses or get away anything. It’s important to figure out why there is a difference so you can either apply that to your 2013 business plans or figure out how to prevent it from happening again.
It’s important to do this because this will help you plan for next year. Use the strategies that helped you achieve your goals in 2012 and apply them to 2013. That’s what I do. My plan last year was to focus more of my time on product development and come up with new services and products in 2012 than I did in 2011. I used all the information I gathered to see that I indeed accomplished my goal and I did it because I stayed on track with my 2012 business plan.
As a business owner you may have a definite idea about what you want to see accomplished in 2013. If you have employees though you may want to ask them to participate in the creation of next year’s business plan. This is a great way to get your employees to feel connected to your business and for you to be made aware of any issues that need to be addressed. Work together to come up with a list of goals you want to accomplish in 2013. Have everyone create their own list and then compare notes. Whittle the list down to only a few goals. Trying to accomplish more than 5 or 6 goals will pull you in too many directions and most likely result in not accomplishing anything.
For each goal you come up with list a detailed plan of action to accomplish that goal. If you want to make $50,000 more next year write out how you are going to do that. Break it down by month. To make $50,000 more in 2013 you can see that you need to bring in about $4200 more each month. Then list what you are going to do in order to reach that monthly sales goal. Are you going to schedule more sales appointments? Are you going to create new services? Are you going to trim expenses? Whatever path you choose, make it reasonable and quantifiable.
Be sure to assign these actions to employees or to yourself. You need to make them or you accountable if you want to reach all of your goals. You should also make a date to review how everyone is doing right after the first quarter of 2013. This way you can see how you or your employees are doing right out of the gate. By doing this, you’ll be able to see what areas are not on track to reach their goals and which ones are exceeding your expectations.
A lot of people feel business planning for the short term and long term is unnecessary. I couldn’t disagree more. The whole review and planning process is a great time for me and my employees to reconnect with the business and remember why I got started in the first place. In addition to helping the business do better financially, it also helps to make me a better business man. The skills that I use to plan my business, help me in other aspects of my life, including retirement and family planning.
Good luck with your year-end business review!
Ethan Warrick
