We are at the beginning of 2021, and most are glad that 2020 is behind us. We are all looking forward to a vastly different 2021. As you look at 2021, do you have a plan for your business? We take time to make longer-range personal plans for ourselves for things such as retirement, college education for children, dream vacations, yearly budgets, etc.
What about for your business? Do you have a written plan so that you can monitor your progress and communicate with your employees? When was the last time you put a yearly plan together or even a longer-term plan?
Too often, we are so busy working in our business that we fail to plan for our business. Taking the time to think strategically about your business and planning for the following year is critical to advancing your business. Without a plan, our efforts often become reactionary versus proactive as we deal with issues without any prior thought. Having no plan can result in either frustration over a lack of results or confusion as to why we see no change year after year.
How do I start to develop a plan?
The first step is to do an analysis of where your business is today and what happened during the prior year. There are two parts to this review, qualitative and quantitative.
Qualitative Evaluation: Ask yourself what went well during the year and what did not go well in the business. Also, think about your own role. Were you satisfied with that role and your level of involvement in the business? By doing this assessment, you should be able to identify 3 or 4 key strategic initiatives to enhance your business or actions to change your role in the day-to-day operation of the business.
Quantitative Evaluation: The assessment is focused on your financials (sales and profits). Are you satisfied with the results? How stable are your results? When it comes to your sales, how dependent are you on a small number of customers? Is your business built upon repeat business, or is it primarily new clients? Did buying behavior change during the year? An analysis of your sales is critical to understanding how easy or difficult it will be to grow your sales. When evaluating profitability, look at your expenses for the year. Did you have any unusual expenses or items in the year of which you need to be aware as you evaluate your profits for the year? Can you observe any trends in your expenses (either positive or negative) compared to prior years that are a concern going forward and need to be addressed? Doing an evaluation of both your sales as well as profitability for the preceding year will enable you to develop realistic goals for the new year.
I have a plan now what?
With your financial goals and your strategic initiatives written down, it is important to monitor your progress on a regular basis throughout the year. A good time to do this is when you review your monthly financials. Evaluate progress on your initiatives, sales trends, and profitability. Are you on target, ahead, or behind? If behind, what do you need to change to help you get back on track? If ahead, are there any concerns with the business being able to handle the additional opportunities?
The secret is not the plan, but the process of assessment, plan development, progress monitoring, and adjusting when needed. If planning is new to you or you have difficulty taking the time to plan, find a trusted advisor to help hold you accountable. If you want your business to flourish, planning is critical.
