As an avid sporting fan and somebody who has been playing competitive team sport for almost 20 years I have become accustom to training hard, having a well organised team and the importance of working towards a game plan week in week out. Similarly, with business having a clear vision and defined set of goals that links back to your business strategy is essential to achieving success in any business.
Now that the 2020 financial year has come to an end most business owners will have reflected on the year that was. Did you achieve the growth you thought you would for the year? Did you make the profit you wanted? If the answer to any of these questions is no, then ask yourself what did you do different this year to achieve the expected outcome? The unfortunate truth for many business owners is that they overlook the importance of planning for success at the beginning of the year. Instead they continue operating as they did the previous year but expect a different outcome. I’m sorry to say it but without a plan this is more of a wish.
Regardless of the size and sophistication of your business all businesses should undertake an annual planning process to define the financial and non-financial goals of the business. At a minimum the following 4 activities should be conducted each year as part of the annual planning process:
Reflection – You need to consistently analyse (monthly or quarterly) what worked and what didn’t work in your business so that you can implement change as required. Failing to identify an issue in your business could cost you a significant amount (both financially and non-financially) if left unaddressed.
Communicate your strategy to the team – In order to align your team and the strategic vision of the business you need to ensure that the team is aware of what the strategy is and the role they each play in helping the business to achieve it. Having a team that is engaged and aligned to the strategic vision of the business will improve culture, reduce turnover and likely increase efficiency.
Implement a rolling 3-way forecast – Work with your advisor and your internal team to set the financial targets for your business for the coming 12 months. Remember when preparing the annual budget be sure to set realistic targets that are based on reason and logic rather than arbitrary growth estimates such as a 10% increase on previous year.
Having an integrated 3-way forecast will enable you are monitoring the business performance and cashflow consistently throughout the year in line with the financial targets set at the beginning of the year.
Review staff performance – Having the right people in your business is no different to having the right players on the field. Teams that perform the best are those that have all players working towards a common goal. Star performers should be rewarded while conversely those that are underperforming should be dealt with accordingly.
Don’t leave the performance of your business to chance, you are the captain of your business and the ball is in your court.
PKF – Business Advisory Services