Now that Christmas and 2021 are in the rear-view mirror, it is time look forward and plan ahead. There is no one size fits all approach to tackling this.
At one end of the scale is to reflect on the events which occurred last year, and then set new goals for this year. The middle of the scale would be to revisit your business plan or business goals you set this time last year, make an honest assessment of how you did, and then set some new goals for this year. At the other end of the scale is holding a strategy session with key stakeholders and carry out a similar review, explore some opportunities and set some short term to long term goals.
The option you choose will ultimately be dependent on the size of your organisation and the involvement of your wider team in the strategic direction of your organisation.
Reflection on last year
A simple reflection of last year and evaluation of any initiatives implemented will help assess what worked well and what did not work well. This trial-and-error approach is typical of smaller businesses and is one step better than not planning at all. As the saying goes, if you aim for nothing, you’ll hit it with incredible accuracy. The goals under this approach tend to be small, business as usual, conservative, and incremental improvements over an extended period.
Review of business plan
A business plan is a formal document which outlines the core business activities, company objectives, and how the company plans to achieve its goals. A business plan tends to be a living document which is continually updated and sets out a plan for the next five to ten years. A business plan tends to cover products and services, marketing strategy and analysis, financial planning, and a high-level budget.
A review of the latest business plan and evaluation of the company performance since the plan was last updated checks whether the company is on the right track or corrective action is required. This review should not be limited to the short-term goals set but also reflect on how the company is tracking in terms of its medium- and long-term goals.
To make the most of this, it is be good to run a strategy session with the senior management team, or key staff members if you do not have a senior management team. It will be the senior management team who will drive and deliver on the company’s strategic plan.
The goal of this strategy session is to reflect on what went well over the past 12 months, what could have been done better, and a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats. A SWOT analysis is one of many tools which may be used to analyse your business’s abilities and areas to focus on based on these abilities.
Once you have assessed the current state, it is time to look forward and set some goals. These goals should be capitalising on the business’s strengths and opportunities and include a range of short-term to long-term goals. Successful CEOs operate in the future and look back to the present and past. They should go where there is no trail and leave one.
To help frame a strategy session, you should also use the BEST system to take you from obstacles to action – Barriers, Enabling Strategies, and Targets. Identify all the barriers and obstacles to achieving your vision, including personal barriers. For each barrier identify an Enabling Strategy. Don’t worry about how, focus on why.
The key strategy question to remind yourself is “How can I leverage my strengths to take advantage of the opportunities?” If your business target doesn’t challenge you, it’s a waste of valuable time and effort to pursue it. As Sir Peter Blake once said, “If it’s not hard, it’s not worth doing.”
The final aspect to strategy is execution of your business targets. Targets should follow the SMART system. Characteristics of an effective business target are that they are:
Once you have set your goals for the year, it would be good to commence preparing your budget for next year so that you can start the new financial year with your goals sorted and a budget to measure how you are tracking throughout the year. A robust budget will be backed up with sound assumptions and include a balance sheet and cash flow forecast. The cash flow forecast will assist in determining whether the company is generating enough cash to fund any planned capital expenditure or expansion goals. A budget of the profit and loss statement will not provide this level of information and will be detrimental to management’s decision making if the bigger picture is not considered. This budget may also be used to help secure funds from the bank to help fund your goals and ambitions. A robust budget would also be stress tested with ‘what if’ analysis. This analysis should include considerations for supplier price increases, inventory shipping delays, and changes in customer and supplier payment terms to name a few.
Your trusted advisor will be able to provide assistance and direction in planning for the future and can act as ‘devil’s advocate’ to ensure the goals and planned execution is commercially plausible.