Annual review of your business and setting of growth plans?

growth plans?The festive break allows time for you to reflect on your business and review its performance over the previous year. It is also an opportunity to consider your growth plans for the coming year.

The discipline of writing down your plans and setting of budgets needs to be underpinned by measuring and monitoring performance as the basis for future planning.

The level of your review, whether strategic or tactical, will be defined by your objectives which might be for little change or dramatic transformation.

While the level of detail and research will differ, whatever the objectives the key information needed for a review are.

  • Last year’s plan and last year’s actual figures, details of your order book and future order prospects an up to date balance sheet.
  • Consideration of the different parts of your business that have been non-productive and those that act as a drain on resources that might be discontinued and those that have growth potential and should be the focus for the future. While this might seem subjective, it should be supported by evidence from historical figures and an observation of trends. Ideally it should involve market research before making any big decisions about major investment or a change of direction.
  • Consideration also should be given to resources available, options for growth, and this can be done by analysing your business’ strengths, weaknesses, opportunities and threats and preparing a SWOT matrix. The key is to use this as the basis of a ‘so what’ assessment of how to exploit strengths and opportunities and what to do about weaknesses and threats.
  • Consideration of your products and markets to identify those that yield the best margins, those that are good for cash flow and those that might require attention, whether increased margins, revised terms or cutting.

Your review should provide you with a clear picture of the business’ current situation and be used as the basis of future plans.

Setting of growth plans

Plans should be based on clear goals and objectives which need to be written down and agreed upon by everyone involved so there is no ambiguity about what is expected and so that they can be measured. A useful test of each goal is that they are ‘SMART’ where each should be based on the following criteria: Specific, Measurable, Attainable, Realistic, Timely.

While business plans might be prepared, all too many sit on the shelf unread for another year. Instead it is often more useful to use the review and SMART goals to produce financial forecasts of profit and loss, cash flow and ideally balance sheet. The more detail the better as they can be used for setting detailed budgets for expenditure and detailed sales by market or product. The detailed expenditure lines in a forecast can be used as key drivers of business performance whether investment in people, in marketing or in equipment. An example is to identify and have a separate line in the forecast for all the various marketing initiatives so that the results of each initiative can be measured and used as the basis for adjusting the marketing plan.

Detailed sales lines can be used to support the SMART goals so that performance can be measured against achieving targets.

The layout of the monthly management accounts should reflect the same line items as set out in the forecast so that once a detailed forecast has been set, such as for monthly sales and expenditure, it can be used to compare with the management accounts as a means of monitoring performance. In this way adjustments to the plan can be made where necessary.

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