January is a time of renewal. It marks a new beginning, a fresh start. But there are things you should be doing now, before December 31, to get you out of the blocks fast when the year turns over. If you’re on a roll, you need to think about how to keep that roll going. If the year ending has not been a kind one, then you need to think about how to make the new year better. Either way, there are four things you should do before we say goodbye to the old year and ring in the new. Actually, there are probably more than four things on your to-do list before the end of the year, so I hope the four I have in mind will be included. For more on this, please read below.
First, you need a written annual plan that outlines the three to five strategic initiatives you intend to implement next year to move your company forward. Hopefully, this is already done, but if it isn’t, there’s still time. This needs to be done thoughtfully, but it need not be a complicated or time-consuming task. A single page per strategy should do the trick. Just start with a paragraph that describes the strategy, explains why you’re implementing it, and lays out the benefit(s) you expect to come from it. Then break the strategy down into individual tasks, assigning responsibilities and deadlines for each, and TA DA! . . . you’re good to go. I assume you would be making this plan with the help of key managers, but if you’re very small and doing this solo, then run your plan by your attorney, banker, accountant, or other trusted advisor for their input.
Second, you need a Profit Plan . . . sometimes called a budget. I prefer Profit Plan because “budget” has a negative connotation. It sounds restrictive, confining. Profit Plan, on the other hand, is more positive. It says, “Here’s the profit we intend to make next year, and here’s how we intend to do it.” Start with a month-by-month sales forecast which is always the dicey part because sales forecasting isn’t an exact science. Be guided by your sales history, adjusting as necessary for current conditions. The trick here is to come up with a forecast that’s realistic, neither unduly pessimistic nor overly optimistic. Once you know what you expect to sell, determining your costs to complete your Profit Plan is relatively easy. If necessary, get help from your accountant. The strategic initiatives in your annual plan will almost certainly have cost and revenue implications, so be sure your Profit Plan takes those into consideration.
Third, do a customer review with the objective of ferreting out unprofitable customers. You know who they are. They’re the ones who demand $100 worth of service for their $10 order. Wouldn’t it be nice to start the new year by making those problem customers available to your competitors?
And finally, do an audit of your general ledger. In part, you’ll be doing this anyway to prepare your Profit Plan. But this additional scrutiny will tell you if any waste has crept into the system that needs to be curtailed, or if costs are creeping up and need to be more carefully controlled. You can almost always find something here to add to your bottom line.
So those are the four to-do’s I recommend before December 31.
• Write an annual plan covering three to five strategic initiatives.
• Create a Profit Plan to act as your road map to the profitability you expect.
• Do a customer review and get rid of those who are not a good fit for you.
• Audit your general ledger looking for waste and/or spiraling costs.
As I’ve said, this is not intended to be a definitive list of all the things you need to do before the year is out, but if you do these four, I guarantee you’ll have a better year next year than you will if you don’t do them.
For some small business owners, all this planning and financial stuff can be a bit intimidating. If that’s you, call me. We should talk.
Rock Solid Business Development
Phone: (847) 665-9134
andy@rocksolidbizdevelopment.com
If you would like to schedule a free, two-hour strategic coaching session, click here or call me at (847) 665-9134 to take advantage of this offer.
