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Business Planning Tips for the New Year

You may have heard the familiar quote that “a goal without a plan is just a wish.” It’s particularly apropos for business planning. As you set new growth objectives for the year to come, realizing success requires advanced thought and a detailed strategy.

Here are some tips to help you prepare for and achieve a new era of growth in the year to come.

1. Set your new-year goals

As you review your current year in business and think about goals for the new year, it’s important to celebrate your past successes. Often entrepreneurs don’t realize the value of small achievements, so start by listing all of your accomplishments and then isolating the top three. Recognizing your success is a positive way to encourage a mental mindset of growth for the year to come.

However, while you’re raising a glass to your accomplishments, don’t downplay the areas where your business didn’t measure up. You can learn a lot by evaluating where you failed to meet critical metrics or lost revenue over the course of the year.

Write these down as well, and then determine how to avoid the same pitfalls in the future. Understanding where your business succeeded or may have gone astray will help guide your goals for the new year.

Another big key to developing a proactive strategy is having accurate and timely financial reporting. If you don’t know where your business is positioned financially, it’s hard to know what is working and what is not. Timely accurate financials help you to set realistic goals for the year to come and even shift direction mid-course if a change in strategy can bring about more positive outcomes.

1. Create a 12-month budget

Once you’ve isolated your goals for the coming year, you’ll need to set your business’ budget. First, determine your operating expenses and then project what can be dedicated toward each individual objective. Taking this approach also allows you to see where expenses need to be modified to support your goals.

1. Evaluate your resources

Growth and business success require a minimum resource level, so the year end is a good time to evaluate where you stand. Do you have the human resources necessary to achieve the goals you’ve set? Will you need additional equipment or working capital, and will you have ready access to the supplies you need? Answering these questions allows you to take your planning to a deeper level by isolating issues that could impede your success.

1. Align your business to your goals

As you prepare your goals for the new year, it’s essential that you communicate your plans to your employees and business partners. While each of your executives may have their own responsibilities and concerns, the end goal of all their efforts should be the same.

It’s a similar situation for your broader support team. Professionals, such as accountants, bankers and your legal associates, need to understand where you are headed and how you plan to get there to help ensure that your goals are in line and achievable with your balance sheet, debt structure and risk appetite.

1. Mind the Critical Importance of Cash Flow

As you consider your financials from the year, one of the biggest areas you should review is the cash flow cycle.  A strong and consistent cash flow means you’ll have the funds on hand to achieve your objectives. On the other hand, if you experienced deficits during the previous year, it’s important to understand these gaps and how to fix them.

Too often, business owners focus only on how much cash they have in their accounts come year end. However, by reviewing cash flow over time, you can isolate patterns in liquidity, such as whether you were able to collect receivables in a timely fashion and how quickly you could turn over existing inventory. Answering questions like these will provide insight and trends that help you identify when you can be aggressive with working capital as well as when you should be more conservative.

Once you’ve determined the course for the new year, be sure to revisit your business plan and update it to reflect any changes to your operational structure or future goals.

While year-end planning might sound labor intensive, there is good news for businesses that take time to perform these evaluations. You’re setting your business up for greater success in the year to come.

Looking for help with your business finances? Contact a Commercial Banker to learn how we can help.

About the Author

Jeremy is a Vice President of Commercial Banking. He has a long and varied history of service at FNBO and finds fulfillment in helping clients determine the best plan of action to manage their finances and meet their goals.