7 Things Businesses should do to Prepare for Next Year
1. Start Early
As they always say the early bird catches the worm. Don’t wait until December or after the first of the year to create next year’s business plan. Many of your partners and suppliers begin making their budgets in the fall, tying up money they could have spent on activities with you. Begin your planning for the coming year after your third-quarter results are in. At the very latest, start your planning well before people start taking off for the Thanksgiving holiday.
2. Review This Year’s Results
Look at your income and expenses for the current year, reviewing your budget with a variance analysis. If your numbers differed from your projections, find out why. Review your sales reports by more than just gross volumes and revenues. Look at which products or services did best, which locations generated the most sales, and which marketing efforts generated the most return. In addition to reviewing your numbers, discuss with your management team or even get outside support like a consultant and see their thoughts on why you performed the way you did. By not getting the proper answers you are leaving money in your market that could be in your business growing it.
3. Create Projections
Have you created projections for next year based on doing the same things you did this year before you start considering new ideas for next year? Ask your team to give their best estimates for the coming year if your operations and the market stay generally the same. Review the likelihood that your customers will buy more or less from you, whether you think your expenses will increase or decrease and if your competitors, customer preferences, or new technologies will change your marketplace. After you’ve run this analysis, discuss how you can do things differently. Look at the effects of a cost-containment effort, new promotional strategies, changing your distribution, and raising or lowering your prices. Even come with a fresh innovative marketing strategy.
4.Create Your Budget
Once you’ve projected your sales and expenses for the coming year based on your discussion with management, create a detailed master budget that includes your income and expense projections, a cash flow statement, cash reserves, credit availability estimates, debt-service numbers, profit-and-loss statement, and balance sheet. Look at your estimated year-end profit and determine if it’s adequate or if you need to lower your costs, reduce debt or increase sales targets. Don’t forget to review your potential tax burden, calculate the effects of any tax laws, and consider tax strategies to help reduce your burden. Every business should have a great defense (tax strategy) and a great offense (marketing and sales strategy)
5. Discuss Expansion
Once you have a detailed analysis of how your company might perform next year, barring any significant, unforeseen disruptions, discuss your financial and operational ability to expand your business. Consider adding a new product or service, opening another location, adding distribution channels such as online selling, increasing your marketing, or diversifying into a new market. Calculate the costs to do each, analyze the risk/reward ratio and determine what you can afford to do. Use the amount of money you can afford to lose without seriously damaging your business as your low-end benchmark and your profit potential as your high-end target. Many times for small businesses, it is more cost-effective to find a consulting company that not only does consulting but implements all consulting strategies they find for your business to expand. The best suggestion we have found is really trying to find the same company for both services the consulting and the implementation of the consulting results.
6. Make Your Commitments
After you’ve reviewed your past performance, made your projections, created your budget, and discussed options for new business development, create your plan for the coming year. Prepare an annual plan and operating budget for your team to review and approve. Create benchmarks that alert you when you’re underperforming to help trigger automatic responses, such as reducing spending, arranging for more credit, or exiting failed marketing strategies.
7. Get help NOW!!
Many companies start looking for the perfect outside support i.e consulting companies in January and February. If you do this you are already behind the eight ball. If you want to change next year you need to start next year. Think about it, if you start a promotional campaign you will not start after your promotion has ended market you will market the promotion at least a month in advance. You need to give your clients time to adjust or be made aware of your new growth strategy.