Time flies when you’re having fun — and running a business.
Although it’s probably too early to start chilling a bottle of bubbly for New
Year’s Eve, it’s certainly not too early for business owners to start doing
some strategic planning for next year. Here are some ways to get started.
Begin with your financials
A good place to find inspiration for strategic objectives is
your financial statements. They’ll tell you whether you’re excelling or
struggling so you can decide how strategically ambitious or cautious to be in
the coming year.
Use the numbers to look at key performance indicators such as
gross profit, which tells you how much money you made after your production and
selling costs were paid. It’s calculated by subtracting the cost of goods sold
from your total revenue. Also calculate current ratio, which is calculated by
dividing current assets by current liabilities. It helps you gauge the strength
of your cash flow.
Examine other areas
Human resources is another critical area of strategic planning.
What was your employee turnover rate last year? High turnover could be a sign
of poor training, substandard management or low morale. Any of these problems
could undercut the strategic objectives you set.
Examine sales and marketing, too. Did you meet your goals for
new sales last year, as measured in both sales volume and number of new
customers? Did you generate an adequate return on investment for your marketing
dollars?
Finally, take a close look at your production and operations.
Many companies track a metric called customer reject rate that measures the
number of complete units rejected or returned by external customers. Sometimes
a business must improve this rate before it moves forward with growth
objectives. If yours is a service business, you should similarly track and
assess customer satisfaction.
Set new objectives
With a review of your financials and key business areas
complete, you can more reasonably set goals for next year under the banner of
your strategic plan. On the financial side, for instance, your objective might
be to boost gross profit from 20% to 30%. But how will you lower your costs or
increase efficiency to make this goal a reality?
Or maybe you want to lower your employee turnover rate from 20%
to 10%. What will you do differently from a training and management standpoint
to keep your employees from jumping ship this year?
Act now
Don’t let year end creep any closer without reviewing your
business’s recent performance. Then, use this data to set realistic goals for
the coming year. We can help you choose the best metrics, crunch the numbers
and put together a solid strategic plan.
© 2019
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