As Fall looms on the horizon, many businesses are gearing-up (or hunkering down) for their annual budget and forecasting ritual. Sadly, far too many businesses are not!
In a recent informal survey I conducted of 7 small businesses, exactly one was working toward a formal budgeting and forecasting process, and it was something he was attempting for the first time in 11 years of operation!
Now, as a serial entrepreneur myself, I fully understand and appreciate the incredible challenges faced by managers of small businesses, and the many ways you can explain not having a regular formal planning process. But, as a business success coach, I can confidently report that one of the most important factors in the continuing success of your business is your annual planning process!
Think about it. There’s a reason the very first thing venture capitalists and banks ask for is your business plan! In fact, according to success guru Brian Tracy, failure to plan is the #1 cause of business failure.
Perhaps you’re already enjoying a certain level of success without doing an annual plan. Maybe you’re struggling so hard to keep up with the daily demands of business that it’s hard to find the time; or maybe you’re not really sure how to go about it, so you just keep putting it off…
No matter what your situation, you can make this the year your business really takes off, reaching heights you’ve only dreamed of in years past! And as you do, you can bank on the fact that your enjoyment and satisfaction with your business and your life will likewise soar!
I challenge you to commit now that you’ll do whatever it takes over the next couple of months to create and implement a definite plan for your business, based on a well thought out budget and forecast.
Here are 7 actions to get started immediately!
- Decide right now, that you’re going to create and implement a thoughtful business plan this year, and refuse to fail in this resolve.
- Schedule times on your calendar, right now, when you’re committed to working on your business, rather than in your business – each and every week. Until you do this, you don’t really have a business, you only have a very expensive job!
- Become a ‘numbers person’. Most entrepreneurs are not naturally numbers people. They thrive on being visionaries, meeting people, negotiating, etc. But if you really want to succeed, you’ve got to become a numbers person! It’s fine to hire professionals to help with your bookkeeping & accounting, etc., but you cannot delegate total responsibility in these areas and expect to have lasting success.
- Carefully consider, and write down as succinctly as you can, what business you’re really in. In other words, describe the benefit you’re customers get from your product or service, rather than identifying what the product or service is.
- For instance: Nobody buys ‘Insurance’; they buy ‘Piece of Mind’; and people don’t go to McDonalds, for a hamburger, they go because they want ‘cheap, ultra fast food that they know will be the same every time’, or because their kids want the happy meal toy.
- Setup or hire someone to setup QuickBooks for you, if you haven’t already, and then learn the basics of its operations. Once you’ve done this, you’ll have easy access to many reports that can tell you exactly what’s going on in your business – by the numbers.
- Pull a detailed P&L (Profit & Loss) Statement from your QuickBooks in Excel spreadsheet format, and go through the following steps at minimum.
- Make certain you understand the total costs associated with every product or service you provide, the sales price, and profits from each.
- Make note of expected increases in costs do to rising gas prices and other economic factors
- Practice zero-based thinking on every line item. That is, ask yourself this question: If I knew what I know now, when I started doing XYZ, would I start that activity again today?
If the answer is no, then the next questions are ‘How do I get out of this activity, and how fast!’
Now that you have a good understanding of where you are, go through each line and determine where you want to be next year. Consider any new products or services you might add, or how you’re going to focus on selling more of the ones you already have. In other words, make a plan!
And once your new budget & plan are in place, be sure to review them at least quarterly (preferably monthly) and make adjustments to your plan, your activities, or both. Soon you’ll gain a sense of control over your business outcomes that will amaze and delight you, and then, the sky’s the limit!
