Today I thought it might be helpful if I detailed the planning process I use at the end of December, and also June, each year.

Look back at the past year

I start with the written annual goals that I set at the beginning of the year.  Which ones were accomplished, and which ones weren't?  Why did we get some right, but missed on others?  Also look at the monthly goals; often the effort is evident and the reason for the annual outcome may become clearer.

Be grateful

In looking over the monthly and annual goals, I'm never fully satisfied.  I set aggressive goals that might be hard to attain, so chances are that I didn't accomplish everything I had hoped for.  However, think glass half-full and see what was actually accomplished, note the hard work, the great things we did do, and how much better off the business is now compared with where we were 12 months ago.

Look ahead

Revisit the long-term/5 year goals.  Have the goals changed, and if so, why?  Document the new 5 year goals.  (Are they SMART: S pecific, M easurable, A ttainable, R ealistic, and T ime-bound?)   Then, work backwards to determine what must be accomplished every year to achieve the 5 year target.  That shows us what we need to achieve in this coming year to set us up on the path to the 5 year goals.

We state these goals as actual financial metrics including revenue, profits, the business assets to create, new products or services, the number of new clients to acquire, and new people required for the team.

Plan out the coming year

Set out the coming year goals on a chart (like a Gantt chart) which shows what has to be done and when.  Document what has to be accomplished in January, February, and so on.  It's not possible to get this exactly right, so expect that you may need to adjust monthly goals throughout the year.

What this exercise gives is great insight into what's possible to achieve in the coming year.

Enter the numbers into Forecasts/Budgets

The Plan says what you must do to achieve the targets/goals.  The Forecasts and Budgets translate them into numbers and tell us what the monthly results should look like and what we need to do to achieve the goals.  Use some good software to make the job easier.  Forecast sales (by each product or service or division), consider your price strategy, how effective your marketing and sales processes may be, where your new customers will come from (expect to spend over 50% of the total time on understanding sales dynamics).  Then, forecast margins, and expenses (this is the Forecast P & L).  Next, use these numbers in a Cash Flow, adjusting for timing of collections and payments, and allow for loan repayments, owner withdrawals, GST, and taxes.  Perhaps look at three scenarios; allow for a worst case, perhaps a 'lot better than expected', and a most likely result.  What does each look like, and what strategies would be needed to overcome poor sales or expenses out of control.

The numbers don't have to be right, they are a forecast.  The key benefit of the exercise is seeing what we need to do to achieve the results we want.

Finally

This is only Goal Planning 101.  Practice is needed; the more you set goals then try to achieve them and assess results, the better you get at setting goals that can be achieved.

So, plan now and start thinking about the reward you will give yourself at the end of the year for being successful!