The start of a new year is a great time to take stock of where the business currently stands and what the future holds and ways of achieving the goals of the company for the year.
According to experts, a company should always seek to improve itself. The final goal of being ‘the best’ at something is incremental and requires lots of small changes over the years to achieve.
Tips To Help Plan For The Financial Year
Creating an annual plan requires a mix of strategic and tactical planning based on a review of your past performance and projections for the future.
Start Early
Do not wait until December or after the first of the year to create next year’s business plan.
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 what marketing efforts generated the most return. In addition to reviewing your numbers, discuss with your management team their thoughts on why you performed the way you did.
Create Projections
Have your management team create 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 sales 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.
Create Your Budget
Once you have 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 and credit availability estimates, debt-service numbers, profit-and-loss statement and balance sheet. Look at your estimated year-end profit and determine if it is adequate or if you need to lower your costs, reduce debt or increase sales targets. Do not forget to review your potential tax burden, calculating the effects of any tax laws, and consider tax strategies to help reduce your burden.
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, analyse 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.
Make Your Commitments After you have reviewed your past performance, made your projections, created your budget and discussed options for new business development, create your plan for the coming year. Have each department head prepare an annual plan and operating budget for you to review and approve. Create benchmarks that alert you when you are underperforming to help trigger automatic responses, such as reducing spending, arranging for more credit or exiting failed marketing strategies.
The Chartered Institute of Personnel Management (CIPM), charged organisations to build a culture alignment journey and a resilient workforce for a profitable organisation.
According to the Institute, the HR manager has to hone the art of matching the generational mix, which exists at various organisations, and then build a culture alignment journey that will ultimately lead to an exciting workforce.
It said it becomes prominent, especially with the new world of work, which has led to constant changes in business models, employee terms of engagement, trends and generational shift, tasking HR managers on the need to have agility, resilience and enterprise mindset for organisational growth.
In this financial year, it is important Companies should focus on investments: investments in staff, skills and technology.
