Planning – There’s never been a better time

The new financial year is upon us and there’s never been a more important time to plan your business for the new year.

Statistics show that less than half of all small and medium-sized business owners make a plan for their business. This certainly reflects my own experience with the business owners we deal with.

Interestingly, we find that business owners who don’t plan their business year ahead tend to get similar results to previous years and, at best, get incremental improvements in the financial results in their business.

The reason for that is that we are naturally creatures of habit and so, without a plan of what you are going to do differently in the coming year, you will naturally continue to do what you’ve always done. This will then obviously give you the same, or similar results to previous years.

Planning and budgeting also bring the Baader-Meinhof Phenomenon into play to help you grow and improve your business.  The Baader-Meinhof Phenomenon is what happens when you, all of a sudden, see a certain type of car on the road simply because you have started looking at buying one of those cars. Those cars have always been there. You’re just noticing them because that type of car is now front of mind for you.

Similarly, when you put in place a plan and a budget for your business (i.e. and you do it properly), both your expected financial outcomes and the actions required to achieve those outcomes become front of mind and, naturally, you are more likely to perform those actions and, by extension, achieve those outcomes.

I have seen clients turn their businesses around simply by properly preparing a budget for the year which has naturally helped them to focus on what is required to achieve their desired outcomes. They push hard to hit revenue targets each month where, in the past, they would just accept what happened in the month because they had no targets to hit.

Proper planning and budgeting also enables you to undertake some scenario building which, with what is going on in the world today, is critically important for the success of your business in the coming year.

The Coronavirus has turned the world upside down and, even though governments have started to relax social restrictions, we won’t see the full impact of the pandemic on business until the government assistance such as JobKeeper stops in September.

Build some worst and best-case scenarios into your 2021 budgets so that you can see what decisions you need to make in order to cope with these possible outcomes. You will be much better placed to handle what 2021 throws at you if you have modelled it before it hits than if you are trying to make hasty decisions on the run.

Planning and budgeting for the year ahead, done the right way, can ensure you have your best year ever or, if disaster strikes, literally save your business. You need to shift from simply being a technician to being a business owner and start planning and driving your business forward.

It will be the best thing you’ve ever done for your business.

Craig