How to End the Year Strong and Prepare for Success Next Year
Each October, many are in the final quarter of the fiscal year. You have less than 90 days to achieve the goals you set, and that includes a few holiday and seasonal distractions. Like any great leader, you want to start the New Year with your plans in place, and team inspired, ready to execute. The annual business planning sessions you conduct now will only strengthen the opportunities for success. Our business planning advisors are here to help, and below cover the steps you can take to make your annual business planning an optimal time.
How Proactive Companies Ensure They Achieve Business Goals
Every year around this time, proactive companies are conducting annual business planning for the year ahead. They might undergo a business diagnostic, uncovering new potential and/or ways to refresh the tried and true. They are likely holding annual business planning and strategy sessions to incorporate the latest thinking to address challenges in their market and serve their customers, while defining the future focus of the company.
Once these exercises are complete, leaders are defining goals for the year, strategic initiatives that will set them on the right path, and coming up with specific metrics, targets, and action plans. Finally, they lock in their budget for next year to give some structure to their management processes.
The year-end push to achieve business goals you set for this year might include increasing your marketing to create quick sales, improving operations, removing an on-going stumbling block, digging deeply into budget lines to manage spending, and keeping close eyes on revenue outlooks and cost management to ensure your profit and loss statement meets your expectations.
Schedule Your Annual Business Planning Sessions on Your Calendar
Annual business planning is critical, so please make the time for it. You’ve heard the saying: “Failure to plan is planning to fail.” Schedule these exercises into your calendar now so you don’t wake up in January without the refreshed direction to guide you.
Here are elements of this annual business planning process you want to consider.
- Conduct a Business Diagnostic
- Define Your Business Goals
- Plan Strategy Sessions
- Align Metrics and Targets with Goals and Strategies
- Commit to Each Budget Line
Let’s review each briefly.
Conduct a Business Diagnostic
During a structured discovery exercise, you will look closely at your operational processes and look for opportunities to streamline or even transform them to provide better customer service and delivery at higher quality and lower cost. When you then predict the financial impact of changing from the current to future state potential, you may be shocked at how much value is at stake. This discovery process provides the inputs for your operational goals and financial targets. Our business planning advisors can help you conduct a business diagnostic assessment and help guide you through improvement opportunities.
Define Your Business Goals
With the results of your business diagnostic to inspire and guide you, it’s time to think about goal setting versus budgeting. It’s important to recognize a few key differences. You want your goals to stretch your team and go beyond what you know how to capture. Your budget, on the other hand, should be conservative and based on actions you have confidence in achieving.
Plan Strategy Sessions
Now that you know from your diagnostic what is possible, and from your goals what you aspire to achieve, you now begin the process of defining the actions and initiatives that will make your dreams a reality. The thing with business strategies is that you can only handle a few at a time, so you may need to select the highest value initiatives that will help you create the future you want. Or recognize those initiatives that are foundational and need to be in place for you to achieve your strategic goals.
Align Metrics and Targets with Goals and Strategies
Once you have your strategies defined, you can plan your success by using metrics and targets. Consider how to measure the success of business initiatives and create one or multiple metrics that are easy to monitor throughout the year. Each metric can then have monthly targets, either by calculating what it will take to reach your goal by the end of the year, or by creating a detailed action plan that has dates and impact expected for each step in the plan. Either way, you now have a way to track your progress.
Commit to Each Budget Line
Remember the difference between business goals and budgets, and set a conservative representation of what you expect to achieve this year for each budget line. Understand your revenue goals and potential, and dial it back just a bit to be conservative. Look at your costs and estimate what you need them to be for you to hit that budgeted revenue and your profit targets. And, of course, closely manage your budget through the year.
Now, Execute and Schedule Your Review Meetings
All these annual business planning sessions are for naught if you don’t now implement your plans! How do you know if your results are on track? You set up regular progress review meetings. These progress reviews are often monthly, or you could review your operational performance weekly. Start with your budget and make sure you are not falling short. At Danaher, we considered the budget to be “the floor,” meaning results had to at least be better than that. Then, review the actual results versus your targets for each metric, as this will give you a sense of how you’re progressing toward achieving your strategic goals.
Case Study: Diagnostic Finds Millions in Value
This was a mature business with solid Lean and Six Sigma processes in place. The finance team wanted to learn how much financial opportunity was available in this particular manufacturing plant and asked our business planning advisors to conduct a diagnostic of their operations.
In our early interactions, we discovered that the company had years of continuous improvement training, and every team member had a command of the lean and six sigma processes and necessary language. We were happily surprised by the evidence of their past efforts, which included:
- visual metric boards and multiple tiers of daily meetings.
- tracked target versus actual on each line.
- visual standards posted at the job locations.
- monitors posted at multiple locations across the facility with the status of problems that have been reported.
Before we arrived, we were not sure what level of opportunity would be available because on the surface, they seemed to have their act together. As always, we trusted our process to engage the team on site and dove in to see what we could find.
Here’s the result: With the involvement of the site leadership team, our business planning advisors found an extraordinary value.
Here’s How We Uncovered Over $2 Million of Opportunity in Their Business
The site team was with us each day to help conduct various analyses, make observations alongside us, and run the math. Keeping the site team deeply involved was critical as we could help them calibrate in real time and “see what we see.” With their involvement, there was a strong sense of responsibility and ownership of the numbers.
We shared new perspectives and principles to guide the team, and together studied the operations through this new lens. Each day we collected our observations and discoveries and combined the new ideas that we could implement.
We created their roadmap: an itemized list of projects and initiatives, which focused on the anticipated operational and financial improvements from our work together. At the end of two weeks, when we tallied up the value of all the opportunity, everyone was pleasantly surprised that the total was over $2 Million. That was rewarding and exciting, both for our team of business planning advisors and by their team.
Using the Diagnostic Results as Input to Set Goals to Determine the Budget
While the diagnostic revealed significant savings, the operations leadership team did not expect the team to implement all the actions right away. Rather, they interactively discussed and decided which actions would lead to results they could count on with certainty, and added those to the budget expectations.
They then decided which initiatives expected results with a little focus and coordinated effort by team members, or after investment in equipment or training. They decided to staff teams on these initiatives and monitor their progress as stretch goals, which would take longer to implement and were therefore not in this year’s budget.
Now you have some steps to take and a case study to inspire you. In order for you to enjoy to the extraordinary results that are possible for you, you have to follow the methodology we described here for you. Make your annual business planning a priority so that you can launch into next year with focus and excitement.
Here are some specific actions for you.
- Conduct a diagnostic of your business, at least the areas of your business that need the most help (if you’re not sure how or what specifically to do, contact us and our business planning advisors will help you)
- Set some goals – at a stretch level that would be a game-changer for you when you achieve them
- Decide the strategic initiatives that will enable you to achieve your goals
- Determine who owns each initiative, and how you’ll measure success
- Set your budgets with the input from your diagnostic and the goals you aspire to reach
Contact Our Business Planning Advisors
Our experts provide tailored solutions that meet the unique needs of each business to increase their competitiveness in today’s evolving landscape. If you are in need of a business diagnostic assessment or need help with your annual business planning, reach out to our team of business planning advisors today.