It’s officially time to start creating your annual plan! Whether you are new to the business or a seasoned vet, you’ve likely put into practice each of the main items needed to create an annual plan.
A plan starts with assessing your current state. Then it requires setting goals, creating strategies, measuring progress, and confiding in an experienced professional.
An annual plan is all of this pulled together. When carried through, this plan sets your business up for success.
Assess the State of Your Business
Before you dive into creating your annual plan, you need to assess the state of your business. This is when you’ll take a closer look at your budgeting, cash flow, financial metrics, and operations. Maybe even fintech, if this applies to your services or operations.
To help you assess the state of your business, here are some of the questions to ask about your company and its operations:
- How close were you to reaching your goals this year?
- Did the team reach their goals?
- Where can your company improve?
- Can you make adjustments to your budget?
- How was your cash flow? Do you need to improve your cash flow?
- Did your tax strategy miss the mark?
Use these questions to guide the conversation about your business operations. This is where you get information and quantitative data that shows, in solid numbers, how well things are going.
So where do you go from here? Go into an even more in-depth analysis to help you find areas you’d like to improve and set goals to help you drive results.
Set New Goals
Once you’ve completed your review, set goals for improvement. Your review will tell you what areas you need to work on and what information can be used to create your goals.
To create strong goals, follow the SMART goals outline. SMART stands for—Specific, Measurable, Attainable, Relevant, and Time-Based. The concept of SMART goals is focused on modern, actionable steps a business can take to reach its goals. These goals have a high level of detail and make accomplishing them easier.
For example, let’s say your goal is to save on your taxes in the year ahead. Following the SMART framework, your goal may look something like this.
- S – Specific
- We will save $500 on our taxes each quarter.
- M – Measurable
- We will track this on a quarterly basis.
- A – Attainable
- Based on our numbers in previous quarters, this is possible
- R – Relevant
- This goal is relevant because by saving on taxes, we will increase cash flow and the success of our business
- T – Time-based
- Breaking this goal down into a quarterly basis makes the task a present issue
Once you’ve outlined your goals, you can build the rest of your annual plan around them.
Create Strategies to Reach Your Goals
To achieve your newly crafted goals, you’ll need to create strategies to help your team stay on track. Figure out best practices and craft a plan for implementing them. For example, if one of your goals is to save on taxes, do research to find the best ways to save.
Based on a quick search, here are some examples of beneficial ways to save include:
- Accountable plans on expenses
- Choosing a more accurate business structure
- Deferring expenses at the first of the year
- Health reimbursement arrangements (HRA) to pay for medical expenses instead or along with traditional health insurance premiums
- Retirement plans including a 401k
These are all tax-deductible and not taxed as income, which is where you get even more savings for your business. Choose which strategies/strategy is the best route for your business, then implement those strategies into your business.
It may seem like a no-brainer step, but without a concrete strategy in place to help you reach your goals, it’s more likely you’ll miss the mark.
Implement a Tracking System
Now that you have your goals and a plan in place for reaching them, you need a way to measure progress. Measuring progress shows you whether or not you are on pace to reach your goals and gives you opportunities to make corrections when needed.
The best way to do this is by tracking KPIs that are centered around your goals.
Here are a few common KPIs entrepreneurs use to measure progress:
- Cost per acquisition
- Burn rate
- Churn rate
- Revenue per employee
- Run rate
Once you’ve selected your essential KPIs, you should use a dashboard to keep everything in one place. This way you’ll have easy access to all the numbers that drive your business towards success.
Work With an Experienced Accountant
Your annual plan can set your business up for a successful year. It will guide you through questions and help you make important decisions. The answers to these questions will propel your business towards reaching its goals.This is why you should work with an experienced accountant. They’ll help you piece together an annual plan that drives success. Let Pasquesi Partners manage your accounting needs. Contact us today for your startup or small business needs. We offer certified public accountant services with a modern approach to help you grow your business.