That's right it is time to start thinking about Annual Plans! This will be an exciting and fun-filled experience for all! So, why do so many Businesses operate without one? It always boggles my mind.
I see two problems. First, people really don't like numbers and avoid their finances as much as possible. This seems silly to me as it is simply a report card on your business. And taking a deeper look a the numbers can provide some valuable insight into how to improve the business. There are plenty of spots in Operating Expense, Cash Flow, and Cost of Goods Sold that can provide solid intelligence. So, many just don't want to know and the rest are not educated enough.
The other problem is with the development of Key Performance Indicators or KPIs. Here the issue is the plan to move the business forward. So many owners don't actually think about things in any analytical way, such as why customers buy or are time being spent productively. Given the problems with hiring, one would think that ensuring that everyone was working on the right things and that these things compliment the business strategy that it would be easy to get do. I had a conversation with a customer last week who is very analytical about his own numbers. I asked the following question: What analytics do you give your current customers about your existing relationship? This is very much a subscription business and being able to know, publish, and market statistics about your performance is a great way to differentiate yourself.
On top of that, one can then evaluate the effectiveness and the cost of the firm executing against those numbers. Since businesses need to get more productive every year, these are great things to look at. Those same numbers can be shared in aggregate with prospects to help close new business as well. Then, we can set goals for improving them and plans to make them better. We can measure the effectiveness of those plans and see the impact on the bottom line.
All in all, you can see how this creates a cascade of goodness. You work on important things. These things are important to you and your customers. You measure your effectiveness and your customers can see your results. Your business becomes better and you will be able to see it directly. Doesn't that sound like the kind of plan you want for your business?
Have a great day!
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