We human beings will always make some sort of plan before doing anything. It’s in our nature to think things through before we get started. The same can be applied to a business as well. At the start of every new year or new period, we will make some sort of plan as to how the business should be run that year or come up with ways to be more efficient and more profitable. This practice, called the annual business planning process, is done to get a more in-depth understanding of the past fiscal year and plan ahead for the coming year to make improvements to the business. There are multiple steps as to how to do this successfully. Listed below are the steps of an annual business planning process.
1. Understand the Situation: Before you get into the new year’s annual business plan, you have to go back to your past year. See how well or how bad your business has done. See the highlights of the years and the bad moments too. Understanding the situation of your current business and where it stands is of extreme importance. This will give you a solid idea as to where and how to make improvements in the coming year. In fact, when looking back, don’t just look at the past year; you can go as far as two or three years back to see if there is a trend. You could have a particular month where sales are bad, or maybe there is a constant factor which isn’t allowing you to do well in the market. Find those key areas before proceeding further.
2. Set Goals or Objectives: Now that you have a thorough understanding of your current situation of the business, you can easily set goals or objectives for the organization. The goals can be different things including increasing sales, focusing on improving profit margins, getting a higher inventory turnover or maybe the business needs to work better on customer services and so on. Sometimes a business may have to deal with external factors such as public relations or improving the supply chain. Often a business will be functioning well but external factors may hold it back from thriving. So it is of utmost importance to set up goals and stick to them so that at the end of the year, you can see how much the business has progressed.
3. Collect Data: Once you have set goals for your organization it’s time to assign tasks to your employees. This can be done by collecting data regarding your workers. You can easily find out which ones of your employees have had the best years, or which one was responsible for the highest sales or who slacked off in the past. You can measure their outputs and assign them a weight. The top performers obviously get the most crucial goals of your company. They will have to oversee that those goals are met and the business continues to perform better. But at the same time, you have to keep track of the ones who had average years. Find out why they did not do well and try to fix that as well.
4. Identify the Strengths and Weaknesses: A good business will always ensure they play to their strengths. A great business will find their weaknesses and try to eliminate them. It is crucial when making an annual business plan to identify both the strengths and weaknesses of the company. This will help to make strategies better and more efficient. Focusing on the strengths will allow the company to further establish themselves in the market while eliminating the weaknesses will ensure there are no ways the company can do poorly. Doing both equally well will mean that the performance level of the company will do wonders in the coming year and there will be a massive improvement from the past year. Conducting analysis like SWOT, BCG might be helpful for your business at this stage.
5. Customer Analysis: It is of absolute importance that you analyse your target customer thoroughly. For starters, narrow down on who your customers are. Target the customer base that has the most to gain from your business and the ones who can help you do well. Find out what they like and what their demands are. Once you have managed these data, you can start working on serving them. And then afterwards think of ways to retain these customers whether with after-sale services or special offers and so on. Once you have your loyal customers locked down, your customer base will automatically improve.
Planning is crucial for any kind of activity and even more in the business world. An annual business plan will ensure you start the new year, or the new period with a proper plan and have everything set. It makes everything easier and organized so that leaves very little room for mistakes. Besides, an annual plan helps to set markers and set goals which can be used at the end of the period to see how much progress the company has made and see the overall performance too. It is a sure way to improve your business.
