6 ways to start your yearly business planning
Whether you’re ready or not, it’s time to start your business planning for 2022. Even if you’re a one-person business, don’t underestimate the importance of having a business plan for the next year to help guide your decisions and keep you on track, especially as we all try to navigate the ever-changing economic landscape.
Related: You might want to check this article for what you should be aware of to avoid failure in your first year as a startup.
Here are 6 ways to get started with annual business planning
With detail and care, you can create a strategic plan for the year ahead. The best thing is, once you’ve got used to doing the following steps, you can use them to develop your plan year after year.
- Start by reviewing the past year’s performance.
- Don’t try to plan everything for the whole year.
- Review your ideal customer profile.
- Consider the competitive landscape.
- Build your financial plans.
- Prioritize your opportunities.
Let’s get started!
Business planning by reviewing the past year’s performance
The most common place to start with an annual review is to look at your financial performance.
- Did you make as much money as you planned?
- Did you spend more (or less) than you planned?
As you answer these broad questions, you may need to dig deeper into what you did that earned more money, or where you over (or under) spent.
This isn’t about passing judgment on those decisions — it’s about looking at them through fresh eyes to help you make good decisions for next year.
After you’ve done the quantitative analysis, it’s time to get more into the qualitative stuff. You know, how you felt about the year and what your gut is telling you.
Answer these questions:
- What went well?
- What did you accomplish?
- What did you learn about your business?
- What did you learn about your customers? If you are not sure how to do that, this article provides you with tools to understand your customers better.
- What didn’t go well?
- What was your biggest challenge?
- What would you change?
Once you’ve done this, you can start your annual business planning.
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Don’t try to plan everything for the whole year
When you start thinking about annual business planning, you probably want to plan everything. It feels like it’s going to make everything easier.
But one of the biggest takeaways from any year is that plans need to be flexible.
When you’re business planning, give yourself a bit of a break. Don’t try to plan every campaign and every piece of content that you’re going to create for the whole year.
Instead, use broad strokes for your plans. The landscape of your business may look very different nine months from now. Especially in today’s-difficult-to-predict business environment with the pandemic going on.
Here are two things you can plan:
- Holiday launches and sales. You can confidently do some business planning around these dates for any industry, from service to ecommerce.
- Relaunch dates. If you already have a finished product that you’re relaunching, you can set firm dates. Examples of programs that you may relaunch include opening a membership program or accepting new registrations for an online course.
Related: this article will help you prepare a holiday gift guide in advance.
Wriggle room dates
- New product launches. Why do product launches fall into the category of wiggle room dates? Life happens. Shipments get delayed. Tech goes awry and it’s impossible to record your videos. Give yourself a bit of flexibility when you’re launching a new product, and your launch will almost certainly go better.
- Partnerships, joint ventures and affiliate promotions. Whenever you have more than one schedule to work with, it’s good to plan for flexibility. Whether it’s a surprise sale from an affiliate program or the opportunity to collaborate with a partner earlier than expected, keeping your third-party promotion dates flexible will help you accomplish more goals.
Related: this article will introduce you to how to start affiliate marketing on your blog
Review your ideal customer profile
Start by looking at who your best customers are. Consider what makes them the best from a financial standpoint, and who is the best to work with.
Understanding your best customers will help you refine your target market and reach similar people who are not yet customers.
Consider these questions when refining your ideal customer profile:
- Who are your current customers?
- Who are your best customers or repeat customers? What do they have in common?
- What challenges do they face (that relate to your product or service)?
- What characteristics do they have?
If you’re in B2B, you could be thinking about an individual person OR about the company. Look at things like annual revenues, locations, technology use, staff size, etc.
B2C businesses, on the other hand, often focus on characteristics like family status, household income, beliefs and values.
Related: this article will introduce you to important tips to do you market research and when trying to understand your customers.
Consider the competitive landscape
You may already have a pretty good idea of who your competitors are but spend a bit of time re-evaluating the competition. See who’s emerged in the past year, who has pivoted and who has shut down.
You can choose to do a full SWOT analysis or a simpler evaluation.
Either way, you should look at:
Their messaging. How do they talk about their products or services? How is that different from how you talk about your products? If they’re on social media, also look at how their followers are responding to their campaigns.
Their products. In most cases, products aren’t identical. How are their products the same as yours? How are they different? Be honest and look at how their products may be better than yours. How can you improve on your own products?
Their pricing. Are they more or less expensive than your products and services? How does that pricing impact their position in the market?
And the final overarching questions:
- How can you win against each competitor?
- How do the overall shifts in the market create new opportunities?
- What new threats are there in the market? (Threats can be new competitors or shifts in customer preferences and behaviors in the market.)
Related: this article can help you decide on a price for your products by introducing you to 7 different pricing strategies
Build your financial business planning through steps
There are two approaches to revenue business planning for your business for the year ahead: top-down and bottom-up.
In a top-down approach, you will start with your revenue goal and then figure out how you will get there based on what you have to sell.
For example, a wedding photographer may be planning to book 30 weddings for the peak wedding season. If big weddings aren’t back on the schedule, that same photographer may do more small events or even start offering virtual photoshoots.
In a bottom-up approach, you start by identifying what you have available to sell, and then how much you can earn from that. Then you figure out how to bridge the gap.
Either way you choose to budget, you may find gaps between what you want to make and what your current capacity (of time or product) can get you. That’s where our final step becomes the most important.
The other step of financial business planning is your cost plan. Consider what new purchases and expenses you’re going to have in the new year. This includes expanding your team, buying new equipment or software, investing in training and spending on ads.
Your revenue business planning, combined with your cost plan, gives you insight into how profitable your year could be.
- Yearly business planning by Prioritizing your opportunities
Once you’ve mapped out your yearly business planning process and came up with a strong business plan, don’t overlook the importance of prioritizing the opportunities. If you’re like most entrepreneurs, you’re constantly getting new ideas for things you can create in your business.
But not all of them are created equal.
Start by doing a brain dump – getting all of those ideas out of your head and onto paper. If you’ve been collecting up ideas over the course of the year, get those out too.
Then use these questions, inspired by Charlie Gilkey’s self-help book “Start Finishing,” to evaluate your opportunities and goals.
- Which of these items wouldn’t actually hurt at all if you cut them?
- Which of these items would you be relieved to no longer be planning to do? (Remember, some of them may still be non-negotiable, like paying quarterly taxes!)
- Which of these goals are “shoulds,” or relate to other people’s priorities, rather than your own?
- Which of the items are good ideas, but don’t directly relate to something that frustrates, annoys, angers, inspires, nourishes or calls to you?
- What’s the most important thing you want to celebrate this time next year?
- Which causes the most gut-wrenching anguish when you consider cutting it?
- Which are you most likely to wake up two hours earlier or stay up two hours late or steal time elsewhere to create two hours to do?
- Which will matter the most in five years?
Image by: Daria Nepriakhina via Unsplash.