🧭 Is Your Business Ready for Next Year?

Welcome back! It’s that time of year. Business Planning SZN.

Today, we’ll walk through how to create a clear business plan for the coming year.

A business plan is a yearly road map that outlines where you want your business to go and the strategies to achieve it.

Planning provides clarity on what needs to be done to reach your goals, eliminating guesswork and increasing the chances of success.

Moreover, it serves as a tool to keep you and your team accountable for progress.

Neglecting to develop a comprehensive business plan can hinder the growth of your business. Many underestimate the worth of a business plan or feel daunted by the process, and as a result, fail to capitalize on the potential for expansion and success.

“If You Fail to Plan, You Are Planning to Fail” — Benjamin Franklin

Let's discuss what you’ll need to create a business plan to chart your course.

HERE’S HOW IN 8 MINUTES:

1. Know Your Numbers 📍

2. Create a S.M.A.R.T. Plan 🧭

3. Do The Damn Thing 🎬

Step 1: Know Your Numbers 📍

Before you craft your business plan for next year, you must first understand where your business stands today.

That means knowing your business numbers and key performance indicators (KPIs) for the current year, in other words, your year-to-date progress toward achieving your stated goals.

Understanding your current financial health and performance metrics is like knowing your starting point on a map. Without this knowledge, you won't be able to plan an effective route forward.

Carefully review your financial statements, sales figures, and any other relevant data.

It is essential to identify which Key Performance Indicators (KPIs) truly matter for your business.

These may include metrics such as revenue growth, customer acquisition cost, conversion rates, the number of appointments required to hit your units sold goals and churn (the number of customers who leave) percentages.

Once you have a clear grasp of your current situation, you can make informed decisions and set realistic and achievable goals for the next year.

Step 2: Create a S.M.A.R.T. Plan 🧭

Now that you know where you currently stand, it's time to set your sights on the future. Start by creating clear and specific annual goals for your business.

These goals should align with your long-term vision (i.e. your mission statement) and address any challenges or opportunities you've identified.

Annual goals provide direction and purpose to your business. They serve as the destination on your map, giving you a target to aim for.

One common mistake is setting vague or unrealistic goals.

For instance, aiming to "make more money" without a specific target is like trying to navigate without a map. Simply adding a number to that statement (e.g. $100K) isn’t specific enough either.

Be very specific and ensure your goals are achievable within the context of your business. I recommend using the S.M.A.R.T. framework. This approach ensures your goals are Specific, Measurable, Achievable, Relevant, and Time-bound.

• Specific: Define your goals with precision. Instead of a vague aim like "increase revenue," specify "increase monthly sales by 15%."

• Measurable: Determine how you'll measure progress. Use concrete metrics, like website visits, social media engagement, or sales numbers.

• Achievable: Set goals that are realistic within your current resources and capabilities. Stretch yourself, but make sure it's not a moonshot.

• Relevant: Ensure your goals align with your business's overall mission and objectives. They should contribute to your long-term success.

• Time-bound: Set a clear timeframe for achieving your goals. For instance, "achieve a 20% increase in customer retention within the next six months."

Begin with the end in mind and work backward through your sales process, all the way to the ONE thing you need to focus on daily to move your business forward.

Let’s walk through an example together. We’ll say we have a consulting business and we want to pay ourselves a total of $100,000 by the end of the year, before any personal taxes, but after saving for business taxes.

Here’s how we would do the math.

Personal Income Goal: $100,000 (55% of Net Profits)

÷ 0.55 (to save 30% of Profits for business taxes and 15% for retained earnings; a total of 45%)

Ask your accountant for what percentages are correct for your business as these are rough numbers and I’m not an accountant. Legal says 👋

= $181,818 Net Profit

÷ .40 (to account for 30% operating expenses + 30% of Cost Of Goods Sold)

Again, you should have a good sense of what your expenses are, unless you just started your business. In that case, the percentages above are a good place to start. If your expenses end up being a lot lower, amazing! Your goals will likely be easier to hit as a result.

= $454,545 Gross Revenue

Now that we have our top-line revenue number, we need to figure out how many appointments we need to set in order to close that amount of business given a reasonable conversion rate, followed by the number of leads we need to generate and convert to appointments.

This will help us determine what our daily activities should be to generate the quantity of leads we need to fill our sales pipeline and ultimately hit our revenue goal.

From there, we’ll need to keep an eye on expenses and manage expenses aggressively throughout the year (without stifling growth) to ensure profitability. If it isn’t creating at least a 4X return on our investment, we should likely cut it.

Take a look at previous years’ sales to determine conversion rates (%), otherwise, visit the Google machine to get a sense of averages in your industry.

OK, back to the math. 🤓 Let’s say each consulting gig generates $5,000 in revenue for our business.

$454,545 Gross Revenue

÷ $5,000 in Revenue

= 90.91 Consulting Gigs Sold

Always round up, so we’ll call this 91 gigs.

Here’s where we use that Conversion Rate % to determine how many appointments we need to go on to hit our goal.

91 Consulting Gigs Sold

÷ .50 (we’ll use a 50% conversion rate, but be sure to figure out what your percentage is or Google it)

= 182 Appointments Held

I know, I know. That’s quite a few appointments. Divide that by 48 weeks (assuming we want to take 4 weeks off each year) and we’ll need to hold 4 appointments per week.

Keep in mind that improving our ability to effectively qualify our appointments and convert more appointments to paying customers will reduce the number of appointments needed to achieve our goals. Increasing our conversion rate by 20% reduces our appointment count by 50 (1/week). 💥

For some Extra Credit math, should we desire additional clarity going into the next year, we can take our Appointments Held number and divide it by our Lead Conversion %.

The Lead Conversion % will greatly depend on the type of leads we intend to generate and the quality of our plan to connect with and nurture those leads.

Let’s say, for funsies, we plan to only run Facebook Ads to generate the leads we need for our 182 appointments. While that would be a terrible idea, it will illustrate this final data point. Internet leads typically yield a 1-2% conversion rate, so…

182 Appointments Held

÷ .02 (2% Lead Conversion Rate)

= 9,100 Consulting Leads Captured via Facebook Ads

Well, that escalated quickly. 😅

Now, we would need to figure out our plan to generate those leads and work to convert them into appointments. This would be our main focus each day.

We can do this math for any of our lead-generation strategies. I would focus on 1 and no more than 3 unless you’ve already mastered those and/or have the team to effectively execute more.

Step 3: Do The Damn Thing 🎬

Creating a plan is one thing, but executing it is another.

To make your business plan a reality, you need a strategy.

Implementing your plan each day is where you start seeing tangible results, moving you closer to your goals.

Along the way, you'll need to:

• Delegate Tasks: Assign responsibilities to team members, making sure everyone knows their role in executing the plan

• Set Milestones: Break your plan down into smaller milestones (Quarterly, Monthly, Weekly), and track your progress regularly. This helps you stay accountable and make adjustments as needed

• Embrace Technology: Leverage technology and systems to streamline your operations and marketing efforts. There are countless tools available to help you automate tasks and gain insights into your business's performance

• Monitor KPIs: Keep a close eye on your key performance indicators (KPIs). These metrics indicate whether you're moving in the right direction. Adjust your plan if necessary

• Stay Adaptable: Be prepared to adapt to changing circumstances. The business landscape can shift quickly, so flexibility is key to success

Remember, consistency is key.

Rome wasn't built in a day, and neither is a successful business.

Have a productive planning SZN, my friends!

ONWARD TOGETHER.

In The Weeds 🌾

Additional resources for you to dive deeper.

• Annual planning: 6 steps for a well-planned fiscal year

• 7 Simple Ways to Plan Your 2024 Business Goals

• 5 Ways To Ensure You Create A Successful 2024 Plan

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