1. Look backwards before you look forwards
Planning is a forward-looking activity, but the best way in which to ground it in reality is to start by looking backwards first. If you plan for the year ahead, begin by looking at the year past. What worked? What went wrong? What were the highlights and the disappointments? Now start looking forward – how can you increase those highlights in the year ahead, and limit the risks of disappointment? Planning not rooted in past experience runs the risk of drifting off into fantasy.
2. Take a look around you
Take your head out from under the bonnet of your business and have a look at the environment in which you operate. Is your optimism in line with others in your industry and perhaps the economy as a whole? Should you allow for interest-rate hikes in your financial plans? Are there regulatory changes or new technology that may disrupt your industry? Your plans should be closely tied to the constantly changing conditions in the business environment.
3. Build in clear targets and milestones
Even if a plan contains clear and realistic targets, as it should, as well as strategies to reach them, it is not complete if it does not contain clear markers that will allow you to measure your progress towards your goals. Annual goals without a breakdown of monthly or quarterly progress targets run the risk of being forgotten.
4. Be careful of chasing turnover
A very common, if not the most common, business target for the year ahead is a turnover goal. The problem is that it is easy to increase turnover at the expense of profitability by lowering prices or discounting too much. Turnover targets must be tempered by realistic profitability goals.
5. Don’t neglect marketing
Most entrepreneurs love operations and find it relatively easy to plan for it. To many, marketing is seen as something that just happens more or less spontaneously. One common sign of the neglect of planning around marketing is the number of outdated websites of otherwise well managed businesses. The fact is that, just like operations or finance, the marketing side of a business requires careful thinking, timing and budgeting.
6. Make your staff part of your plan
Apart from working out how many hands you are going to need for the year ahead, make sure that you staff are involved in your planning process. Key staff members must have their own clear targets aligned with your overall goals for the year.
7. Time is money
Any roll-out of a new project, system or product line, or even just taking on a new employee, will absorb some of your time. Your plan is not complete if you have not calculated that extra time in rands and cents. It is a good idea to establish an hourly rate for yourself and your key staff members so that the true cost of your plans can be worked out properly.
8. Plan for your own health
Does your plan for the year include a holiday for yourself? If not, take it back to the drawing board. Owner-managed businesses are completely reliant on the health of the entrepreneur, and you cannot afford to neglect it. Proper planning for the year must include time off for yourself, and you would do well to add a set of realistic fitness goals to it.
9. Stop planning already
Usually entrepreneurs suffer from impulsive action without proper planning, but the opposite – over-planning – can also be a problem. At some stage you have to stop planning and take action. Any plan is a work in progress and can never be perfect. You can always go back to it and adapt it for the future by taking into account what you learn through implementation.
10. Stay nimble
One of the main advantages of being an entrepreneur, as opposed to a lumbering corporate, is the ability to act quickly and to adjust according to changing circumstances. This does not mean that planning goes out of the window. Rather, constant and fast-paced planning is an important part of your ability to keep on landing on your feet when things change fast.