Although it's a busy time of year, December is a great month to do some pre-planning so you know what to focus on next year.
Review financial performance
Measuring the performance of your business ensures that you know what to do when planning for the new year.
How to review the performance of your business
- Prepare financial statements for the last three months.
- Compare to the previous quarter or season in your own business, as well as other businesses in the same industry.
- Note down favourable and unfavourable trends and make an action plan for the next three months.
When reviewing financial performance:
- gather information about your market – knowing the key characteristics of your target market will help you find the most effective way to develop a marketing strategy and reach your target clients
- review sales data to understand repeat customers behaviour
- for each marketing strategy, have action plans in place that nominate who's responsible and the timing of each action
- implement performance measures to monitor the success of each marketing strategy you implement
- undertake a cost/benefit review of each marketing strategy to ensure there are profit and cash flow benefits to the business.
Prepare a business plan for next year
Setting business goals will keep everyone in the business focused on the important areas for success.
How to prepare your business plan
- Review the operations and financial results from the last year and prepare a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats).
- Make a list of where you would like to see your business in one year's time.
- Prepare action plans for each item on your list, and allocate responsibility and timing for completion of each action.
- Update your existing business plan with this fresh information, or create a new plan using our free business plan template.
When updating your business plan:
- research your industry – looking for trends and opportunities to grow your business
- involve your staff as they may have suggestions for improvement – if they're involved in the development, they'll be more likely to support the new plans
- look at your financial results critically and identify areas where improvements in income and expenses can be made.
Review your forecasts
How to review your forecasts
- Compare the last six months profit and loss results against budgeted profit and loss for the same time period.
- Note any variances and review any unfavourable results – document actions to rectify these issues.
- Decide if your profit and loss budget is still achievable – if it isn't, then create a new profit and loss budget.
- Review your cash flow forecast in line with expectations for the next six months – make sure you'll have adequate cash flow to support your business.
When reviewing your profit and loss budget and cash flow forecast:
- aim for more regular reviews – such as monthly – to identify problems earlier and allow more time to fix any issues identified
- note down the variances when comparing actual results to anticipated results for both the budget and forecast – and where issues are identified, make an action plan, for example if sales revenue collected is less than expected, chase up outstanding payments
- prepare separate profit and loss budgets and/or cash flow forecasts for specific larger projects
- review the assumptions used when you prepared your profit and loss budget and cash flow forecast – as situations and expectations may have changed and this may easily explain any variances noted.