The beginning of a new year is the perfect time to refresh the strategies and procedures that will carry your business toward its goals. Many business owners spend most of the year bogged down in operational details — pulling the oars rather than steering the ship — so this is a vital time to look at overall objectives for the company.
But mistakes made when planning for the year could steer you off course rather than moving you forward. As you set out your annual overview, make sure to avoid these common errors and oversights.
1. Not Setting Aside Time for Planning
One of the most frequent errors in business planning is not allocating enough time for it. This often results from trying to do too many things at once or unrealistic expectations.
Underestimating the amount of time necessary for proper planning will only create more work down the road and could jeopardize the success of your business initiatives.
2. Budgeting Optimistically
If you weren't an optimist, you probably wouldn't have started a business. But the same positive outlook that helps you see possibilities and strive for goals can also cause problems.
Usually, entrepreneurs create a financial forecast based on previous years' data. But if the resulting numbers aren't what they hoped for, some people are tempted to manipulate the data to make the end results look better instead of facing the problems the numbers reveal.
If your projections aren't showing you the results you want, you have to adjust your procedures rather than your projections. Find ways to cut costs, increase profit margins, or increase sales to deliver realistic numbers that will help you meet your business goals.
3. Not Allocating Resources Effectively
One of the most critical elements in any plan is an accurate assessment of what resources are needed to accomplish its objectives, whether time, money, people, or other assets. Unfortunately, one area that is often neglected is marketing and sales.
Many businesses allocate the lion's share of their resources to production or administration and neglect these essential functions. Without a consistent flow of leads and new customers, your business will eventually run out of steam.
4. Focusing on Short-Term Goals Over Long-Term Objectives
It's natural for entrepreneurs to be driven by short-term goals, especially in the early stages of development. But this can also lead to problems, such as putting off long-term projects and objectives because they don't contribute directly to the bottom line immediately.
If you know your long-term objectives, you can choose short-term goals that move you in that direction. That might mean developing a product or service with a long-term impact rather than one that offers quick results but doesn't scale well.
5. Not Assigning Responsibility for Targets
When no one is given responsibility for a goal, it often languishes. If you've ever heard your leadership team talk in circles at meeting after meeting — bringing up the same issues and chewing over the same potential solutions again and again — this might be your issue.
A specific member of your team should own each goal. That individual should know exactly what milestones they're responsible for, what metrics they should be following, and how often they need to report on progress.
Without that kind of leadership and accountability, targets are often neglected.
6. Focusing on Sales Rather Than Profit
It's a common mistake to tie all goals into sales or revenue. If your staff, from leadership down, feels that their performance is being measured strictly by sales numbers, they could make decisions that would sacrifice profit margins.
For example, they might offer excessive discounts to win business or put too much emphasis on selling attractively priced loss leader items or services instead of focusing on profitable cross-selling tactics. Those aren't sustainable strategies in the long term.
To counteract this, make sure everyone in a decision-making role knows your break-even price points and understands your profit margin goals.
7. Not Having a Plan B
No one can predict the future, and even the best-laid plans often go astray. That's why it's essential to have a plan B (and C, D, and E) for every goal you set.
When something unexpected happens, your business should be able to adapt without missing a beat. That might mean having a different plan for meeting a goal, or it might mean abandoning the goal altogether and recalculating.
Strategic planning is vitally important, and the beginning of the year is a perfect time to take a broad look at how your business is performing and where it's headed.
Avoiding these common mistakes will help you stay on track and achieve your business goals.