Traditionally, annual planning occurs in many businesses when senior leaders gather in a room and discuss which initiatives are worthy of pursuing during the coming year. In this regard, their decisions may be based on budgetary considerations, growth directives, or other criteria.
Sound familiar? It wouldn’t surprise us if your business has operated in a similar fashion for years. In fact, many businesses have done just that. Yet, the challenge is that this approach may not be driven by analytical insight—or for that matter, the right analytics.
Planning without data behind internal operations, performance and external factors tends to be uninformed planning. Some data that should be used to inform planning includes:
Data is key—and when it comes to business growth planning, it needs to be used throughout the process to enable the best decision making. Planning seeks to focus limited time, effort and resources on the best opportunities, so using data analytics to identify and focus on the best opportunities is critical.
Likewise, have you benchmarked your company’s performance against that of your competitors? If so, how do you stack up? Is your growth and profitability in line with them, or if not, what’s the gap? If your business’ revenue benchmarks below competitors, is it because your competitors are lower priced, higher quality, better at executing sales—or is there another reason? And what should you do about it?
Planning sessions often start when executives gather in a room and ask the big question: What do we want to accomplish next year? At SVA, we believe meetings like this should be preceded by a diagnostic analysis of key performance indicators from the current and previous years, along with competitive benchmark data and other meaningful metrics. The goals in all this: Determine the best places to focus your efforts for the greatest return in 2018.
The first area to focus on is a review of the current and previous years to assess areas of concern and to formulate key objectives for the upcoming year. This is followed by pulling selected data and conducting preliminary analyses on key areas of the business and the market.
Once the requisite analyses have been performed, numbers have been crunched, pie charts have been crafted, qualitative factors have been identified, and you and your team now have reports in hand. What’s next?
At this point, your team should convene for an open and honest review of the information and data that has been gathered—both quantitative and qualitative. This includes:
Remember: Before you can plan for 2018, you need to understand how your business performed in 2017 (and to some extent, recent prior years as well). Accordingly, your team’s discussion of the internal and external factors listed above should ultimately lead to a consensus regarding current business performance relative to your competitors.
From there, you’ll have a baseline of knowledge to begin planning for 2018. Some questions you’ll need to ask include:
The traditional business planning scenario involves the convergence of an executive team for a half-, full-day or even multi-day session, usually led by the company owner, president or other executive. Typically, an agenda is prepared and work begins once the meeting starts.
However, the best results are realized when the real work occurs prior to the start of the meeting. In these situations, critical areas of business performance are analyzed up front and then shared with the leadership team before the first meeting even begins. This allows for a more focused and effective discussion as the business performance is reviewed and discussed.
In the preparation of this analytical material, the development of the agenda and the facilitation of the meeting, an outside consultant can bring significant expertise to this work. Knowing where to focus time, resources and attention during sessions, understanding how and when to release tension as discussions elevate, and channeling the focus of the group onto critical issues are just some of the distinct advantages that an outside consultant offers in the growth planning process.
Conversely, using the company president or other executive to develop, prepare and facilitate can actually hinder the process. Doing so minimizes that executive’s role as a participant and diminishes that voice in the process. Oftentimes, when the president is speaking, dissenting opinions are lost.
Business consultants offer a distinct advantage in this regard. A consultant with deep experience leading and managing corporate planning and transformation has the depth of knowledge, methodologies and outside resources necessary to conduct thorough quantitative and qualitative research up front – before the executive team ever meets – and then present their findings to the executive team, and help them determine priorities based on information collected.
When it comes down to mining really good company and market-specific data, many small to midsize businesses just don’t have the expertise, time and resources necessary to get the job done.
For these and other questions, qualified business consultants often prove to be a business’ secret weapon in devising and deploying winning growth plans.
Whatever questions are meaningful for your business, and whatever answers you and your team arrive at, the final product should be the plan—a clearly articulated set of initiatives with responsibilities, timing and results that can be measured and reported on.
Your business growth strategy is fundamentally about competing better, serving clients and customers better, and winning more business—all elements of growth. Analytics, combined with thoughtful review of qualitative factors and insights, provide a solid basis of understanding that, when leveraged properly, can help to guide priorities and tactics for the coming year.
Do you have questions about using analytics and analytical processes to drive your business growth planning? Please contact SVA Certified Public Accountants. We are here to help.
(C) 2018 CPAContentPlus
Glen is the President of SVA Certified Public Accountants. He has extensive experience in the real estate industry and consults on business continuity.