For business owners, the end of one year and the beginning of another is always an optimal time to look back on the preceding 12 calendar months and ask a deceptively simple question: How did we do?
Large companies tend to have thoroughly documented strategic plans in place. Some stretch years into the future. These plans include various metrics for measuring whether they have achieved the growth intended. Reviewing a calendar year’s success in terms of strategic planning is relatively easy for these large companies, as they just crunch the numbers.
For small to midsize businesses, the strategic planning process may be a little more informal and less precise. Yet even if your strategic plan is not a detailed document with spreadsheets and pie charts, you can still review actual performance and compare it to the strategic plan. You then can use this assessment to look ahead to 2022. If you need help your Rudler advisor is more than happy to help.
Areas that inform
Generally, there are three areas of most businesses that inform the success of a strategic plan. They are:
HR. Your people are your most valuable asset. So, how does your employee turnover rate for 2021 compare with previous years? High employee turnover could be a sign of underlying problems, such as poor training, lax management or low employee morale.
Much has been written this year about “the Great Resignation,” the trend of employees leaving their jobs for various reasons. How has it affected your company? Has it stymied your efforts to meet strategic goals? You may need to make hiring and retention efforts a focal point of your 2022 strategic plan.
Sales and marketing. Did you meet your monthly goals for new sales, in terms of both revenue and number of new customers? Did you generate an adequate return on investment (ROI) for your marketing dollars?
If you can’t clearly answer the latter question, enhance your tracking of existing marketing efforts so you can better gauge ROI going forward. And set reasonable but growth-oriented sales goals for 2022 that will make or keep your business a competitive force to be reckoned with.
Production. If you manufacture products, what was your unit reject rate over the past year? Or, if yours is a service business, how satisfied were your customers with the level of service provided?
Again, if you’re not sure, you may need to establish or enhance your methods of tracking product quality or measuring customer satisfaction to meet this year’s strategic goals. Many companies now use customer satisfaction scores or a customer satisfaction index to establish objectives and benchmark their success.
Flexibility and the right adjustments
By now, you should probably have at least the framework of a 2022 strategic plan in place. However, if you’re not that far along, don’t worry. Strategic plans are best when they’re flexible and open to adjustment as economic conditions and buying trends change.
This is particularly true when the year ahead looks as uncertain as this one, given the continuing impact of the pandemic. Rudler, PSC can help you review your 2021 financials and use the right metrics to develop a cohesive, realistic strategic plan for the next 12 months. Contact your Rudler, PSC advisor for assistance at 859-331-1717.
RUDLER, PSC CPAs and Business Advisors
This week's Rudler Review is presented by Evan Kandra, Staff Accountant and Audrey Goetz, CPA, CVA.
If you would like to discuss your particular situation, contact Evan or Audrey at 859-331-1717.
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