As a business owner, you know that planning is critical for success. But where do you start?
In this blog, we will walk you through our approach to annual business planning and how to manage the impact of predicted issues on your business in 2023.
The benefits of planning cannot be overstated
Businesses should plan to ensure they set a clear direction, establish achievable goals, identify potential opportunities, and prepare for different scenarios.
Planning helps businesses to make informed decisions early and calmly, reduces stress and anxiety, and increases confidence to respond to issues or opportunities. It also enables businesses to monitor their performance and track progress toward achieving their goals.
Planning is also essential for effective communication with team members, customers, and suppliers.
The planning process:
The planning process is an ongoing cycle that starts with reflecting on your past performance, celebrating your successes, and reaffirming your purpose and values. It involves determining what you want to achieve in the next year, including what ‘success looks like’ (define this so that you understand how you’re tracking throughout the year).
It should involve consideration of key issues that may affect your business in the coming year, such as economic conditions, industry trends, and new legislation.
Based on the above, develop a 12–18-month plan that outlines how you will achieve your business goals and enables you to navigate potential challenges or leverage off opportunities.
Be flexible in your approach, you should treat your business plan as a living document and revisit it frequently and have regular accountability check-ins to track progress and make adjustments as needed.
The Planning Process
What might impact your business in 2023?
Some of the predicted key issues that New Zealand business owners may face in 2023 include:
Inflation and a cooling market
The ongoing economic impacts of Cyclone Gabrielle
Employee well-being
Rising interest rates
Attracting and retaining good people
Government policy and changes due to a general election
Escalating input costs.
By identifying the issues that may affect your business in the coming year, early on, you can be on the front foot managing the potential impact. We recommend taking a stance on the ‘mindset’ that your business will implement in the coming year in response to the key issues facing your business, will you be focused on growing your business, holding steady, or declining/downsizing?
Growing your business involves identifying and realising opportunities, such as diversifying your product or service offering, expanding into new markets, or even acquiring a new business.
Holding steady means maintaining the status quo (no major changes) and ensuring your business is stable and sustainable.
Declining or downsizing your business involves reducing your risk and making hard decisions, such as downsizing, turning off projects, and re-evaluating your product/service mix.
Once you’ve determined the approach you are going to take, ensure that you have developed contingency or different scenario plans for potential changes.
6 areas to consider in your contingency planning:
Forecast changes and key issues (ideas above)
Re-directing focus
Team communication and well-being support
Customer and supplier relationships
Adjust pricing to focus on margins, not sales
Conduct a financial health check regularly to ensure your business remains financially stable and sustainable.
Contingency planning ideas
By understanding how to approach planning, identifying key issues (potential threats and opportunities), and considering different scenarios for managing the potential impact, businesses can succeed and thrive in a challenging business environment.
If you would like our support to undertake your annual planning, please get in touch with Loren
OR
Download our free annual business planning toolkit [HERE]