This article is published as part of our “SMB Success”, a program designed to help small and medium sized brands succeed. For questions, comments or suggestions, please write to editor@vpersonalize.com
One of the most important things any business should do is create and update their business plan at least once a year. A lot of small businesses skip this step and lose out on growth. Just as you use a GPS to drive, an Annual Business Plan (ABP) provides a route map for your business for the next twelve months.
Once the previous year’s dust has settled and you can look to the year ahead, spend time in January to gain a clearer vision of where your business aims to be. Not only will an annual business plan define your objectives for the coming twelve months; it can also construct the roadmap for meeting those goals.
Using the strategic planning and performance measures we outline below, combined with a review of your expectations and results from the previous year, you’ll be able to create an annual plan that gives everyone in your organization a sense of where they’re headed and how they will get there.
Here are five things to get you started:
1. Create a Mission Statement
Although you know why your business exists and what you offer, it’s still important to craft a summary that can quickly and effectively communicate it to the rest of the world. Taking the time to build a clear mission statement, and annually reviewing it to make sure it’s still in line with your vision, will help you and your team stay focused on your core business.
It goes without saying that setting and pursuing goals is a critical part of growing your business and will play an important part in your annual plan. Goals will vary from business to business, ranging from reducing expenses, increasing operational efficiency to increasing your market share or bringing traffic to your website.
Although it can feel overwhelming, start by outlining the top 3 to 5 goals and a plan to meet those objectives. Initially outline broad, end-of-the-year goals, then work backwards to create quarterly objectives.
2. Do a SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis
A SWOT analysis is used internally to organize your top strengths, weaknesses, opportunities and threats into an organized list, which is usually presented in a simple two-by-two grid. A SWOT analysis will help outline the best opportunities to pursue and what you should highlight to achieve your business goals. It also assists in identifying areas in which you need to improve and can bring threats to light, where they might otherwise catch you off guard.
Understanding your customers’ needs and how your product fits them will help you establish effective strategies for marketing and sales, as well as future product development. Identify your most valuable markets, develop buyer personas, and track consumer behavior to ensure that you stay ahead of your competitors.
With so many alternatives existing today, it becomes increasingly important to stay ahead of your competition. Take the time to evaluate your industry, market size and competition. Identifying your major competitors, researching their products, marketing, and sales strategies.
This will not only help you stay aware of industry trends and consumer expectations, it will also help determine what sets you apart and what your unique competitive advantages are and what can be further developed.
3. Set Key Performance Indicators (KPIs)
if you can’t measure it, you can’t improve it! Measuring performance regularly is a big part of scaling your business. Tracking and analyzing your performance across multiple key areas will help you gain a clear understanding of what is working and what needs improvement.
Some important KPIs to include in your annual plan are sales metrics, customer acquisition, revenue growth, operational metrics such as fulfillment time, returns and refunds. Some not so obvious KPIs are referral rate (word of mouth by an existing customer is the best sales tool you can get).
4. Discover Your Growth Engine
This is where you’ll put a lot of the previous analysis to good use. What marketing strategies should you focus on to increase traffic and time spent on your website, improve conversion rates, and directly reach people that are looking for your products and services?
Think through operational efficiencies you can drive to increase customer engagement and satisfaction (newer products, giving customers more control over product design, faster fulfillment, lower price, etc). Some common themes that work across industries are: what can I do to make my products better, faster, cheaper and put my customer in the driver’s seat.
These typically involve streamlining workflows, improving communication, automating processes or adding product personalization.
5. Plan For Success
Once you have discovered your growth engine, take that information and develop a plan on how to implement and manage it this year. Allocate budget for capital expenses and key areas that will drive growth and revenue for your business this year. Start your research and identify the best suppliers, ecosystem and partners that can help you implement your plan and reach your goals.
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