The new year has begun and many business owners are turning their thoughts to a plan for the new year. Wow is here to ensure that 2016 is your best year yet. We’re sharing some inspiration from people that have been there, seen it and done it.
First things first
You need to think about what you want to achieve, then set targets accordingly. Take your plan one month at a time and see how you can achieve these targets. It’s important to keep this short and sweet, don’t get caught up in the finer details.
Martin Palethorpe, the founder of The Pragma Group, suggests you “Mind out before you plan. The quality of your planning depends on the quality of your thinking and your state of mind. Poor thinking will lead to substandard planning and forecasting, which will, of course, impact what’s possible for you in the year ahead.”
Look back to 2015
It’s important to look back to the previous year. Doing this will allow you to look at your progress each month. You can change the things that did not go as well and repeat the successes from the last year. Gaining insight into your performance from the previous year allows you to increase performance for the next year and achieve the targets you have set.
Don’t be afraid if your plan from last year did not go as well as you hoped, or you didn’t meet all of your targets. A plan is not a script and it doesn’t have to be followed exactly. Tamara Arbib, the founder of Rebel Kitchen, sums this up perfectly, “You can never plan for the mistakes that you make. So when you make them, learn from them…”
Cash flow forecast – but not just for your business
Many business owners will create a cash flow forecast for their business, but not everyone understands the importance of creating a Personal Cash Flow Forecast. This will help you to plan what you need your business to achieve in order to hit your personal financial objectives. Wow, can help you to plan for your retirement and what your business needs to achieve to hit a personal objective. Have a look at a sample Personal Cash Flow Model created by our very own Geoffrey Mabbutt, Financial Planner at Wow.
Gary Turner, Managing Director at Xero has given us a pearl of wisdom about forecasting and planning. “Even turkeys can fly if the wind is strong enough, meaning even positive outcomes can sometimes bear no relationship to the effort that went into them. Effective planning and forecasting ensure that the job of you hitting your goals isn’t a happy accident.”
Have a look at Float, a simple cash flow forecasting tool for businesses. This is a great tool that integrates with Xero, Free Agent and QuickBooks. “Let Float take care of your cash, while you take care of your business.” Float lets you look into the future of your business, giving you a better picture of where you are headed.
A budget is to control your finances and to help you meet your objectives. Budgeting will help you determine if you have enough finance to fund projects. They will allow you to plan ahead and check your actual performance against budgeted figures. Xero has a great budgeting tool available for you to use if you are not sure where to start.
Constantly review your budget. This is important as your business develops throughout the year, you may well need to adapt your plan based on your growth patterns.
One last tip…
It is worth noting the changes announced in November’s Autumn Statement. Nearly every business owner will experience a change in the way they will run their finances as of 2016. Changes include the “Tax Credit U-Turn”, Digital Tax Accounts and changes in dividends.
It’s important to include these changes in your plan for 2016 so that you stay on top of your company’s finances.