Business Analysis and Goal Setting at half time
Whether your commercial business is small, medium or large, the same rules apply; the process of analysing past performance and then using that information to plan ahead and set new goals is of high importance for the success of your business. Is this an exercise you and your team carry out regularly, rarely or never? The end of September marks the middle of the tax year and is a good landmark in the financial calendar to assess the first six months and make plans for the next six, to ensure your business will maximise profits and minimise tax.
What happened in the first half?
Similar to if you switch on the TV in the middle of match between your team and their main rival and wonder “what happened in the first half to give this result”, the same thought can be applied to your business.
By analysing what worked and what didn’t in a set period of time gives you the knowledge and understanding of how to make changes for future periods using actual facts and figures and not just guesswork.
The reality is that many business owners don’t allocate sufficient time to reviewing the performance of their business and setting strategic goals to work towards.
Analyse business performance regularly and frequently
Analysisng your business performance takes practice and time. The process needs to be carried out both regularly and frequently, so that you:
1) Get to grasp the ins and outs of what is happening financially within your business by continual monitoring
2) Build up a history of data around business performance to better understand trends and fluctuations
[dropshadowbox align=”center” effect=”lifted-both” width=”450px” height=”” background_color=”#ffffff” border_width=”1″ border_color=”#dddddd” ]Always analyse business performance regularly and frequently for the best results![/dropshadowbox]
If you are just sporadically dipping in and out of reviewing your business performance you will never truly understand how it is performing and the factors that influence this.
First half review
You may have some form of financial forecast or business plan detailing what you wanted to achieve in this current financial year. Or, you may have something informal; an idea in your head of how successful or profitable you wanted to be come your next year-end. Or, you may have no idea, no goal and no plan in mind, formal or informal.
Whichever scenario describes you the best; the first half review is an important milestone in business planning.
Consider the following:
1) What was your recorded total income for six months? Was this better or worse than the same 6 months in the previous year?
- If better, what was the driving force behind this increase
- If better, How can you continue this to grow further?
- If worse, can you pin point a reason, or reasons?
- If worse, was it a bad month that dragged the results down?
2) If you had a financial target set for the period in question, what is it? Was the actual figure higher or lower than the target amount?
- If higher, was the target set too low?
- Is there a reason why your business exceeded target?
- If lower, was the target set, unrealistic?
- If lower, is there a reason why the business didn’t do as well as expected?
- If you didn’t have a target, then just think about this in terms of how you feel your business should have performed given the time, energy and any investment you have made in the given period.
3) Now take into account the same or similar questions taking into account your business costs and then your business profit.
Second half planning
Once you have a clearer picture in your head about the reasons why your business has performed as it has for the first half of the year, you will then be in the position to set goals for the next half. Break goals down into manageable periods of time, months, weeks or days even, depending on the size of your business.
Consider the following:
1) What income and profit would you like at the end of your financial year? Have you met that goal in the first six months?
- If yes, then set new targets
- If no, what gap needs to be bridged? With the remaining months, is it achievable?
- Do you need more income?
- Or, are high costs preventing you from earning more profit?
2) Is someone in your team not performing? Does this need attention to increase productivity or reduce costs?
3) How are you going to track your actual results against your goals in the coming months?
- Whose responsibility is this within your business to report and monitor results and highlight any areas for concern?
- Do you and your team have easy access to the required information you need to analyse business performance regularly and frequently? If no, what systems need to change for data to be available?
4) How frequently are you going to track your results, setting aside quality time to assess your business performance and take necessary action?
- At least once a month is essential but a weekly review of Key Performance Indicators can ensure you are right on top of your business game.
5) Are your goals, specific?
- Ensure they follow the SMART logic – Specific, Measurable, Achievable, Realistic and Timely.
[dropshadowbox align=”center” effect=”lifted-both” width=”450px” height=”” background_color=”#ffffff” border_width=”1″ border_color=”#dddddd” ]Set SMART goals:
If you choose to use this process as a starting point you can and will develop your own technique over time. With practice you will learn in detail about how your business operates, what makes it tick and what causes it concern, what speeds it up and what puts the brakes on.
By becoming your own business coach you will see the difference it makes to your business success.
Figurit help many commercial business owners achieve and realise their goals through effective business planning and learning how to self-coach. Call today to speak to one of our experienced advisors: 020 7376 9333