I’m a believer in the adage that you can’t go forwards by looking backwards. However, to ascertain your next move, you need to explore your mistakes.
To make sure you move forward with purpose and focus, it’s useful to take the time to reflect and to review where you are now and what has transpired over the past 12 months.
Get business news first
Sign up to SmartCompany’s daily newsletter
The end of the financial year is a great time to undertake a detailed review of the performance of the business. This is more than reviewing the financial statements that the accountant has prepared for you.
Get your accountant to also prepare a detailed financial analysis of profit margins, cashflow and working capital that you can compare against industry benchmarks.
Get some feedback from your customers that you can incorporate into the review. Ask them what they think about your business.
I often find that customers are a goldmine of good ideas and are more than happy to contribute when asked.
There are lots of inexpensive survey tools on the net that you can use. If anything, seeking their feedback makes them feel connected and that their opinion is important.
You should also work out the current value of the business and assess whether you are on track to achieve your wealth goals. After all, the main reason most of us go into business is to create value and build wealth to fund lifestyle and retirement.
Once you have completed the business performance review, you should then undertake a gap analysis. This is all about comparing where you are now against your targets.
Look at what has worked and what hasn’t. Make a list. Aim to leverage the things that have worked and fix the important things that haven’t.
Did you achieve your objectives and goals? If so, give yourself a pat on the back and set some new goals that will stretch you even further.
If you didn’t achieve your goals, ask yourself why and list the top five things that stopped you from getting there. Was it lack of cash, time, know-how, leadership or implementation?
Compare the current business value to the target value you want to achieve. Then assess which value drivers need to improve, and by how much, to achieve your target.
The next step is to set targets, goals and objectives for the next financial year. These should include growth and cashflow targets.
Prepare a simple one-page business plan that set these out, along with the key priorities and an implementation plan to drive you towards achieving them.
It is a good idea to break the plan into quarterly chunks to make implementation more manageable.
Finally, put in place a review process to make sure you track how you’re progressing regularly throughout the year or at key milestones.
This will keep you focused and ensure you’re celebrating come the end of the next financial year.
Marc Peskett is a partner of MPR Group, a Melbourne-based firm that provides business advisory services as well as tax, outsourced accounting, grants support and financial services to fast-growing small to medium enterprises. You can follow Marc on Twitter @mpeskett