No one could have predicted the events that unfolded in 2020. COVID-19 and the subsequent economic crisis challenged entrepreneurs in unimaginable ways. And as the pandemic continues to impact companies everywhere, there are still many questions and unforeseen challenges ahead. Despite this, savvy business leaders know future planning is a key component in ongoing success.
At Cultivate, we’ve helped thousands of entrepreneurs scale their business, and this year we’re focused on helping owners take back control, and that all starts with a plan. While the pandemic introduced new obstacles, there are ways to take lessons learned in 2020 and incorporate them into a strategic business plan for 2021.
With this in mind, this article will outline steps you can use to start planning for the new year.
Reflect on the past year.
2021 is around the corner, and while most of us would like to forget the last 12 months, a year-end review helps in planning for the future. You can learn a great deal about your company by placing it under the microscope.
An end of year review is a way to take stock of how your company is really doing. The COVID-19 pandemic affected businesses in different ways. Taking the time to identify the highs and lows of your year can open your eyes to new opportunities.
How to conduct a year-end review:
Identify 3 of your most significant achievements of 2020. Maybe you released a new product or hired some new employees. Whatever the case may be, choose the three that stand out as making the biggest impact on your business.
Identify three areas of your business that didn't go so well. Ask yourself what factors contributed to this failure. Were they environmental? Identify those areas and drill down to the root issue. Once you do, recognize what you learned from it and how your business has evolved because of it.
Your year-end review should be based on facts, not feelings, so take the time to dig into some data and ask your team for help. Analyzing your year can help you pinpoint areas of both success and failure that you can use to make informed decisions next year.
Reconnect with your vision & long-term goals.
Once you complete your review, you'll have the information you need to dive into your 2021 planning. The first step in creating any strategic plan begins by looking at your business's long-term vision and goals. By taking the time to analyze your vision, you allow yourself to step back and identify how your business needs to shift over time to hit your goals versus looking for short-term solutions.
The vision acts as your north star. It should always be there to remind you where you're heading and why. When you're setting goals, they should be in pursuit of that end destination. Although things may have shifted over the last few months, your vision doesn't change. The timeline may have extended, but you should still be working toward the same end goal.
If you don't already have a clear vision, now is the time to create one.
Set your annual marco goals.
What do you need to accomplish in 2021 to achieve your vision?
Identify 3-4 overarching goals for your business. Do you want to launch a new product or service? Do you want to recruit 20 new people? Write down 3-4 things you need to accomplish next year to help you achieve your long-term vision.
When finalizing the macro goals, identify the Key Performance Indicators (KPIs) you will use to track success. All of your goals should be SMART goals (i.e., Specific, Measurable, Achievable, Realistic, and Timely) that are measurable and easy to track.
Example
A goal to "Increase sales by 10% in the next two months" is easier to measure than "increase revenue." Having these key metrics are an excellent way to measure progress over time and understand what is working and importantly why.
Prioritize those initiatives.
Once you have 3-4 goals for the year, and you know how you plan to measure their success, brainstorm 5-6 strategic initiatives you can use to achieve those goals.
Once you've identified 5-6 for each goal, prioritize them. Consider your resources and prioritize each initiative accordingly. Remember, over a year the best teams will accomplish four initiatives per goal; depending on your team's size, you might be able to accomplish more, but as a rule of thumb four initiatives per goal is an excellent place to start.
Build your strategy to implement each initiative.
Now that you have your goals and objectives and know what you are working towards (your vision), it's time to identify the strategy and plan to implement these initiatives. It's best to break it down to a weekly schedule that you can revisit throughout the year to ensure you stay on track.
Here is an example of how you can break down your goals to hit a yearly revenue goal. For argument's sake, let's say you have a 3-year vision of hitting $10M in revenue; how much do you need to make in 2021 to be on track for that goal?
For this example, let's say it's the following:
2021 - $5M
2022 - $ 7.5M
2023 - $10M
Once you have those numbers, let's break it down further. What do you need to make next year to make it happen? What do you need to get there on a monthly, weekly, and daily basis?
The most common metrics to break down include leads for marketing, sales transactions, and conversions, as well as people and resources needed to achieve your revenue goal.
Example
2021 goal = $ 5M
Average sale size = $2,000
This means your goals should be the following:
2021 goal = 2,500 transactions (average sale size/revenue goal)
Monthly goal = 209 transactions (Number of sales needed/12 months)
Weekly goal = 48 transactions (average sale size/52 weeks)
Daily goal = 10 transactions (Number of sales needed a week/5 days)
This micro breakdown is where the magic starts to happen as you realize what will break or what needs to shift in the business to get to that level.
Once you get down to the day, you can choose to take it a step further by determining how many calls or meetings each person on your sales team needs, then how many prospects they need to schedule a meeting, and so on. Once you have this framework, you can start seeing how your tactics will come into play.
Stay adaptable.
Innovation is born out of necessity. From developing new products to problem-solving delivery methods, 2020 forced businesses to get creative. If 2020 taught us anything, it's that you need to stay adaptable for your business to thrive. The truth is, things haven't fully shifted back to normal; in many ways, threats of the pandemic and a weakened economy live on.
Being able to adapt to challenging situations builds business resilience. There is no way to tell what types of curveballs 2021 will have in store.
That said, when setting your 2021 plan, it might be a good idea to run some scenarios to identify solutions to challenges that may come up (this is a good place to look back on your year in review). Know the controllable levers in your business, that is the levers in your business you can play with to adjust the gap in your cash flow and tighten your financials. These can include pricing and conversion.
For example, if you miss your projected revenue in Q1 you can identify ways to increase revenue by creating new offerings or bundles or tapping into a new audience by creating virtual offerings for customers who prefer shopping online.
Having some ideas for how to problem-solve different scenarios will help you make decisions based on logic, not emotion, which will help you stay calm while you continue to grow your business.
Developing a plan for your business is a necessary way to break your goals into digestible, achievable actions to keep your business on track. Try using this framework to build your 2021 plans and see how much simpler your big audacious goals feel.
If you're not sure where to start, you don't have to go at it alone. Schedule a free two-hour session to dig into your business to uncover bottlenecks and develop a roadmap based on where you are in your business and where you would like to be. With this roadmap, you'll have a concrete plan you can implement to reach your long-term goals.
As a motivated business leader, Casey is a passionate entrepreneur who got his start owning a home service franchise. After nearly a decade, he successfully exited his role with 90+ franchise owners and over 600+ employees. Casey went on to co-found Cultivate Advisors, one of the largest small business advising firms in North America. As the CEO of Cultivate, his team has helped thousands of business owners reach their growth objectives through core business skill development and scalable systemization.
In both 2019 & 2020, Cultivate ranked within the top 800 fastest growing businesses in the United States on the Inc 5000 list. The mission of Cultivate Advisors is to partner with committed entrepreneurs to propel their business beyond expectations. In 2019, the average business within the Cultivate portfolio grew by 68% in year over year revenue and 108% in profit, proving that when you prioritize the growth of your clients, the business grows as well.