Planning the year ahead
How has 2022 been for you and your business? Did you achieve everything you had set out to at the beginning of the year or did the scourge of Covid or any other external factors derail your plans? One thing’s for sure, New Year’s Eve resolutions don’t cut it. Statistics show that your chance of success in achieving a New Year’s resolution is around 10%, i.e. there’s a 90% chance of missing it!
In previous articles we have discussed the value in setting SMART (Specific, Measurable, Achievable, Relevant and Time-specific) goals and as well as the importance of having an ‘accountability partner’ (someone that will hold you accountable to your defined objective(s)) so as we near the end of the year, this is the perfect time to be thinking about your goals for 2023 so that you can hit the road running next year.
How do you go about setting your goals? People do this in different ways, but there are some approaches that will significantly improve success, so let’s discuss these using the SMART principle:
Specific – there is no doubt that the better defined the goal, the more likely you are to hit it. ‘Improving profitability’ is nowhere near specific enough since quite different approaches will be required in making a 5% profit as opposed to 50%, so a defined number or percentage should be specified.
Measurable – the more specific your target, the easier it will be to measure it. The benefit in doing this is that you can review your progress periodically to see if you are on track. For example, if your target is to make an annual profit of $60,000, then on average you would need to make $5,000 each month to hit the target. There is an important point to be made here, when tracking financial data, determine first if there is a level of seasonality to your income so that you can vary your periodic expectations accordingly by month. Retail stores should expect much higher income in December and January whereas the construction and manufacturing sectors should typically expect less in these months and hence the expectations on other months should allow for this accordingly.
Achievable – a great way to determine if a particular goal is attainable is to look at the results for the previous year. It was Confucius (551 BC – 479 BC) who said: “Study the past if you would define the future” and so by looking at what happened previously (and understanding why), your ability to predict results for the coming year will be greatly enhanced. For example, if your business turned over $1M last year, then a target of $3M may well be bordering on unrealistic, but by thinking about what is possible and how, you should be able to define what a reasonable increase might be.
Relevant – only set goals that you need and are prepared to work towards. There is no point in setting goals that you neither believe in nor will provide a measurable benefit for your business. This is especially true if you will be delegating achievement of a goal to another staff member. It is essential that they have responsibility for achieving it and are committed to what they see as a realistic goal.
Time-specific – this is an element that is often overlooked in goal-setting but as for the ‘Specific’ item above, it is very important to be completely unambiguous about the actual deadline. A goal to be achieved “by the end of the year” is simply not specific enough since it is not clear whether this is financial or calendar year and if the latter, before Christmas or by 31st December, so be precise about the end date.
Have a safe and relaxing Christmas and a happy and prosperous New Year!
Ian Ash ACC, AInstIB
Managing Director OrgMent Business Solutions - www.ombs.com.au