New year, new business goals
February 10, 2021
By Steve Campana, CPA, ABV, CFF®
With a troublesome year behind us and a new president in office, your business might be faced with upcoming challenges and change. With this in mind, it is important to have the tools necessary to help shape your thinking regarding the year ahead, and that starts with addressing your planning processes. Here are a couple of analytical tools to use when revisiting your planning for 2021.
AAR - After-Action Review
An after-action review was first attributed to the United States Army and is a structured approach to help teams continually assess their performance and learn from their successes and shortcomings. An AAR is intended to improve the learning process so lessons are not continually learned the hard way.
AAR is centered on four questions: What was expected to happen? What actually occurred? What went well and why? What can be improved and how?
An AAR features:
An open and honest professional discussion. Participation by everyone on the team. A focus on results of an event or project. Identification of ways to sustain what was done well. Development of recommendations on ways to overcome obstacles.
This review process benefits companies across all industries. AARs assist team members with open communication and allow companies to adapt new processes and procedures to keep in step with, and ahead of, the upcoming year. With this in mind, it also is important to assess and adapt the strategies, actions and outcomes from the past year as the first step in your planning process.
$COPE - bringing it all together
The $COPE analysis is one of the most effective tools we use within the business planning process. This analysis allows companies to take a broader look at several areas of their business to get a good glance at the entire landscape of their business activities.
$ - Financial: Your financial statements give insight into the financial results your activities are producing. It is said that every business is perfectly designed to get the results they have been getting. Looking at the basic components of your operating statement such as revenues, cost of sales, operating expenses and financial income and expense during the average of the last five, three and two years and the trailing 12 months, will often bear this out. Often, we find organizations measure past financial results but neglect or short-change the establishment of meaningful financial targets for the next one- to three-year periods.
C - Customers: Customers hold the key to a company's long- and short-term success. Can you and your employees succinctly describe your products, services and ideal client or customer? Likewise, are they aware of the value your product or service offers to the client or customer?
O - Operations: Processes and procedures that drive a business are directly related to the financial results achieved. By reviewing documented procedures and comparing them with implemented procedures, you will gain further insight into the financial and customer-related results you observe. An annual review and update of documented processes including necessary, permanent or temporary changes required by the events of the past year could increase the operating efficiency and profitability of your company.
P - People: No business can succeed without the right people. With a clear understanding of roles and behaviors of employees, you can determine if the team is supporting the organization in achieving its objectives. Are your human capital management and human resource functions properly scaled and/or outsourced? Is your compensation strategy in line with your company's core values and strategic direction? Do you have the right people in the right seats to optimize positive outcomes?
E - End in mind: A business needs to know where it is going in order to get there. Understanding and reviewing the vision and long-term plan of an organization can help you determine if financial measurements and results are supporting that vision. No business plan comes to life until it can be clearly and consistently articulated internally and externally throughout the organization.
There are no ordinary moments. Create your future by embarking on a continuous business planning process today and keep in mind these important questions: Are you devoting an appropriate amount of time working on your business? Are you excited with your plans for 2021? What is important to you personally and professionally and why? What must happen during the next one, two, three years for you to feel happy with your progress?
Act now to create a clear and compelling vision of your future. The clarity focus and results this will bring to your business makes this a high yield endeavor to start the new year. Best wishes for your continued success in 2021. Take pride in the work you've done thus far and enjoy the upcoming journey.
This article was previously published in the Tri-State Business Times.