CEO Advisor® Newsletter
Planning, Forecasting and Goal Setting for 2016
November and December should be your planning months to prepare for 2016 and maximize your opportunity for success. Planning, forecasting and goal setting are critical to any company, large or small.
CEO Advisor, Inc. works with CEOs, presidents and business owners of small and mid-size companies on strategy, growth, business planning, sales, sales management, marketing, funding, mergers and acquisitions and the key to a successful year is up-front strategy and planning. Conversely, if you are not committing the needed time and focus on planning, forecasting and goal setting for the upcoming year, you are leaving a lot of money on the table and risk your business and your livelihood near and long-term.
Planning doesn't mean just having a meeting with your staff or updating a brief business plan and going back to your daily routine. Business planning is a critical aspect of your business that enables you to rethink, adjust, plan, research, strategize, prioritize, focus and allocate resources to your largest opportunities, while minimizing wasted time and resources.
Planning takes discipline, expertise, the ability to strategize and mobilize around a focused effort. Execution is the follow-on implementation of your 2016 Plan in a well thought out, concentrated effort. If you are not executing on your Plan, you are wasting time and money, missing opportunities, burning valuable resources and causing irreparable harm to your company, many times on a permanent basis.
Creating a monthly financial forecast of Sales, Cost of Goods Sold (COGS or costs directly related to providing your products and services), Gross Profit (Sales minus COGS), Gross Profit Margin (Gross Profit divided by Sales), Expenses (Overhead), Net Profit and Net Profit Margin (Net Profit divided by Sales) is paramount to effectively running your business.
Additionally, a monthly financial forecast enables you to compare your actual results to your forecast, proactively make needed adjustments to your business, eliminate wasted time and resources, increase gross margins and maximize your profits.
Without a monthly forecast, you are flying blind throughout the year with no metrics or financial goals. This, again, will have you leaving a lot of money on the table that will never be recovered. Forecasting is a straight forward process and a key part of planning for the new year that can be one of the biggest drivers of success and profits. Seek help from a seasoned business advisor to ensure success with this process.
Goal setting should entail all aspects of your business including:
a) Company goals
b) Management goals
c) Employee goals
d) Financial goals
e) Sales goals
f) Sales per Employee goals
g) Gross Profit and Gross Profit Margin goals
h) Net Profit and Net Profit Margin goals
i) Optimizing Financial Ratios
j) Other measureable goals to grow your business to the next level.
Without setting measurable goals, you and your employees may spend the majority of 2016 going day to day in a constant cycle of reactive tasks instead of proactively focusing on and accomplishing your goals, executing on your Plan, and maximizing sales and profits and the value of your business.
When I meet with CEOs of small and mid-size businesses throughout the year (and I meet with approximately 100 of them annually), they typically cannot answer the simple question, "What are your goals for this year?" They throw out short answers such as, "Grow the business", or "Sales", but cannot go beyond this and answer the question distinctly with their four to eight primary goals to drive their businesses forward to build profits and substantial value.
This is due to a lack of planning, forecasting and goal setting and is a major deterrent to success and profits. CEO Advisor, Inc. provides expertise and experience to quickly and effectively assist you in planning, forecasting and goal setting for 2016. We address your specific needs with hands-on action, expertise and seasoned advice. Contact Mark Hartsell, MBA, CEO of CEO Advisor, Inc. at (949) 629-2520, by email at MHartsell@CEOAdvisor.com or visit us at www.CEOAdvisor.com for more information.
Gettting Help with a Turnaround Strategy
It is important to understand why a company is not performing as expected. Many times it is critical to the near and long-term survival of the business.
It is very common for a small or mid-size business to experience a downturn due to lower than anticipated sales or higher than expected expenses. Whether it is due to poor sales management, slow to react senior management, lack of marketing, lack of innovation or an economic downturn, you need to become proactive and seek help from a professional advisor. When this downturn occurs, management needs to reverse the downturn and return the business to profitability before cash reserves hit a critical state.
For smaller companies, this shift needs to take place quickly to ensure that the company's long term position does not suffer irreparable damage. With so much at stake, a calculated, methodical approach is required by a business advisor at your side with the experience and expertise to generate results.
1. Analyze the Business
Examine your financial reports to determine why the company is not performing to Plan. There are two main reasons why companies underperform. Either there is a reduction in revenue, or costs and expenses are too high. If the former, analyze your pricing compared to your competition and the performance of your sales team and your marketing plan. If the latter, examine costs including direct labor, contractors, materials, and support. Also examine operating expenses, including staffing, technology, training of staff, and processes to identify the problem areas.
2. Develop a Strategy
Develop a strategic direction to improve overall performance. If the problem lies in poor sales, develop a strategy that corrects the problem. Assess your sales management, sales goals, sales compensation plans, sales performance of individual salespeople and make changes, as needed. If the issue lies in high costs and operating expenses, develop a strategy to reduce the number of employees and other expenses and realign responsibilities within your team. Incorporate the changes into the company's strategic plan and, most of all, take action quickly.
3. Create a Written Plan
Once you establish a strategy, document a specific plan with tactics to achieve your goals and needed changes. Execute on your sales goals and increase productivity in every department. Develop goals that translate into results and a large return on your time and investment.
It is essential to communicate about profitability issues and your Turnaround Plan. Discuss your Plan to the entire company and explain how it will impact each department. Your goal is for everyone to understand how they can help improve the company's financial stability and get on the right track. Be sure to deliver the plan in an upbeat, confident manner. This shows employees the issues are identified and the course of action is clear. This is best done with an experienced business advisor who can help you each step of the way.
5. Discipline and Accountability
Align the personal goals of each department and staff member with the Turnaround Plan. Avoid miscommunication and make it clear that this is a long term plan to ensure the success of the company now and in the future. It is essential that each staff member understands the expectations of them in specific detail. Tie their personal success to the success of the company, with the new goals and tactics identified and individual metrics assigned.
CEO Advisor, Inc. has experience and expertise in turning around small and mid-sized companies.
Contact CEO Advisor for a no cost, no obligation initial consultation at your office by calling Mark Hartsell, MBA, CEO at (949) 629-2520, by emailing MHartsell@CEOAdvisor.com, or visiting our web site at www.CEOAdvisor.com for more information.
"I've worked with Mark on multiple client engagements over the last several years. We have worked on transactions including a technology asset acquisition, preparing an operating business for sale and the turnaround of a distressed business. Mark provides his clients with expert advice and counseling. He is great at developing a big-picture plan, and doing the work and providing the direction to implement it. Mark is a good communicator, very responsive and easy to work with."Corporate & Transaction Attorney
Words of Wisdom
"Unless you have definite, precise, clearly set goals, you are not going to realize the maximum potential that lies within you."
20th/21st Century American Author/Salesman/Motivational Speaker
Prime Minister of the U.K.