7TH JANUARY, 2021
January is the time when most of us come up with goals for the year ahead and make some New Year’s resolutions for our sole trader businesses.
But the start of a new year is also the perfect time to spend thinking about how you want to move your sole trader business forward in 2021 and make any necessary changes.
Here’s how to prepare yourself for the year ahead, so you get the most out of it.
In short, we’ll cover:
- Analysing past performance
- Getting a snapshot of your current financial position
- Revising business plans
- Goal setting and prioritisation
Evaluate the year that was
It’s wise to look back at how your business performed during 2020, in terms of wins and losses.
It was a turbulent and unexpected year, but this likely also shook things up and helped you look at things from a new perspective.
Think about what worked last year and what didn’t, so you know where to focus in 2021 and what to leave behind.
Determine which goals you achieved in 2020 and, for those that didn’t happen, consider if you want to make them a priority this year or not.
In particular, consider where you, your team, your processes, etc., fell short in 2021.
Ask yourself why issues occurred and how you might mitigate them in the future.
In preparation for the year ahead, evaluate primary business areas such as your offerings, marketing, finances, team (where applicable), communication, processes, and time management.
Examine your finances
If you’re like many entrepreneurs, 2020 was a hard year for you, and you probably felt like you were simply trying to stay operational.
No matter how monetarily successful or not the past twelve months were for your venture, though, it’s essential to spend time now looking at your financial position.
Calculate an updated profit and loss statement and examine cash flow.
This will help you see if there are steps you must take urgently to cut costs and bring in more revenue.
Determine the main areas you spend money on in 2020 and if areas where you invested money hoping for a return worked out as planned.
See if there are expenses you can get rid of or at least pare down, while also investigating any unexpected sources of revenue that could be developed and grown.
For example, a particular product or service may have sold unexpectedly well, or you may have had great success from targeting a new customer type.
Also, if you haven’t already taken steps to complete all the necessary tax and stimulus-related admin and other accounting tasks from 2020 that you need to, now is the time.
It helps to utilise a quality accounting program to streamline these jobs. Software such as Xero & MYOB’s products are easy to set up and will enable you to always see your organisation’s financial position at a glance.
These tech tools can also integrate with your bank and other systems, saving yourself, your team, and your accountant or bookkeeper considerable time throughout the year.
Read and update your business plan
You likely created a business plan before you launched your venture, but how long has it been since you read and updated the document?
The beginning of the year is a good time to do this. It helps to remind you why you set or purchased the business in the first place and what you’ve been trying to achieve from the start.
Goals and markets change, though, too, so be prepared to overhaul your plan as necessary to reflect your current work and life dreams and the reality of your industry and target market(s) in 2021.
Set SMART goals and priorities
Spending time working on your business plan should help you become clearer about your goals and priorities for your operation this coming year.
Make sure the outcomes you’re striving for are SMART. This acronym refers to creating goals that are specific, measurable, achievable, relevant, and time-based.
Think about the who, what, when, where, and why of goals. Decide on a concrete target to aim for rather than a vague wish.
Note how you will tell if you have met the goal or not – the measurable part. What metrics can you use for this? Outcomes must be tangible.
While it’s important to keep stretching and challenging yourself and your team to do well, goals must not be out of the realm of possibility, either.
Make them achievable so that everyone stays motivated, rather than discouraged looking at the tasks ahead.
As for relevance, your goals should line up with your overall business objectives.
There’s no point setting a target that doesn’t take your venture closer to where you’re aiming it.
Always decide a timeframe for each goal, too.
Keep this as realistic as possible, but even if you don’t meet that date, having the deadline will help you and your staff members to accomplish things more quickly. Time constraints create a sense of urgency.
These are just some of the critical steps you can take this quarter to prepare for the year ahead.
You may also want to tackle things such as:
- Upskilling (yourself and/or your team)
- Reviewing suppliers and their terms
- Obtaining insights from customers via surveys and phone-call or in-person follow-ups
- Looking for ways to delegate and streamline processes
The more you do now to set yourself up for a positive, productive year ahead, the better.