As we reach the end of the year, for many businesses it is a natural time to reflect and think about planning for the year ahead.
But where do you start and how do you set specific objectives that will actually take the business in the direction you wish over the next 12 months?
A great starting point is to take stock and assess the current position of the business and the market you operate in:
Look inside the business:
- What are your most profitable products and services, do you have clarity on what is profitable?
- What is the cash position of the business – is income trending upwards or static (or declining). Do you have a firm handle on the day to day finances?
- Are you retaining and upselling customers to increase the total life time value of a customer?
- Is there opportunity to increase productivity and operational efficiency?
- If you diversified during the pandemic, are the revenue streams temporary or permanent and require ongoing investment?
- If you set business objectives for 2021, were they achieved?
The macro environment
- Has the competitive landscape changed? Are rivals investing in future growth or is the market static?
- Is your supply chain in good health or experiencing shortages in supply and rising costs? It the situation likely to change in the near term?
- Is there an opportunity to take advantage of emerging technology, for example; connected or smart devices to improve the customer experience?
The questions above are a snapshot but often spark much debate and help provide a 360 degree view of the business and market landscape when planning and setting actionable targets and goals.
Where will your revenue growth come from?
It is one of the most common questions we ask when working with a business to explore and grade the revenues streams for the business. There is no right or wrong answer but it is helpful to consider what revenue will come from new customers, existing or repeat customers, or even channel partners.
It is often surprising to reveal the potential revenue opportunity from existing customers if you can increase repeat purchases or increase the number of products they buy by just a small amount.
Once you have a revenue target in mind, you can start to work back and plan to hit your goals!
How many products or services should you be selling each month?
A common way is to start with the revenue target and then work back and determine how many products or services the business needs to sell to reach the target. If for example you want to reach a turnover of £1.2 million in the year and your products/services are 10k each, then you need 120 sales per year or 10 per month (assuming there are no seasonal variations).
Then look at sales conversion data. If you win 1 in 3 deals then the business needs 30 leads per month and can start to plan sales and marketing activity to build the pipeline and feed the sales engine.
By communicating with sales and customer services teams, targets and renumeration can be geared towards a common goal with monthly reviews in management meetings to track progress and take corrective action where required.
Top Tip – Reviewing your pricing strategy can be a quick way to unlock increased revenue. Ask yourself; when was the last price increase? If you raised prices by 10%, how much extra revenue would this bring in to the business and how quickly? Make sure you account for some customer attrition and model a c1-2% reduction in retention into your figures.
Is your marketing going to deliver the goods?
“Half the money I spend on advertising is wasted; the trouble is I don’t know which half.”
John Wanamaker, American Retailer
An old adage, still very relevant today. Without a clear marketing strategy that aligns with how customers actually buy, you are at risk of wasting marketing spend on activities that won’t build your brand or drive sales, leaving you with a marketing engine that might have moments of brilliance but probably isn’t firing on all cylinders.
In reviewing your marketing operation, start with the customer and consider how they engage with your company. If they predominantly use search engines and social media to find suppliers, then your strategy will be weighted towards websites, SEO, pay per click and social channels to create the sales funnel. If you operate in a market with longer sales cycles, fewer competitors and larger contract values, a more targeted key account management approach that engages and nurtures sales via events, webinars, and even high quality direct mail is likely to pay dividends.
Emergence of omni channel sales and marketing
While having the basics in place is a great place to start, the proliferation of new technology platforms blended with physical experiences is spearheading an omni channel approach to sales and marketing. Your customers no longer follow a defined path and are almost certain to visit your website, search social media for information, read reviews and physically engage with your brand via your stores or office and production facilities. This presents a fantastic opportunity to differentiate and create a unique connected customer experience; there are numerous examples of successful businesses that have been able to promote their brand online and allow customers to physically experience the products or services before they make a purchase. This is approach is driving higher levels of engagement and loyalty and new revenue models including subscription models that have exploded in popularity during the pandemic.
If you have ambitious plans for 2022, you need partners that share your vision and can add value. We are working with businesses right now to help them plan for growth and provide monthly strategic advice and guidance including KPIs and financial reporting that keeps the business focused and ready for growth.
Experience a different kind of accountant; we would love to learn more about your company and share our insights and experience.