Annual Planning

Your yearly plan should include both SMART and stretch goals.SMART (Specific, Measurable, Attainable, Relevant, Time-Bound) goals are an enduring staple of the business world, helping to clarify your ideas, focus your efforts, ensure your time and resources are used productively, and increase your chances of success.Stretch goals, as the name suggests, require above-and-beyond effort and innovation to pull off, with the promise of a greater payoff. Include a mixture of both in your annual plan.

Include projections for the coming 12 months, forecasting income and outlays.Your projections will help you plan for cash flow dips, pinpoint financing needs, and decide the best timing for projects.Part of this involves developing monthly financial projections by recording expected income based on sales forecasts and anticipated expenses for labor, supplies, overhead, and so on.It’s wise to prepare a projected income (profit and loss) statement and a balance sheet projection

To reach where you want your business to be in a year, take your larger goals and split them up into smaller goals set on specific timelines.As you set your deadlines, include metrics that will indicate how successful you’ve been in achieving your goals.

It’s a good idea to set up emergency financial reservoirs before they’re necessary.Maintaining a cash reserve or keeping room in a line of credit are both good contingency measures.Remember to compare your actual financial results to your projections throughout the year, so you can spot financial problems before they spiral out of control.