Does your business slow down at this time of year? November and December are quiet months for a lot of business owners, and it’s a great time to do some business planning for the year ahead.
So what’s the outlook for small businesses in 2014?
2013 was an unsettling year for many business owners. While many felt the pain of the federal government sequester and subsequent shutdown others were and remain concerned about the requirements and financial impact brought about by the Affordable Care Act.
Yet, despite these uncertainties, a recent study by the Principal Financial Group shows that small and medium-sized business owners are optimistic about what 2014 has in store (31% of respondents reported feeling “optimistic” about the economic outlook for 2014 while only 14% are “pessimistic”). Furthermore, analysts expect the GDP growth to improve, albeit slowly, in 2014.
But what about the freelance market?
Freelancing is undergoing a significant transformation and is no longer perceived as the domain of hourly contractors. According to Fox Business and Department of Labor job reports, freelancers are rapidly becoming the nation’s contingent workforce with companies increasingly turning to non-employee based talent to help them deal with the rapid pace of change and innovation in the global economy. The current top fields for freelancers include sales and marketing, IT and programming, design and multimedia, engineering and manufacturing, and writing and translation.
So, with these trends in mind, what can your small business do now to channel the optimism and opportunities that 2014 may have in store? Here are four planning exercises you shouldn’t overlook:
1. Hold an Offsite Planning Session
2014 is just around the corner and knowing what to do with it will require some stepping back. A great way to do this is to literally step away from your business for day or two. Pick a location out of your office or place of business – you don’t want to be interrupted – and take your core leadership team with you. If you are a freelancer or proprietor, get out of your home office, even if it’s just to the local Starbucks or library – take your spouse with you and don’t ignore your accountant or tax advisor (they can really help you crunch your numbers and look for ways to cut costs).
Key areas to address include:
a) Long-term goals. Whether it’s fame, fortune, a government contract, or just more independence – really visualize where you want to be. Now ask yourself – how are you doing against that goal? What could you be doing differently? Is that goal still realistic?
b) A SWOT analysis – One of the foundations of great business planning is stepping back and looking from the outside in. Before you even put pen to paper and start planning your 2014 business strategy, step back and conduct a SWOT analysis of your business and all the variables that impact it (market trends, competition, financials, supply/chain, staff, etc.). Where are the strengths, weaknesses, opportunities and threats? This exercise can really help you zoom in on what’s working and what isn’t, and where the best places are to concentrate your energies.
c) Steps to reach your financial goals (i.e. what is your strategy)? Use your SWOT analysis to inform this. Are you still focused on the right target market? Does your market focus match where the opportunities are at? What competition are you up against and how can you work your business value proposition to its advantage.
d) How to accommodate that growth? Staff, more capital, office space, etc. – whatever it is, plot out what you need and how to get it.
2. Have One Big Picture Plan and a Few Mini Plans
Your plan for 2014 doesn’t need to be an encyclopedic document. For a freelancer, an annual business plan could have a simple goal – that of growing your client base from 5-10 customers by the end of the year, and having a plan to do so. This might include networking, building an online portfolio of your work, joining local business groups, and any associated costs.
So that’s your big picture, strategic plan. Now, if your operations are on a larger scale than a freelancer, consider breaking your planning down into mini-plans. Develop a marketing plan for promoting your business, a technology plan, a financing plan, and so on – and revisit these often.
3. Create a Budget Plan
Notice how I wrote “create a budget plan” and not “create a budget”. In business, budgets are never static nor should they be. If a budget is going to work for you (i.e. help you manage costs and achieve your profit goals) then it needs to be a living, breathing document that is revisited often.
As you start planning your 2014 budget, start by identifying your profit goals and then list out the expenses you’ll incur to reach that goal. Look at your financial statements for the previous year and factor in any trends or lessons learned.
This is your budget plan – and right now that’s as much as you can do. That’s because a budget is a dynamic tool. In fact, a successful budget is one that you take stock of and update on a continuous basis to account for the previous month’s performance and actual expenses. For example, in reviewing the previous month’s actuals, you might find you need to shift certain line items in your budget to help close specific deals, acquire inventory or hire staff. Perhaps you need to cut back on expenses to stay on track. A budget can also help you plan for the unexpected (such as losing a client) and make adjustments to minimize any potential impact to the business as a whole.
SCORE offers a useful 12-month budget planning template that you can download here.
4. Have a Plan for Yourself
Let’s not forget you. As a business owner, you’re alone when it comes to self-development, but it’s an area that’s just as critical as any of the others mentioned above. For example, do you have the right skills to help you achieve your goals in 2014? Is there something you struggled with this year that you’d like to improve upon next? How do you rate yourself across key functional business areas – sales, marketing, admin, managing employees, accounting, etc.? Develop a plan for self-improvement – whether it’s attending at least one educational webinar a week or taking advantage of workshops, often run for free or at a low cost, offered by small business resources (SBA, SCORE, SBDCs) in your community.
