As we enter the first week of January, I would imagine that many of you will have your budgets for this year already in place (if you run a January-December financial year) or, if you prefer to follow the government’s financial year, you’re about to enter the final quarter.
Whenever your business’ financial year may fall, there are always a few preparations you can do before you get fully stuck into the new year ahead. Here’s what we’re focusing on as we enter 2022 to prepare for our year ahead and how this can help to set the groundwork for years to come.
Reflect on the last year
If you haven’t already, a good place to start is to take some time to reflect on the last year. Ask yourself what went well – and, perhaps most importantly, what didn’t. What should you try to repeat? What should you change?
Think about doing a round up with your team, reflecting on what you have achieved together over the last year; yes, celebrate the wins, but also celebrate the fact you have navigated yet another year of disruptions due to Covid-19 – not an easy feat, by any means.
Celebrating together as a company will boost your team’s morale – especially after what has been a long and tiring year for some. Plus, reflecting together can bring new approaches when looking at data; in finance, numbers might rule the roost, but context is crucial.
Plan for the unexpected
If the last two years have taught us anything, it is to be prepared for the unexpected! Make sure you have baked into your plans the possibility of staff turnover, further Covid-19 disruptions and client churn – all which could impact cash flow. Know where your growth opportunities are and know where your risks are, too.
Hopefully 2022 will be much smoother in relation to disruptions around the pandemic but it is good to know what risks you may face and which clients could be further affected.
‘What if’ planning is a great way to test how your business will cope in different scenarios. It is good to run a few different scenarios on your budgets and cash flow to see where you could face weaknesses and have a plan you can turn to should any of these situations arise. Imagining a best case and worst case scenario (however far-fetched it may seem) can be so important in seeing how watertight your plans are.
Set clear goals
New year’s resolutions are somewhat etched into society but, personal goals aside, it’s also good to set some business goals for the new year, too: these can be financial goals such as reaching a net profit target or reaching a certain amount of cash in the bank. You could also set some non-financial goals such as becoming carbon neutral, achieving B Corp status or increasing customer or employee satisfaction.
Whatever you choose, remember to make them SMART and try working them into individual KPIs. It is much easier to have individual goals cascade down from main company goals as this aligns everyone on the same path, ensuring that everyone is working towards the same goal.
Create a long term strategy
Many businesses focus on the short term and, during the last couple of years, we haven’t been able to focus on any longer due to the uncertainty surrounding the pandemic. Hopefully 2022 will be a more stable year and one with which we can start planning longer term growth goals.
It can really help your business to have a longer term strategy in place; for example, this could be what you want to achieve in the next 3-5 years and could be based around turnover or profit. Once you have this in place, you can start building each year with that strategy in mind. Questions you should ask are: what steps do we need to take to get there? How many people do we need to achieve this? Do we need to invest in particular areas to meet these goals?
Having a long term strategy in place can ensure you are proactive rather than reactive, anticipating scenarios so that you can take action before they happen.
Another benefit for having a long term strategy in place is having a sense of direction for the whole company. It has been proven that employees are happier when they know the direction the company is going. Make sure you share your plans across the company so your colleagues can be involved and know where they can contribute.
Prepare future budgets with your strategy in mind
With a long term strategy in place, you no longer want to be budgeting on a short basis but instead with your long term goals in place.
Will this year be a year you need to invest? Where might you need to make additional hires to meet turnover growth? Ensure you are factoring these longer term investments into your budgets. Sense check your resourcing to make sure you are happy you have enough capacity to meet turnover goals.
Planning your budgets around your strategy may mean you take a hit on margins for a year, but this is ok as long as it is well thought through and that this is setting you up to meet your strategy.
Focus on wellbeing
Burnout was a huge talking point for 2021. If you haven’t already got plans to make this a focus for 2022, we would highly recommend you do so. Financial year or not, having a well thought-out plan for your employees’ wellbeing will play a big part in retaining people across the year ahead.
For businesses questioning ROI (other than the obvious – and arguably vital – aspect that you hopefully want your staff to be happy at work!), consider the current costs of hiring. With the widening skills gap, inflated competition to plug vacancies is fierce. It’s better for your colleagues, your wider teams and your business as a whole if you aim instead to retain and support wellbeing, including ensuring that your staff’s skills are up to date.
Some wellbeing initiatives you might consider offering are mental health resilience workshops, employee assistance programmes which offer mental health support, flexible working patterns for a balanced work/family life and enhanced parental leave.
Not sure where to start? Reach out to us and we’re happy to share how we’ve approached these initiatives.