That’s a Wrap!
2023 is almost in the books. I’ve spent the past week dissecting my year and planning for 2024 and wanted to share with you what I look at so you can do the same.
YEAR IN REVIEW
What Happened?
I always start by thinking back and writing down what happened over the year. It’s sometimes hard to remember everything that happened almost a year ago, so I’ll actually scan back through my calendar and emails to help me remember. This part is all about recognizing and celebrating everything that you’ve accomplished.
Goal Debrief
If you wrote out goals last year, I’d also take some time to see how you made out against those goals. Some you’ll have knocked out of the park, other’s not so much. This isn’t about dwelling on the goals you didn’t reach, but rather you want to understand why you didn’t.
For me, I didn’t launch a program that I had wanted to. It’s disappointing. What I want to figure out though, is why it didn’t happen. I’m not looking for excuses, but rather am looking to learn what I need to do differently THIS year, so I don’t sabotage myself or make the same mistakes again.
Financial Deep Dive
Don’t bail on me…We’re doing this! Step 1 – we need to get our financial statements. Your income statement and balance sheet. The income statement will show you your income and expenses over the year, and the bottom line of your profit. The balance sheet will show you your assets (what you own), liabilities (what you owe to others), and your equity (the value you’ve got in the business).
Step 2 – check out some key metrics:
Net Profit – bottom line: did you make any money?? This doesn’t necessarily mean that you’ve got that money in your bank account; it just means that your revenue was more than your expenses. If yes, what percent of your revenue was it? It’s good to know the percentages so you can compare things year to year.
Gross Profit – this is your revenue less your cost of goods sold (COGS). Your COGS are the costs directly related to delivering your product or service. This will be things like raw materials, ingredients, client subscriptions, etc. The other expenses are called overhead. Like with net profit, you want to figure out the percent of revenue. This helps you to see how well you priced your products or services so that you could cover your overhead – and hopefully have enough left over to make a profit.
Your Debt Burden – that’s obviously not the technical term, but basically you want to figure out if you’re drowning in debt or using it wisely. Bad debt is where you’re borrowing money with nothing to show for it; when you’re using borrowed money to pay for things that your business should be able to cover. If you’re borrowing money to build assets, that’s good debt. Those assets – things like equipment, inventory, computers – are supposed to help you MAKE money, and they inherently have value so in theory you could sell them off and get some money back.
Inventory Hoarding – (again, not the technical term) when you look at your balance sheet, how big is that inventory number? Now if you just stocked up, that makes sense, but if your inventory value is consistently high, it might be time to think about a different strategy. Inventory that sits on shelves for months is no good. Are you actually going to sell it all or will you end up holding a fire-sale? Or worse yet, giving it away? It’s a fine balancing act between hoarding inventory and making sure you don’t run out.
Not too painful…right? It’s ok, you can hate me.
THE NEW YEAR
Alright, that’s the hard part, now we need to learn from it and make a plan for the New Year.
What projects or products do you want to complete or launch?
What are your revenue goals for the coming year?
Do you need to adjust your prices, so your gross margin is better? What about find a new supplier to help bring your COGS down?
Are there overhead costs that you can cut, or are there new costs that you’re going to need to add to help accomplish your goals?
Once you’ve got the big picture stuff, start breaking it down quarter by quarter. This will help you to stay on track, set your monthly/weekly priorities, and check in on a regular basis to see how you’re making out towards your goals.
I know that seems pretty simplified for planning for the New Year, but those questions will make you dig deep into where you want be at the end of the year. Dream big. Do the work. Don’t let fear hold you back. I can’t wait to see what you accomplish 🌟