659: The 8 Step Annual Planning Checklist for Business Owners

This week marks the launch of the Business On Purpose annual PREP WEEK for clients.  Each year at the beginning of November, we guide each of our heroic business owners through a series of repeatable, predictable, and meaningful (RPM) steps to help bring the clarity they need to get their business in shape for the coming year. Each year brings its own swirling mix of headwinds and tailwinds, and the business must be properly prepared and maintained in order to handle the predictable and unpredictable chaos that will come. There are eight steps that we guide our owners through to equip them and their teams with the foundation to lean into their mission. First, every business owner (including me) will go review and update their vision story.  The vision story is a seven-category outline inviting the owners to detail what the future snapshot of their business looks like and enables their team to have a clear picture of what they are pushing towards. The Proverb is self-evident, “where there is no vision, people scatter” (29:18). Next, each owner will write an annual letter to their business…even if the business only has a few employees. The concept of the annual letter was inspired by Jeff Bezos’ 1997 shareholder letter where he went back and reviewed the prior year, a brief history of Amazon, and his anticipation of what was to come.  It was powerful and insightful to go back and read that letter in contrast to where Amazon is today.  An annual letter works as a reflection, a vision boost, and a chronicle of the history of your business.  Each owner will then read their letter to the entire team either at the end of this year, or at the beginning of next.  Hemingway is not the goal…just a simple reflection and anticipation of the business. The third tool of annual preparation is the business’ culture calendar.  The culture of any organization is simply the growth and culmination of whatever cultural ingredients have been planted.   Plant chaos and confusion and your culture will follow suit.  Plant clarity byway of repetition, predictability, and meaning…your culture will follow suit. A culture calendar is a timeline through the following year showing exactly what ingredients will be installed (team meetings, check ins, training, birthdays, whatever you want) and when those ingredients will be planted, watered, and fertilized. The fourth, fifth, and sixth tools all have to do with an owners business financials taking a past, present, and future look. Reviewing the past will require an owner to make time to review the business balance sheets and profit and loss statements from prior years.  These will provide a visual “flow” of the business finances as the owner moves into the next two steps in the financial preparation stage. To review the present financials we ask each owner to go back and see the continuity of their Level Two Dashboard.  All BOP clients are encouraged to subdivide their bank accounts beyond the one, two, or three accounts typically held by a business. A BOP business will subdivide all receivables into 5 to 10 different bank accounts each designated for various business or profit purposes.   As these receivables are “flushed” or “swept” into the various accounts, a simple spreadsheet template (Level Two Dashboard) tracks the flow of those accounts giving the owner a helpful snapshot of the “water levels” of their business. During annual preparation, each business owner makes time to review and adjust the percentages they have allocated to each account ensuring profitability and retained cash for growth.     Having a good perspective of what has happened and what is happening, owners will now run a simple exercise of determining a helpful budget that will guide them in decision making throughout the next year.  It is a fiscal map of sorts reminding the owner and team of how much they were going to allot to certain activities for the coming year.   We talk all the time about the reality that for business owners, life and business necessarily intersect.  In the final steps of BOP PREP WEEK we invite each owner to go home and have some necessary planning conversations with the people they share a home with. The seventh, and often toughest (and yet most productive) conversation is a guided discussion around personal finances called the Financial Barn.  This exercise allows the owner and their spouse to walk through every area of generosity, spending and investment that will be flowing in and out of their home finances in the upcoming year.  It can be uncomfortable, and yet it is healthy and good. Finally, with the eighth step comes the less-than-exciting work of legacy planning as we ask each owner to connect with their advisory professionals to audit and discuss the legacy and protection issues of insurance, financial advisory, legal/estate, etc. With business ownership comes increasing risks of exposure and the need for planning and protection. Unfortunately most business owners never make the time for these important steps in their annual planning.  But we know you are different, and that you will make a decision to make the time to build a business on purpose because life and business necessarily intersect. Reach out if you need help at mybusinessonpurpose.com/contact.