About this time of year, time permitting, I try and take stock of what happened in the current year. Throughout the year I have been busy executing my plan for the year and whilst I have been monitoring the performance of each activity, I haven’t taken a step back to consider if there are other activities that should have been considered.
Getting the First Pass
I have a look at my plan from last year as there are almost certainly activities from this year that will carry over to next year. After that I go and have a look at my plans from the previous few years to see if any activities pursued in previous years are worth including again. I also consider whether there are activities that we have not pursued previously and if it would be worth including them in the plan for next year.
After that, I also try and take a step back from the plan to ask myself whether the overall approach to the plan needs to be revised. For example, referrals and Google Ads are both working well as lead sources with Google Ads turning out to be a truly variable lead source that I can throttle up or down. However, if ask myself am I happy with these two leads sources the answer is that I would like to not be relying on just two lead sources so next year the current plan is to devote time and resources to build up SEO and LinkedIn as alternative lead sources for the business.
Calibrating the Plan
Generally, I have a view of how an activity has gone overall but I go back and recalibrate the revenue and cost drivers related to the activity based on the results we have achieved in the current year. If appropriate I also look to pull apart the overall results, for example, I have been running two campaigns within Google Ads, one which had a much higher Cost Per Click and used more specific keywords and, based on a Google Ad expert recommendation I had also been running a second campaign which had a lower Cost Per Click and was using more generic keywords.
Also, having had my business disrupted when the iPhone first came out, I am a big fan of having diversification. For this reason, I have more than one revenue stream in play at a time – typically there are at least 5 different revenue streams. So, the end of the year is when I recalibrate the assumptions driving the revenue and costs for each revenue stream based on collating the figures for the current year.
Filling out the Figures for the Next Year
Behind each revenue stream are a set of skills that are required to deliver that revenue. There are different levels of revenue that can be generated based on the skills of the resources and the amount of time that those resources can devote to the revenue stream.
We also have a list of the resources we have at hand. Each of those resources has been trained in or has acquired knowledge of different skills and has a level of theoretical knowledge and operational knowledge in these skills. In our business we make a distinction between knowing how to do something and operational experience and knowledge which increases a resources fluency and shortens the time they need to deliver.
We then marry this with the list of potential opportunities for each revenue stream and our likelihood of winning that revenue stream. Depending on how many potential opportunities there are, we approach the exercise in a slightly different way. For example, if there are not many opportunities available, we look to assign our resources to each of the opportunities. However, if the number of opportunities available is greater than our resources, which is the way we like to skew our business, we can iterate through the available resources and opportunities to project the likely revenue, costs and profits for each scenario will also considering the likelihood of each opportunity to work out which opportunities we should pursue to maximise the profit outcome for the business.
Sanity Checking
Like the results of any model, we always question the projections to see that they make sense. The boundary conditions are always a great place to start, for example, we look at what the model outcomes say if we were to solely pursue Opportunity A. Does that make sense first of all on a high level, e.g. if all our resources were employed on Opportunity A would we really believe that these would be our projected revenue. If that looks reasonable then we start to look at the overall cost projections. And, if the high-level costs look realistic we would then look at the detail.
We do this for each of the Opportunities at hand as a first pass. We then start to look at some of the combined scenarios, e.g. 50% of Opportunity A and 50% of Opportunity B to check that we are scaling revenue and resources correctly. Just as we did for sanity checking the figures for when we are pursuing a single opportunity, we start with the high-level and then get progressively more granular.
Building Future Capability
The other dimension that comes into our planning is looking to upskill ourselves where needed. Part of this is looking at how we might improve our current delivery using our current resources. The other dimension is thinking about to where we would like to evolve the business and questioning whether we currently have all the skills needed to take the business on that journey and if not, to identify what skills we are missing and looking at which resource(s) might be the best ones to be trained in these skills.
Setting the Focus for 2025
We find that this exercise is really helpful for laying out the high-level plan for the year ahead based on revenue and cost drivers that have been recalibrated with reality. It quantifies the potential results and puts more rigour into our planning process which have lead to better outcomes for our business.
Once we have settled on the high-level direction, we would like to take, we need to colour in the details. We do this by first dividing the year into quarters and setting a theme for each quarter and then going down to the months and filling in the activities that we need to do each month to bring the plan to life.