June 2010: Planning for the new financial year

Have you written your new year business plan yet? A good annual plan sets out where you want to go and how you intend to get there. It uses your experiences over the last financial year to build a better business in the year ahead. And it creates strategic priorities, so you can focus on those important but non-urgent tasks that can transform your business in the long run, but which otherwise never seem to get done.

Here's how to create a plan in five simple steps.

1.     Understand where your business is now. Before you can figure out where you're going, you need to check where you are right now. Start with a review of the past year, then do a SWOT analysis, showing the Strengths, Weaknesses, Opportunities and Threats confronting your business. It's a great tool for understanding the current competitive landscape and your place in it.

2.     Set goals. Armed with the results of your review, you're now ready to set goals for the year ahead. A good rule of thumb is to have three financial goals and two longer term non-financial goals. 

3.     Set strategies. Next, you need to decide on strategies to support your goals. Aim to create a high-level road map that sets out milestones for what you want to achieve in each quarter and the actions needed to get them done.

4.     Create financial forecasts. Now you are ready to create your budget and financial forecasts for the year, including a profit and loss forecast, balance sheet forecast, and a detailed cash flow forecast.

5.     Share the vision. Make sure all of your staff understand your key goals and their personal part in making them a reality. Link them to KPIs, print them on mouse mats, post them on the walls — whatever it takes to get them at the forefront of everyone's minds.

To make the planning easier, the Commonwealth Bank has created an online toolkit for small business owners. Find out more

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• Important information.
  As this advice has been prepared without considering your objectives, financial situation or needs, you should before acting on this advice, consider its appropriateness to your circumstances including by considering the terms and conditions of any product or service mentioned.