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We all knew it was coming. We knew January 1st would usher in a new year. Yet for many of us, we can still feel unprepared three weeks into a new year. As you scramble to consider how to make 2023 a success, we’re here to shine a light on something that might not be top of mind: a financial game plan for your business.

Not having a financial plan for the next 12-36 months is like climbing a mountain without water. It’s not advised.

So as you consider your growth aspirations for the year, we’re sharing a framework to help you develop a financial plan for your business. As most good plans entail, you’ll consider your current position, desired position, and resources required to reach your goals.

Assessing Your Current Financial Position: Where Are We Today?

When considering a path for your future, you might hear someone say, “What does your gut tell you?” Friends, evaluating your financial position is not a time to rely on your gut. Let the data drive your thinking. A quantitative analysis is necessary to determine where you are today. And determining where you are today is an essential starting point for any discussion around goals and game planning. 

As you begin mining the data, think revenue, margins and cash. 

Start with revenue. Work through each question as determined by the data.

• Where are we from a revenue and run-rate perspective?
• How much revenue do we currently have contracted for the fiscal year?

Get a clearer picture of your financial position by analyzing your gross margins.

• Are gross margins aligned to industry standards?
• Will these gross margins setup your business for go-forward scale?
• What pricing strategy or cost inefficiencies might be impacting the delta between the business reality and aspirations?

Ambitions only take you so far without cash. Scaling for growth is dependent on cash, so round out your analysis by studying your cash flow. 

• What’s my cash position?
• How healthy is my cash flow?
• How can I increase my cash flow?

For the questions that have a subjective component, consult with your leadership team and key talent. You’ll consider things you would not otherwise, and you’ll communicate value along the way. If you take one thing away from this post, let it be this: Don’t make a game plan alone. 

Defining Your Desired Financial Position: Where Do We Want to be Tomorrow?

The next stage of developing your financial game plan is vision casting and goal-setting. With the understanding of where you are today and consideration of your historical performance, you’re able to more effectively define what success looks like tomorrow. 

Here’s a curve ball for you. Think more broadly than financial goals and approach this stage comprehensively. When you’re setting goals, we recommend accounting for the following:

• Revenue 
• Profit
• Employee growth and development
• Customer satisfaction
• Product development
• Community impact
• Culture 

Define success for the next 12-36 months in each of these areas (and others as fits the needs of your business). Then work backwards and specify the milestones that need to be targeted. Polish it off with some dates by which you will achieve your goals. 

Especially when it comes to setting milestones and timelines, bring in your team members to speak into the decision. When it comes time to operationalize, you’ll be two steps ahead in garnering alignment for the road ahead.

Resources Required: What Do We Need to Get There?

When you’re in the fast lane to growth, it can be more difficult to slow down and evaluate whether you have what you need to achieve your goals. But experience tells us that sometimes you have to slow down to go fast. This is one of those times.

Bridge the realities of today and aspirations of tomorrow with a path that defines the resources you need along the way. These questions will guide you through this final stage of planning:  

• Do I have systems and processes in place that are simple, scalable and repeatable?  
• If not, where are my inefficiencies? What can I bolt on from either a process improvement or technology solution to help streamline and automate?
• Do I have the right resources in place to execute against my vision? If not, where are the gaps and how do I best address or supplement?
• How much capital is my growth plan going to require? Where is that dollar amount going to come from?  

This final stage will uncover needs that would not otherwise be on your radar. Perhaps you realize you need to begin preparing for a transaction. You may need to revamp your investor pitch to garner outside capital. You may realize some key hires are inevitable. 

The goal of this stage is to identify the people, processes, systems and capital you need to achieve your growth ambitions.

A Necessary Word to the Wise.

Thanks to Simon Sinek and his well-known TED talk, “start with why” has become a common expression in business and life. Constructing your financial game plan comes second to knowing your mission, vision and values. Knowing your why will keep your team showing up. So even as we commend you to set your financial plan as you enter this new year, don’t neglect the heart of it all. Remember your why, and plan from there. 

These questions and their answers will position you to confidently take the first steps toward success. With that, we join you in looking to the months ahead with great anticipation. 

May the journey be a great one!