Where is the business now?

The starting point for meaningful
strategic and business planning begins with an objective assessment of
how the business is currently performing. An objective analysis
requires you to review your financial statements with a critical eye.
You do not need to have an accounting background to perform a
reasonable analysis. Instead, you can use the excel template that I
have attached to this entry to perform a high level analysis. The excel
template essentially allows you to compare the performance of the
business for the accounting period ended 11/30/2013 with the accounting
period ended 11/30/14. Please see the instructions on the template to
complete the analysis. The basic goal of this analysis is to highlight
the positive or negative trends in your financial results. Once the
spreadsheet is complete, you should examine the results and consider
the following points.

1) Did gross sales rise, stay consistent with the prior year, or
decline on a year over year basis? Rising sales are typically found in
businesses that have the ability to generate new customers, retain
current customers, or increase the price of their product due to rising
demand for their goods or services. This is obviously the desired state
for most business owners. Stagnant or declining sales are typically
seen in businesses that are not generating new customers, not retaining
current customers, or not able to raise their prices due to lack of
demand. The excel analysis simply allows you to identify whether sales
are rising, consistent, or declining on a year over year basis. It does
not explain why the applicable trend has developed. As the business
owner, you should be monitoring and measuring the effectiveness of your
various marketing methods. Which marketing methods were successful in
2011 and which marketing methods did not achieve their expected results
in 2011? The answers to these questions will go a long way towards
establishing your strategic marketing plan for 2012 because they will
allow you to focus your time, energy, and limited resources on your most
effective marketing methods.

2) Are the various expenses increasing, remaining consistent, or
declining on a year over year basis using a percentage of sales
measurement process? Declining expenses on a year over year percentage
of sales basis are a good sign that the business is controlling its
expenses, operating in a more efficient manner, and becoming more
profitable. Consistent or increasing expenses on a percentage of sales
basis are generally a sign that the business is not becoming more
efficient or operating in a more profitable manner. The excel analysis
allows you to measure the percentage change for each category of expense
that you have. However, the more important analysis lies in why the
percentage changes occurred on a year over year basis. For example, if a
particular expense category is rising significantly on a year over
year basis, you should analyze the particular expense category and take
action to control that particular expense in 2014.


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