Your Year In Review: Where Are You?
Your year in review – Where are you?
For Rick’s birthday, we finally broke down and bought a GPS navigation system (we’ve been holding out for an iPhone but that’ll have to wait until they contract with Verizon). How did we live without it? Although it isn’t perfect, it really saved him a lot of time and frustration in it’s first week alone when he took it with him to LA to attend Streaming Media and Createsphere, which had him bouncing all over the Los Angeles basin.
Why do I bring up a GPS in a year in review post? Well, the way a GPS works is a great analogy for the way you need to assess your business with a new year looming.
For example, when you turn your GPS system on, it has to connect with satellite signals in order to know where you are. It can’t direct you to your destination unless it knows it’s current position.
A year end review does this for your business. (It’s also something we like to do for our personal goals as well.) You have to know how you did in the year before you can strategize and set new goals.
It makes sense and it seems like an obvious thing to say but so many people I know don’t really do this on a consistent basis. They make decisions based on what’s happened over a week or even a day, but what happens one day may never occur again. Or they rely on their memory of events which is also a flawed strategy. I don’t know about you but I think it’s safe to say that many of us tend to overestimate our income and underestimate our expenses, just as we underestimate the time involved in many projects and overestimate our sales projections.
Case in point…
In the summer of 2009 Rick thought our sales weren’t doing very well. We had many days where no one bought anything. Since I do our books, I knew otherwise and even showed him some monthly reports to prove it. However, it wasn’t until all the sales were tallied after the big holiday shopping season at the end of the year that he saw our sales had increased by 46% over last year. That figure convinced him I was right.
However, it took looking at the bigger picture that we also saw that our video client work was down from the year before. I had a sense that was true but since we hadn’t received some of the payments until late in the year, it really didn’t register with me. What we discovered in looking back over our year was that the income we generated with our DVD and book sales made up for the fact that our client work was down. It told us that all the efforts in marketing was paying off and were worthwhile to continue in 2010.
So in doing our year end review this year, I’m happy to report that we not only had a banner year with client work in 2010, we also saw an increase of 20% over last year in product sales. This makes it easy to see more clearly what we need to continue doing next year.
My point is that when you look at your business with a micro focus, you don’t really see the trends in your profit or your losses. You may feel you’re spinning your wheels when in actuality your doing better than you thought. Or you may be feeling really flush only to find when you get your bank statements you don’t have the reserves you thought you did.
Now make sure you save these reports for comparison. How are you going to know how well you’re doing unless you compare it to a similar period of time. If you use an accounting program like QuickBooks, it makes it that much easier. Your shopping cart program and PayPal also allow you to run reports. I like to download this info into a simple Excel spreadsheet so that I can quickly compare years or monthly periods at a glance.
So if you haven’t looked at your books or set up a reporting system yet, you really need to do this before you launch into goal setting.
Do this with other aspects of your business as well, not just your sales, such as assets you acquired, connections you made, etc. See which products sold well and which didn’t. Be sure that you don’t overlook all those operating expenses and overhead costs. You may think you know where the bulk of your money is spent but may be surprised where they truly are.
You may not like what you see but at least you’ll know where you stand right now, and you’ll have a better basis for planning how to get to your goals for the coming year.
What reporting system do you have in place? Please share them in the comment field below.
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