We’re in the final quarter of 2021 and that means we’ve got a fresh new fiscal year just around the corner. It’s likely the last two years did not go according to plan due to the pandemic, but that doesn’t mean there isn’t incredible value in establishing a roadmap.
Here are 10 tips to create your financial roadmap as we head into 2022.
1. Be bold. We are living in a world of uncertainty, but opportunities abound. Dream big and be ambitious. Shoot for the moon. We’re all a little fatigued but bold ambitious thinking can reboot our passion.
2. Set realistic 2022 revenue targets. Okay – I know I just said be bold, but ambitious humans tend to overestimate what we can do in a year and underestimate what we can do in a decade. So stay bold, but appreciate growth is a journey and takes time. Whatever boldness you just imagined in step one will likely take more than a year to accomplish. Set yourself up for the satisfaction of hitting your milestone targets on time by being realistic with your revenue goals.
OBJ360 (Sponsored)
Women UNlimited creates collective action and collective impact
I never thought in my lifetime that I would witness something so powerful, heartwarming and inspiring. It’s called Women UNlimited – UNICEF Canada’s women-circled giving collective. The model is simple
Investing in the next generation: Ottawa businesses encouraged to build futures through mentorship
Do you remember the mentor in your life who helped shape your career? In the business world, success often depends on the connections we build, fuelled by guidance and support
3. Understand the importance of EBITDA (Earnings before interest, taxes, depreciation, and amortization). If your business model relies on more than customers for funding then there is a 98 per cent chance that you need to be paying attention to your profitability. (Two per cent disclaimer but it’s not likely pertaining to you!). So what does that mean? You have to spend less than your projected revenues (and if you are SaaS that means you need to be properly recording revenues).
4. Create revenue scenarios. If we learned anything over the past two years, it’s that the world can be unpredictable. Before you finalize your 2022 spend plan, make sure you’ve considered Good, Best, Worst case revenue scenarios to ensure you are able to react and respond quickly, and still remain profitable.
5. Create expense scenarios. Increasing costs of living are likely to increase salary costs. Increasing supply issues are also likely to increase costs. Make sure you’ve considered the ‘what if’ scenarios should your costs jump by 20-30 per cent.
6. Consider foreign exchange. Do you sell in USD and pay most of your costs in CAD? Don’t forget to think about the impact of FX swings on your business. Securing foreign exchange contracts to mitigate FX risk to your business may be worth considering.
7. Be really mindful of the allocation of spend. Increasing or decreasing spend across the entire company is not strategic.Your spend plan should be an extension of your strategy and for that reason you should be strategically considering how you will allocate funds. Fight the urge to go with last year +/- X%. If you are planning to grow revenues, you need to invest in growth initiatives. If you want to expand revenues to existing clients you’ll need to invest in customer success and value-added products and services. Again, be realistic about how much you can do at the same time. Sequencing focus may bring greater results.
8. Finalize your plan. Don’t stop until you’ve created a financial projection for 2022 that confirms these four targets: Sales, revenues (yes there may be a difference), profit, and cash.
9. Measure progress. Once you’ve completed your plan you can upload it into your accounting software to measure your progress. This step increases accountability and satisfaction.
10. Recalibrate as required. Just like a GPS tracker, you may need to recalibrate as you go. Don’t abort your plan, just recalibrate and carry on.
If you need any assistance with your 2022 financial roadmap our team at Numbercrunch can help you today!
