What does the fourth quarter typically look like for a business? In most cases this quarter falls in-line with the holiday season. As a result, the majority of the focus remains in boosting sales and current revenues.
While this is an important time for any business’s bottom line, could this laser-focus toward sales serve as a mistake for leadership teams and executives? In many cases, management and executive teams set themselves up for failure at the end of the year by not effectively planning for what’s next.
Instead of simply focusing on the holiday rush, the final quarter should also serve as a time for leaders to step back and let their teams drive the business. While they’re a step back from the action, effective businesses are evaluating their year-to-date performance while planning for the future.
For example, McDonald’s recently deployed an all-day breakfast model to expand their fast food competition. While this is an important change that is creating quite a reaction, now is the time for corporate to evaluate the results of this change.
Additionally, Apple’s recent OS update to their Apple Watch has their perspective focused far beyond the flagship iPhone release. Their team is also currently assessing this performance to better understand how the road will proceed ahead for their business operations.
As these examples show, the importance of Q4 planning and analysis is critical. Here are five important components of that analysis that every team should follow. This list can ensure that any firm is better prepared for success in the next fiscal year.
1. Year-Over-Year Comparisons
Comparing current year data with previous years is one of the most important metrics a business can measure. This helps showcase performance, trends, growth and other critical areas of business operations.
Using reporting tools to compare key performance indicators can show how current sales and forecasts look within the market. Additionally, market reports cross-referenced with this data can help to better forecast what to expect for the next quarter within business.
In most cases this type of data measurement is easily accomplished through an integrative CRM platform. This type of data can be reviewed as a general overview – or more specifically within quarters, months and even the year-to-date. Both positive and negative trends can be better identify when compared within this context. Additional planning can be undertaken to help prevent ongoing negative trends – or to better address positive growth potential.
2. Cost Evaluation
Cost evaluation is one of the most challenging areas of any business analysis. After all, it’s the costs across a business operation that inevitably leech into revenue when left unmanaged. Subscriptions, term agreements, unchecked contracts and other factors can quickly add up to excessive costs against a company’s bottom line.
By remaining proactive in the analytics, businesses can better identify these costs. And they can devise solutions to reduce or even eliminate expenses that may be unnecessary.
One of the most common areas where costs can be reevaluated occurs within company health insurance. With the marketplace becoming increasingly competitive, more and more insurance packages are becoming available for businesses. In many cases, alternative plans with similar features and lower costs may be available for a switch.
Additionally, contract renegotiations may help to reduce spending. It’s important to remember that these companies are competing for business. Hence, a management team’s job is to leverage contract offers against one another to find the most competitive rates possible.
ISPs and other telecom service contracts are a prime example where costs can likely be lowered. By reviewing current plans, needs and available options, many businesses can reduce these costs by a significant margin. Even essentials such as rent or janitorial services can be reassessed to find cost-saving measures.
3. Product & Service Evaluation
Right alongside overall costs, planning for the future must also encompass an explicit evaluation of products and services. The goal of this phase is threefold:
- Make improvements.
- Make changes.
- Make cuts.
A company must stick with its mission and plan while holding true to the strengths that have contributed to success. If cuts are necessary, ensure that they are made with company strengths in mind.
While seeking out new opportunities is always great, it’s important that a company not spread itself too thin during the process. This stage can allow for planning – and exploring potential market opportunities. By planning ahead for analysis, a business can better set itself up for success. And they can readjust their business focus to remain more aligned toward their goals in the next year ahead.
Remember, making necessary cuts and spending adjustments does not show that a company is having financial trouble. Instead, it shows that they’re preparing for even more success in the future.
4. Employee Evaluations
The best employees to any organization are an investment to the company’s success. Accordingly, it’s important to measure each employee’s ROI and their direct contributions to a company’s potential future.
While layoffs and terminations are never an easy step, the truth is that performance is important within an organization. Without the right team in place, a business will never reach its greatest potential.
In many cases, employee evaluation comes down to assessing current workforce as well as investing in future growth. This could also include investing in fresh talent within new business areas to facilitate this type of growth.
5. Budgeting
Now that the planning has encompassed the major areas of operations, a realistic budget can be developed for the next year.
Utilizing a CRM or ERP software suite should come as no surprise within any organization’s operations. This software simplifies all the above-mentioned steps by compiling data and developing customizable, intuitive reports. This information can be used to quickly develop budgets that address all areas of a business – and plan with future market trends in mind.
Getting Ahead of the Curve
While this list contains many of the important steps a business should take in Quarter 4, it certainly is not exhaustive. There are all sorts of additional options that should be looked at for success. However, these five represent all the essentials any business management or executive team should address.
No matter a business’s size or scope, utilizing a CRM platform can enable even better analytics for improved fiscal performance into the future. These software packages help to compile data into intuitive reporting. That way, management can better forecast the business climate – and the best path forward.
