22: Confidence Booster: Why Planning is Important

I'm Beth Whitworth, race car driving, quilt making, CPA firm owning, wife, mom, and boss. I'm here to help you build a business you love by sharing all of the good, the bad, the ugly, and the excellent sides of working in this industry. It's not always easy, but after many years, I can finally say it's worth it.

Let me guide you on your journey to accounting with confidence. 

Hi, and welcome to Accounting with Confidence. I'm your host, Beth Whitworth. And today I'm going to bring you a short episode, the ones that we call confidence boosters. So today's topic for the confidence booster is why planning is important. So as we're recording this, we're nearing year end. Let's get started.

And this is the time of year that we spend a lot of time with our clients, maybe even with ourselves. In deciding what types of things we want to happen next year. And I usually work with my clients in October and November relating to budgeting activities. How are you going to spend your money? How are you going to make your money?

All of those things. And one of the things that happens is there are usually very divided camps. There's the people who say, How Yep, I subscribe to the planning. I do all the things I make it happen. And then people who say, I don't need a plan. And today I'm going to talk to those people, those people who think they don't need a plan to talk to you about why planning is important.

So most of us have heard the statement in some version that is You will miss 100 percent of the targets that you don't set. If you don't set a target, how do you know that you're even going to get there? You haven't put it out there. So, for my experience and what I do with my clients is to, Look at not just where you want to be in one year, but ultimately, where do you want to be in four to five years?

So depending on where you are in your business or in your career four to five years could be that Huh? I want to be selling my business in five years. I want to be you know X number of dollars in revenue I want to have maybe a certain number of people on my team, you know, there could be larger goals that you need to have in your head, because if your goal is to sell your company in five years.

There's stuff you need to be working on right now, and that means you have to do some planning. You can't get to that goal of selling your business and maybe it's selling your business for a certain amount of money without backtracking into, you know, what do I need to do right now to reach that goal in five years?

But the typical kind of schedule of planning is that you're at least scheduling and planning for the next 12 months. Most people work on some sort of a calendar year. And by doing that, it allows you to focus on what's important and what you need to do to get to your goals. The other reason to do the planning is it reduces anxiety around what to do next.

If you create a plan, you know what to do. What you should be doing next so that because a lot of people get really anxious about okay Well, I've gotten to this point now what and if you have a plan and it's or an extended period of time You're that plan is gonna help you get there now It doesn't mean that the plan that you set now for next year or even the plan that you set now as to what you want To do in four to five years That's not set in stone.

You look at it and you need to revisit it a lot. You aren't going to sit there and just say, okay, I'm going to look at it once a year when I do strategic planning in the third week of November. No, it's an ever evolving piece of your business. So you need to be looking at it, you need to be doing things to kind of be able to track where you are on those things and touch it frequently.

So the things that I'm working on right now as far as types of planning, I mentioned budgets. So, that is something that I believe every business should have. You should be setting a revenue goal and the backup of how you think you're going to get to that revenue goal. Are you just going to do a price increase on your, um, service work?

Are you going to be adding a new line of business? Are you, how are you going to get there? Maybe it's a certain number of clients that you're going to add to your client base. So you need a revenue number, budgeted by month, and then also your expenses. You've got some stuff that's probably fixed, you've got some stuff that's variable, and you need to make some decisions on how you want to spend your money.

And budgets are designed to be a guideline. And it is something that when you're over or under budget, you have a variance that needs to be explained. Budgets are not the fluid part of any planning. To me, a budget is set, it's agreed upon, and then if you end up over or under budget, you need to explain why.

How did that happen? I am not a proponent for somebody who says, well, I went over, so I'm going to change the budget number. That is not really how the budget process works, and I don't recommend that. The other areas of planning that you should be working on right now are your goals, you know, your business goals and personal goals.

So we're back to that, you're going to miss a hundred percent of the targets that you don't set. So if you have a goal for reaching a certain level of revenue, you need to be figuring out how are you going to get there and making the plan. Bye. If you have a personal goal of maybe, Getting to the gym a certain number of days in a week or, um, taking a vacation or whatever.

You've got some, some personal goals and maybe it's saving some money personally. You know, how are you going to track it? How are you going to do it? Make a plan. The other area I feel is important that you should be working on planning right now is what fun are you going to have next year?  Fun. So whether it's a family vacation, A girl's trip.

Maybe you've got somebody in the family that's getting married. Maybe you want to plan something that is just, you know, taking the grandkids to the zoo. I don't know. And maybe, maybe you need to plan some monthly fun. I don't know. But plan it, plan it, get it on the calendar. It really will help you be motivated to move forward.

I know for me, yeah. I did a girl's trip this year with some of my best friends from college, and we've been friends for more than 30 years, but we had never done a girl's trip in this whole time. And we went to Nashville this summer and before we left Nashville, we picked the week that we are going to get together in 2025 and the location that we don't have all the details ironed out.

But I know that next September I get to hang out with my girlfriends. And so having that plan and being able to. Know that there's that, that fun factor in my 2025, make some of the other less exciting planning maybe go down a little smoother. So always plan for fun and think about what it is you want to do next year.

Maybe it's learning to ski, I don't know, plan for it. And I will say that one of the things that makes planning easier. Whether you're a sole proprietor, maybe you have a small team, maybe you don't have a partner, maybe you do, but find an accountability buddy, somebody that you can kind of sit down with and you plan your goals and you're, you make a plan.

They plan theirs, and then you reach out to each other during the year, and maybe it's, you know, once a month, go have lunch, say, okay, how are you doing, and that gives you that touch point so that you don't get so far removed from your plan that, back to that, I'm only going to look at it once a month. The third week of November, that won't happen.

So find someone, you know, it could be a friend, it could be a family member. It could be somebody else on your team. Maybe you have a leadership team, but somebody that's going, you're going to share the goals with, share the plan with, and have them help hold you accountable to getting there. They can also be a great sounding board for, hey, things seem to be maybe not going as planned.

And you can talk through maybe things that maybe you can change things inside that plan as you go, it's easier if you have a buddy, and I will say that the more you do it, the easier it gets. So I used to be a reluctant planner, or I'd be one who went through the motions at the beginning of the year, and then they were pretty much kind of forgotten about because you know what happens?

You know, your year starts going, things start going in a direction. And your calendar starts filling up and you really kind of forget about those plans and goals until you say, Oh, well, what about that thing? I was planning on doing this year before you know it. It's kind of lost. And now that I had actually intentionally spent time planning during during the year and then also Annually spending a good amount of mental energy creating that plan for what I'm going to do in the coming year, creating some account accountability steps so that I have someone who could help hold me accountable, whatever those things it has gotten easier, it's easier to keep track of the plan.

It's easier to decide. Ooh, what do I need to focus on next year? Because I'm constantly in that state of yeah. Knowing that I have goals, I have goals and ambitions, and I will say that, you know, setting them and reaching them is really, really exhilarating. Setting them and not reaching them is really, really enlightening.

So, I want to tell you, it's important to plan. And I would say get started on what you want to do next year regarding finances, business, personal fun, any of those things now, before you get stuck in all the holidays, before you get some planning done and find somebody to help hold you accountable. Okay, that's all I've got for this confidence booster.

I hope you go out and you do some planning and reach those goals or at least account for why you didn't reach the goals so you know how to set it next time. Okay, everybody, that's all I have. Bye for now. 

Thanks for listening to another episode of Accounting with Confidence. My hope is that my experiences can help you navigate the realities of owning and operating your business. Please subscribe or follow the podcast on your favorite podcast listening platform so that you never miss an episode. Feel free to leave me a text by using the send us a text message link in the show description and let me know how I'm doing.