Three quarters of 2017 are in the books. The final quarter is when you should be focusing on your plan for the coming year. If you didn’t already start in October, now is the time. Get together with your management team and key employees to assess the performance of your business through the first 10 months of the year, reinforce your focus for the final quarter, and prepare for the work you’ll do before the end of 2017 to create your 2018 business plan. This article will provide the roadmap for analyzing how your performance compares to your plan’s objectives and key financial metrics, and help evaluate at the department level where opportunities exist for improvement.

Your first thoughts should concern people. Who do you want to involve in this process? Clearly your department or function managers should be included. Next, consider the opportunity for employee development or gaining valuable insight and input into setting your direction and priorities. This should help you decide which employees are ready and should be given the opportunity to actively participate. The business planning process will involve frank discussions regarding what has gone well and where improvements are needed. It’s not about placing blame but identifying what is keeping the business from achieving its goals. All players involved need to understand the ground rules ahead of time.

Begin by assessing your company’s performance and progress against your 2017 business objectives. Perform your quarterly business plan review as you have been doing throughout the year. Or pull out your 2017 plan and assess where you are and what you have achieved compared with your plan objectives. It’s possible that some of your goals will not be achieved or completed within the calendar year, and work will therefore carry over into your 2018 plan. In lieu of having a business plan to compare to, or perhaps in addition to tracking your progress vs. objectives, I recommend working through your year-to-date income statement and balance sheet and evaluating your performance using the following metrics.

Revenue and Mix

  • Did you achieve your overall revenue targets for the first three quarters?
  • Has revenue increased in areas or services you targeted for growth?
  • Is your revenue growth a result of effective sales and marketing work, or have you benefitted from weather events or other large losses?
  • Is your mix of sales—the percentage of contribution by type of service (mitigation, remediation, reconstruction, remodeling, etc.)—in line with your business plan?

Summary:  Have you met your revenue objectives, and if you have, is it due to solid sales and marketing work, or did you receive help in the form of weather events or unplanned large losses?


  • Did you meet or exceed your objective for gross profit dollars generated through the end of September?
  • Given your level of revenue, is your gross profit margin (gross profit expressed as a percentage of revenue) at or above the plan?

Summary: Is your profitability where you planned/need it to be, and are your results due to improved efficiency in executing jobs and projects, or do your results reflect a more or less favorable mix of business than planned?

Budgeting and Cost Control

  • Are your year-to-date total overhead costs in line with your business plan?
  • Have you regularly tracked spending vs. established budgets for critical expense line items (salaries, health care & benefits, sales & marketing, employee development, travel & entertainment, and insurance), and is spending in these areas within budget?
  • If revenue and/or gross profits are below planned levels, have you been successful in reducing overhead spending to maintain the planned percentage of total revenue?

Summary:  Are you effectively managing the fixed cost portion of your business, and are you able to make effective adjustments to your planned spending to protect profitability in the face of reduced revenue?

Cash Management

  • Has your end-of-month cash balance been at acceptable levels?
  • Have you had your line of credit balance to zero multiple times during the year?
  • Is your level of accounts receivable in line with your objectives?
  • Have you limited the number of past due accounts over 90 days to the percent of total receivables you set?
  • Have you been able to reduce the number of receivables that are written off as uncollectible?

Summary: Are you effectively generating and managing the cash in your business?

Debt & Equity

  • Are you effectively servicing your existing debt by making payments, including interest?
  • Have you been successful in retiring your highest interest debt?
  • Is your equity higher than at the beginning of 2017?

Summary: Are you managing your debt to the point where it is not limiting the options for growing your business, and are you leaving enough profit in the business to increase its value and fund its growth?

You may well have specific business objectives in your 2017 plan that address some of the above areas.  In that case, congratulations for having placed a priority on improving performance in some critical financial measures. The above review will confirm your progress on the targeted metrics and provide input into areas where you need to focus your 2018 business plan.

Another approach to defining areas in need of improvement within your business is to assess the functioning, staffing, and performance of each department or functional area. Ask the managers who are accountable for each department to think through the following questions.

  • What is working well, and what is not happening as effectively or consistently as it should?
  • What improvements will increase the likelihood that you are providing a distinctive customer experience for your internal and external customers?
  • What productivity initiatives could be implemented to make your company more competitive by helping to lower your costs?         
  • Do you have the right people, in the right positions, to implement and sustain the improvements that are needed?
  • What obstacles stand in the way of your department reaching its goals, and how do you plan to address them?

These three approaches: measuring performance and results compared to 2017 business plan objectives, assessing revenue and financial results for key metrics, and analyzing departmental performance and opportunities will prepare your team for productive business planning that will effectively focus your organization as you move into 2018. Ready, set, plan!