FAIL TO PLAN
It was Benjamin Franklin who argued that "if you fail to plan, you are planning to fail". It is now 2020, Happy New Year!! It is never too late to develop a “Year Plan” to help you make better decisions for the New Year and beyond.
I have developed many "Year Plans" that I have utilized to direct my life decisions over the last two (2) decades. I hope introducing my year plan module will make a difference in your life. The “Dr. DF Year Plan” consist of six (6) the following elements:
· Review of Year
· Strategic Objectives
· Situational Analysis
· Strategic Action
· Financial Analysis
· Work Plan
The following is a brief description of each of the element listed above:
Review of Year
This section requires a critical and honest analysis of the successes and failures of the previous year. It is assumed that you established some specific objectives that you wanted to accomplish in the year under review. At a high level, the analysis should include an assessment of the reasons for the successes and failures of each objective.
An example of a high level objective is the “renovation of your home to include roof repair, painting of the building, renovation of the kitchen and bathrooms”. The result could be as follows:
Successes - painting of the building and renovation of the kitchen.
Failures - roof repair and renovation of the bathrooms.
Conclusion - lack of a bill of quantity and the necessary funding limited the successful accomplishment of the objective.
Comments - Proper planning is always essential to the accomplishment of each objective. You should always ensure that you properly interrogate the deliverables of each objective and the requirements to be implemented to produce the best desired outcomes.
Strategic Objectives
The strategic objectives should precisely and concisely highlight what you want to accomplished during the year. A very good strategic objective highlights the area of your life that you have committed to making a significant transformation. The strategic objectives should be challenging, but also achievable. The following are examples of four (4) strategic objectives:
· Identify credible investment opportunities that will strengthen my financial health;
· Enhance the reliability of transportation available to my family and me;
· Enrolled in a program of higher learning that enhances my professional marketability;
· Migration to a first world country for greater educational and professional opportunities.
Notice that a great strategic objective seeks to create a positive outcome while indicating the main deliverable to be accomplished. Formulating the strategic objectives for an individual is normally very easy. In the case of a family, I suggest that a family meeting be convened to conduct a brainstorming session to develop the strategic objectives. Every person who extract resources or adds value in a family is important to this exercise. Securing the individual or collective commitments to accomplishing a Year Plan is vital to its success.
Situational Analysis
A 360 degrees situational analysis must be done to ascertain the full context under which the plan will be implemented. In businesses companies conduct what is called a Strength, Weakness, Opportunity and Threat (SWOT) analysis to ensure that the strategies implemented take into consideration the firm and the environment in which it operates. It is no different for an individual or family that operates and exist in a particular social, economic and business space. The plan must look internally at the strength and weaknesses of the individual or family or externally at the opportunities and threats that exist that could assist or mitigate against the success of the Year Plan.
Take for example the strategic objective; “identify credible investment opportunities that will strengthen my financial health”. The situational analysis could result in the following:
Strengths – strong cash and fix assets, income generating from businesses, rental and salary.
Weakness – high monthly operating cost driven by mortgages on car and house.
Opportunity – Jamaica is the top performing stock market in the world and strong economic stability. The financial sector is stable and growing significantly.
Threats – Jamaica has a high crime rate and prone to economic shock caused by extreme weather conditions.
Conclusion – It is an ideal time to invest in stocks and bonds in Jamaica. There is an adequate pool of Investment Advisors to build awareness and provide recommendations on financial investments.
Strategic Actions
The strategic actions explain the things to be implemented to create the required outcomes. This part of the plan require critical thinking to develop actions outside of the box and that will be game changing for your life. Remember always, that more risks create greater return on value. Many persons are risk averse, but to create greater value we have to take greater risk. In some case this means doing things differently.
The following are some of the strategic actions that could be contemplated for: “identify credible investment opportunities that will strengthen my financial health” in the example above:
1. Identify the existing cash assets that will be dedicated to create the investments portfolio;
2. Determine the monthly cash assets that will be saved and utilized/added to the investments portfolio;
3. Create a list of financial institutions in Jamaica and aboard that will be targeted as your Investment Advisor;
4. Meet with your Financial Advisor and build further on your awareness by reading and researching the stock market performances as required;
5. Ensure that your advisor provides a mix of investments with different risk ratios that you will consider for your investment portfolio;
6. Provide instructions to your advisor on the type and magnitude of the investments that should be made;
7. Continuously monitor the performance of your investment portfolio by surveying the market and reading reports provided by the Financial Advisor and the daily Newspapers.
Financial Analysis
Most persons are afraid of numbers, but all logical decisions have their foundation in mathematics. This section requires you to take some time to research and review the preparation of financial reports on your own. At a basic level everyone must be able to read and prepare different financial statements, especially those that tracks the financial strength, performance and the cash flow of a person or family. At minimum you should know how to prepare the following:
1. Income Statement – this includes all your income and expenditure projected for the year. When expenditure costs is taken from the income flows the result is the profit or loss. Read more at www.accountingcoach.com
2. Asset and Liability Statement – this shows the cash and fixed assets owned by the individual and the depreciation and interest on the assets. The liabilities owned by the individual and the interest expense associated with these liabilities. Read more at www.accountingcoach.com.
Identify and list all of the sources of income that will be earned over the year. The following is a sample of an Income and Asset and Liability Statements:
Identify and list all of the liabilities, including mortgages, which will be serviced over the year. The following is a sample of an Asset and Liability Statements:
The income statement will allow for a matching of income flows with the projected expenditures. It allows also allows proper budgeting based on prioritization of the important expenditures for the year against income inflows. The asset and liability statement allows for a proper assessment of the available assets and the investment opportunities that can be created from the cash and fix assets. The asset and liability statement also allows for proper financial planning to ensure that the liabilities are properly aligned to the available assets. This reduces the potential of compromising your financial health.
Work Plan
The Work Plan is a detailed activity based plan showcasing all major activities to be implemented and their associated timelines. The details of the plan will be determined by the type of deliverables targeted. The plan should be also utilized as a monitoring and evaluation tool to assess the implementation progress on a monthly or quarterly basis. The plan should be reviewed and adjusted on a continuous basis as deemed necessary.
The financial plan should properly account for the financing of the Year Plan. Only activities that are accounted for and those that require no additional investments should be reflected in the Year Plan. The success of the plan is directly correlated to the financial, human and material resources that are allocated to the plan. Below is a simple sample of a Year Plan:
