Happy New Year!
I hope your last year turned out amazing and that going into this next year you’re optimistic about what the future holds for you.
This has been a really weird time as we’ve been transitioning out of kind of a COVID to post-COVID era and a little bit more into figuring out what things might look like going forward.
As people have gotten more settled in they recognize there’s some more stability to build the future off of.
A year-end review is an amazing way to
- Look back on the past year.
- See how you did.
- Take stock of that.
- And then look at the next year and see which of those behaviors you want to carry forward and which changes you’d like to make.
Today I’ll be talking about this year-end review from
- a mindset/emotional level
- a tactical step-by-step level
The Optimal Mindset For Your Year-End Review
I find a lot of entrepreneurs take this time to really beat themselves up and this is NOT the goal of a year-end review.
If you’re doing it that way, you’re doing it WRONG.
Something that we forget as business owners tends to be that being a harsh judge of ourselves oftentimes is something that can make us very productive day-to-day.
A lot of entrepreneurs I work with, myself included, have this idea that “I’m not good enough”, “I have to try harder”, or “I have to do more.”
That can be a great motivator on a day-to-day level (if not a bit unhealthy), but when you look at that on a yearly level it becomes very discouraging!
We look back on the last year and we can think, “Wow, I was horrible, I did a bad job,” “This next year will be miserable,” or “There’s not much hope.”
It can become demotivating.
What may serve us on a daily basis can NOT serve us on a longer time frame.
It’s really important to approach this with perspective.
(Also, I’d highly suggest as you move through business that a negative motivating force early on needs to be replaced with a new positive motivating force later.
That negative voice will only carry you so far with motivation before it needs to be replaced with something positive, otherwise, you’re kind of on this emotional roller coaster.
So just a reminder, if you have been struggling with that, a good thing to focus on this next year is finding some more positivity.)
All right, so diving into a year-end review.
Conducting Your Year-End Review
There are two major things to look at at a year-end review.
- How was the previous year?
- What changes do you want to make in the next year?
Did You Have Clear And Specific Goals The Previous Year?
Let’s start with the previous year.
In order to even understand the previous year, you must have had clear goals for that year.
Those clear goals act as a prediction you can compare the actual outcome to in order to better understand your ability to control desired changes.
The Fuzzy Goal Problem
A lot of people work with fuzzy goals instead.
If you have fuzzy goals, that means you didn’t really define clearly and specifically what it is you wanted to attain.
An acronym used to define good goals tends to be SMART.
- S = Specific
- M = Measurable
- A = Attainable
- R = Realistic
- T = Timely
A SMART goal has a lot of clarity around it.
I find a lot of entrepreneurs don’t set a SMART goal.
They set a goal that’s a bit fuzzy.
They say, “I hope I grow my business.”
They don’t say, “I hope by this time next year I have five more monthly clients” or “My revenue goes from ___ to ____.”
They don’t set those exact levels and measurements.
There are a few reasons why.
1.) They Fear To Dream
One of those reasons is that they’re almost afraid to actually dream and hope that it could happen. It seems impractical, so they just keep their head down and do the work in front of them.
2.) They Fear To Fail
The second reason is that they’re afraid if they do set a goal that they’re going to miss it, that they’re going to not achieve that goal.
But by not having a goal set, they’re actually still not achieving it and they just don’t know it.
They’re hiding it from themselves. So nothing gets better, just borderline anxiety.
And the funny thing is, I’ve worked with a lot of people who have actually finally set a goal and then they achieved that goal.
And if they hadn’t set the goal, they wouldn’t have known they’d achieved it.
So I think about it like you’re playing a basketball game. Your team is up by 30 points, but you don’t know because you haven’t seen the scoreboard.
You might be panicking like you’re falling behind. By looking at the scoreboard, by having a goal to say this is my scoreboard, you can know when you’re winning versus when it’s time to dig a little bit deeper.
So being clear on your goals and not having fuzzy goals is very, very important.
3.) Avoid Setting Goals That Are Too Big (No BHAG’s!)
The third reason I see people not make clear goals and stay in the fuzzy goal territory is because of this idea of having a big, hairy, audacious goal, the BHAG.
I personally am NOT a fan of this approach whatsoever for small business owners and entrepreneurs.
The idea is that you set a goal that’s so big, so giant, so 10x whatever you dream to be possible, that it motivates you to take tons of action.
I think that the right use case for this type of approach is for someone who’s very conservative and smaller in their thinking, someone who doesn’t normally take very many risks, and who normally is very methodical inch by inch.
In my experience, business owners have almost no overlap with that demographic. If you started your own business from scratch, you’re probably digging deep, taking risks, making big swings, and having big dreams already.
So if I were to ask you to set a goal that’s an even bigger dream apart from that, from where you are to getting to there is going to be probably an impossible level of a leap to make in a year time frame.
Again, if you’re a smaller kind of conservative-minded where you’re not taking many risks, that approach can kind of push you a bit past your comfort zone, but most entrepreneurs live nowhere near their comfort zone, and that much stretch is too far of a stretch.
People who have set a big, hairy, audacious goal and then fail to achieve it, tend to feel a little bit like they touched the hot stove and got burned and they say, “Oh, I don’t set goals anymore because I don’t achieve them and it just makes me sad.”
Set Achievable Goals NOT Aspirations
The purpose of having a goal is to make it something that you CAN achieve.
It should be something achievable that you should almost be embarrassed if you don’t achieve it. That should be a good baseline goal, something that is very, very achievable in a very clear way.
You can set a stretch goal a little bit past that if you want to. You can use the big, hairy, audacious goal as a point to aim towards a direction, but don’t make that your focused goal.
Don’t make your goal this year to “double your business” unless you see a clear step-by-step pathway to actually do that.
So those are reasons that we tend to have fuzzy goals. If you’ve been working with fuzzy goals, I’d strongly recommend looking at this next year and setting up some clearer goals, some explicitly stated goals. So now let’s assume in this past year you had some clear goals.
Compare Previous Goals To Actual Outcomes
This is the time to see how your science experiment turned out.
You made a prediction.
You said, “This is what I expect to have happen. I put in these specific inputs throughout the year. Was the result what I expected it to be?”
Now oftentimes the answer here is no, and this again is where people can get very, very discouraged.
I think we miss a really big important thing with the whole SMART goals approach is that we think mostly in terms of KPIs, (key performance indicators), mostly in terms of quantitative measurements.
We think, okay, “My goal is to grow my business, and because I didn’t grow it by the $10,000 revenue that was my goal, I have failed.”
We have these very specific measurements, and they tend to almost always be exact quantities.
What I’ve found is what is actually most important to a business owner is that they’re running their dream business, and what that means is that they have a balance of their work and their life, and they’re happy.
They have time to enjoy their family time and their hobbies.
They get to connect with friends.
That’s kind of the most important.
Now if they’re not bringing in enough money, there’s a stress level there that makes that harder, but really a quality of life is the most important thing, and if someone’s quality of life isn’t where they’d like it to be, and they set a goal of increased revenue by 20 percent, that means working harder and being even less present in the life they’re not having fun with.
It’s really, really hard to make those two things work because even though on paper they’ve listed the goal of growing revenue, in their heart and their soul, they have a goal of feeling better in their general life, so those two things are at odds.
So in looking back on a previous year or evaluating how things went, I really recommend getting away from only thinking about the quantitative goals if you have missed them.
If you hit them, great. Check off the box. You did awesome.
If you’ve missed them though, look at the qualitative goals, meaning how has the quality of your life actually changed?
Quality Of Life Improvements Are More Important Than KPI Improvements
Are you happier than you were last year?
You know, maybe you missed your revenue goal, but you feel better in your personal life. That’s a huge achievement. If you made similar money to the year before, but you’re 20 percent happier in your daily life, that’s a huge jump.
For me in my business, I didn’t grow my business aggressively on the revenue side of things this past year. I grew some, but what I really achieved was to greatly increase my quality of life.
I was able to work remotely from all of the time zones in the U.S. this year without really losing a beat in my business. It became very remote and very fun. This was an amazing transition that has been in the works for years as I have transitioned from having only local in-person clients to clients I can assist entirely remotely from all over the US.
I also really improved my skills in delivering my business service and helping people, and I found a lot more peace in my work-life balance. So it was a very, very good year for that. Not the best if I was ONLY measuring what showed up on the profit and loss statement.
So thinking about the qualitative side of things and not just the quantitative is a really important lens for looking back on your past year.
What new skills did you acquire?
What new comfort did you find?
What new efficiencies did you build out?
There are lots of things to look at in the previous year.
Setting Next Year’s Goals
What about looking forward to the future?
I view a business year as a science experiment. Again, you have a prediction of what you want to have happen, and you feed in these inputs, and you see what comes out the other side.
What I find typically is year to year, the goal doesn’t massively change.
Maybe the goal was to grow revenue in one year, and you didn’t quite hit that level. But in the ways that you missed that level, you should get information back about what needs to change.
Typically there are additional skills or habits you need to gain or to stop doing in order to get to that next level.
You don’t really know that those are your obstacles until you run into them.
Learning Lessons From Brazilian Jiu-Jitsu
One of my hobbies is training in Brazilian Jiu-Jitsu.
It’s really, really fun. I’ve done it for almost 15 years now, and early on I would go to some competitions and compete, where basically you try to strangle somebody else, and it’s a pretty intense competition feeling early on. It can be very nerve-wracking.
One of the really early lessons I learned is that whenever you go out there and compete, whether you win or you lose, you learn something.
You take something back with you about, “Okay, I need to get better at this position, this situation, how to deal with this type of an opponent.”
But the key to that is that you’d like to avoid learning as many “dumb lessons” as possible.
So one of my first tournaments, the lesson I learned was, “Wow, I get really nervous. I need to deal with these nerves.”
That was, I’ll say, a “smart enough” lesson. You had to kind of do it to learn it.
For another example though at maybe my third or fourth tournament, I realized I didn’t really train to be in good shape for this tournament. That’s a “stupid lesson” to learn, meaning that I could have known that before I actually lived it out.
It is important when looking at your next year that your end learning thing is not a “stupid lesson.”
You don’t want to learn, “Wow, I didn’t grow my business at all. I guess I should have actually spent time on marketing or sales to grow my business.”
That’s a lesson that you could know now before actually living it.
But focusing on growing your marketing and your sales efforts and hitting roadblocks and then identifying, “Oh, I need to have better skills in my customer conversations, overcoming objections, my follow-up.”
Those are types of lessons that you can learn and then really apply and go deeper in.
This is an important concept that in having the goal, you go down a path and then the roadblocks that you will hit will try to stop you, but that’s where the real lessons are.
That’s the real benefit of a goal is that you’re probably NOT going to have smooth sailing on the way there.
But You ARE going to find these small spots of improvement.
Flexibility In Pursuing Goals
The final thing is whenever you set a goal, be flexible.
None of us are psychic. None of us know what “me of the future” in exactly 365 days wants to have happened.
Set a goal, but be okay with changing that goal throughout the year.
If you set a revenue growth goal and we’re here in the second quarter and you decide, you know what, that’s not as important as work-life balance, be okay stepping back from that goal, readjusting it to make it work for you and your life.
If you’re adjusting your goals every single week, you’re kind of moving in a million directions with no focus, that’s sort of more of a way to avoid doing the work.
But for most people, I find having a goal and heading in that direction is the best pathway. That flexibility allows you to set one now without putting too much pressure on it. So I just wanted to go over a few of those ideas for the year-end review.
Again, I hope your last year was amazing, that you’re hyped up for this upcoming year, that you look on your last year with kind eyes and this next year with optimism, and you map out some of the actions to take, and best of luck to you.
Thank you.
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