Got a Plan?
Most of the business owners I work with, and talk to, tell me they don't have time to create a plan for the coming year. Yet they complain about the sales opportunities they have missed, their inability to hire the right people, the lack of time to connect with past customers, and the money they've spent on marketing that hasn't paid off. If you had cash to invest, would a return of 500 percent be of interest? Would you invest your time if I told you the return on that investment will be over 1000 percent? And, that's just the time you would save. The money you would make is in addition to that!
For business owners, planning should be strategic. Like a military general, your mission is to win the war. You look at the field of battle and develop plans to achieve your targets. You might not win every battle, but by achieving most of your targets you will reach your goal.
In business, the field of battle is constantly changing, your targets are moving and so is your competition. You can’t continue doing what you’ve always done, because you will only get what you’ve always gotten. Strategic planning in business is looking at the whole field of play, recognizing what is happening now and making some assumptions about what will probably happen in the future. Based on that planning you can position your resources where they will be most effective and take action at the right time.
Strategic planning isn't difficult. When I work with people I use a five-step process. We begin with an understanding of the company's vision. What do you want the company to look like in a year, or five years? Though the probability of achieving this might only be 50 percent, you can't achieve lofty goals by aiming low.
The next step in the process is to develop your mission – describe what you do, how you do it and for whom. While we might have lofty goals, we're narrowing our focus to be more effective and create a high probability of success. You can't do, or be, everything for everybody.
The third step is to set goals for the year. While gross revenue is important, net profit is even more so. But revenue and profit are dependent on customers and transactions. How many customers will you need and what average transaction amount will allow you to achieve your goals? How many prospects will you need to work with to convert them to customers?
The next step is the one that is frequently ignored. We need to look at how the goals will affect the company in terms of resources and over the coming year. If you want to increase sales by 20 percent, do you have the people and capacity to handle that increased load? How will your marketing approach and budget need to change to generate those new sales? Will new training or equipment be required? How will all the changes affect cash flow? When will actions need to be taken?
The last step in the process is to balance the goals and the resources. The approach here is to optimize the use of resources and make sure the goals are achievable. Business owners often want to maximize every resource, but in business most resources are interdependent. People depend on the actions of other people, funding is limited, and customers make decisions when it suits them. To optimize means to choose the most advantageous approach, balancing the goals and the resources with the schedule to achieve the best results given the limitations of those resources.
Once completed, the strategic plan then becomes a framework for creating the more detailed planning and projects that become the daily activities that support the goals. Conflicts are minimized and costs are controlled. Results become more predictable. Isn’t that an investment worth making?
Dave Ferguson, President and Head Coach
Lake County Business Coaching, Inc.
Libertyville, Illinois 60048
Updated July 24, 2015