By David Hildreth, Guest Contributor.
Every business needs to plan.
Unfortunately, there is a belief that associates business planning with start-ups. That’s particularly common in the United States. Because of that, a lot of businesses miss out on the opportunity to manage themselves a bit better. If you always do what you’ve always done, you will always get what you’ve always gotten. Smart people change their ways.
As an owner or manager of a small or medium business, can you afford not to plan? Do you leave the annual plan for the large businesses, and let yours depend on reacting to events? Or do you want to plan for priorities, and manage your growth proactively and usually more profitably? That’s a leading question of course, and the answer should be obvious.
You can call it an annual plan, or an operational plan. The name doesn’t matter as much as the development, execution, and management of it. While these kinds of plans are common in larger companies, they are surprisingly rare in small and medium business. One could say the smaller the business, the more important planning becomes, given its limited resources. Business planning focuses on three big themes: a look back, a look ahead, and your next steps.
Guide your growth: Your business will grow, or not, depending on a lot of different factors, including overall economic trends, location, specific market needs, hard work, and other elements. Businesses that plan do it to guide and influence their growth, so that they move proactively towards defined objectives rather than just reacting to business events. Begin by reflecting on the previous year’s accomplishments and incorporate them into next year’s strategic business planning. Write your successes down making note of big wins and small victories. Identify any patterns that led to these successes.
- – Where did you meet your best clients?
- – How did you determine there was good fit between your services and their needs?
- – What is your best source for finding new clients?
Manage priorities: Strategy is focus. Allocate resources where they will do the most good. Work towards your strengths and away from your weaknesses. Develop the company by doing the most important things, according to your long-term objectives.
- – What tactics and business strategies worked to increase revenue and overall business?
- – What initiatives were not successful in producing a return on investment?
- – What is my business vision for the coming year?
Assign responsibilities: A plan gives you a place to develop organizational responsibilities. The who, what, when, where, how, and why is a critical component. Establishing a weekly follow up process is important to check progress towards achieving the desired goals, and/or making the necessary adjustments to your plan to keep things moving. All plans are only as good as their execution and follow up. Keep yours moving! A plan in the drawer is of no value to anyone.
Track progress: Think of a plan as a business positioning device. With a plan, you can track your progress towards goals, measure results, and manage the business. As mentioned previously, establish a frequency of follow up. Without a plan, how do you tell whether or not you are moving in the right direction? What do you measure against?
Plan for cash: Profits are not cash, and cash is not intuitive. You spend cash, you don’t spend profits. However, businesses don’t plan well for cash, and they need to. That may not sound strategic, but it is. It is also the core of an operations plan, and an annual plan. Whatever else, you have to plan for cash.
Regardless of the name you use, annual plan or operational plan, the vast majority of these plans include some or all of the following main points:
- Focus on main priorities: Planning assigns priorities. Of the whole range of possible market segments, and the whole range of services and possible sales and marketing activities, which are your main priorities?
- Specific responsibilities, activities, deadlines, and budgets: We call these Milestones. They are the bricks and mortar of business planning, critical to business success.
- Financial plan: One of the most important gains from an annual plan is the financial plan, which of course hinges on cash flow. A business needs to stress its priorities by making sure they get the right amount of money. Growth costs cash.
What will you do to grow professionally and personally in the upcoming year? As you make your way through this business planning process, remember to reflect with honesty and kindness. Be honest with yourself about your growth and be kind to yourself about your shortcomings or disappointments.
They are simply opportunities for improvement, and now is a PERFECT time to strive for the best business and the best you!
If you don’t know where you’re going, then any road will get you there!
About the author: David Hildreth is President of BOOST Associates. David is an organization and people development coach/trusted advisor helping them achieve greater results & levels of sustainability.