The Journey of Business Planning
Planning is the journey that you take your management team through to balance near-term performances with long- term goals. Your goal is to maximize your long-term returns on investment in your business while meeting short-term financial needs. In our experience, we see many leaders focusing their planning process on creating numbers (budgeting) that will yield the profits they want to see at the end of the year. Amazingly they will go through phenomenal amounts of detail to get precisely to the wrong numbers. They are wrong numbers because the reality is they have no idea how they will achieve these numbers, which is the point of planning in the first place. In these companies, it is not uncommon to hear one of two things at the end of the year: 1) They achieve profits in some unexpected way, such as the pricing was extraordinarily good (not sustainable), or 2) They missed their numbers and offer lots of excuses that have nothing to do with poor leadership. There are many companies that go through the annual rituals of strategic planning, business planning, and budgeting, and completely miss the value of these very important business processes.
Many small organizations mistakenly think that answering the following questions apply only to large companies and that they can wait to become larger to take these very important steps. The companies that wait to implement these steps are among the 50% that fail in the first 5 years. If you don’t answer with a strong yes to any of the following questions, your organization is probably under-performing in the areas of sales growth, customer service, employee satisfaction, innovation, and profitability:
- Does your management team look forward to participating in your annual planning processes?
- Does your organization regularly achieve all or most of the financial and non-financial goals set forth in your plans?
- Does everyone in your organization know specifically what the goals are in your plans and how they will contribute to achieve them?
- Do the actions in your organization regularly resemble the plans?
- Do you get regular input from all levels of your organization and use that information to develop your plans?
- Do you know what trends are going on in your industry, who your competitors are, what your competitors are doing, and what your opportunity and threats are?
- Do you get regular input from your customers (not just complaints) and use that information to develop your plans?
- Do you have specific market segments you are focusing on?
- Do you know what capabilities, management systems, people, and other resources you must have in place now, for the future, and by when?
Make sure your answers to these questions are a definitive “yes” if your business plan is to succeed. Contact us to learn more on how we can help your business grow.
Howard Shore is a business growth expert that works with companies that want to maximize their growth potential by improving strategy, enhancing their knowledge, and improving motivation. To learn more about him or his firm please contact Howard Shore at (305) 722-7213 or [email protected].