Planning for Success
January 18, 2010
During the past dozen years I have studied organizational development, and I have learned much during that time. There are many characteristics that help create successful organizations, but it is essential for long-term success that there is a strategic plan guiding the process.
That does not mean that an organization is confined by the plan; rather, it means that a dynamic plan is the center of operational decisions. A dynamic plan is one that is reviewed and updated often due to changing conditions or opportunities.
I do not think you will find companies that plan to fail, yet there are not many that have the discipline to create a proactive company with a strong business and strategic plan. It is ironic that companies that don’t make the time to create a strategic plan are in fact planning to fail.
It is easy to hear this cliché and disregard the truth in the statement. Not having a plan is easy to understand and easily rationalized. Most people are very busy and grow their staff based on perceived need.
As the company grows, the management team feels that they need to add staff, and that often creates a cycle of needing to grow revenue in order to feed the staff in place. People are not added due to a strong strategic plan; rather, it is due to the overwhelming hours being worked.
As a consequence of this treadmill, the owners and managers are all working very hard yet struggle every week to make payroll due to the cash crunch.
Successful companies can also have similar problems. Success without a plan does occur, yet the situation is difficult to sustain. There are many reasons for success, but when it occurs without a strategic plan the process will usually break down.
There are a couple of reasons for this. The first is that the wrong activities may be given credit for the success or, more often, the success was created on a business model that is not sustainable in a larger company. This is equivalent to building a 10-story building on a two-story foundation.
When you started your company, chances are long days, stress, uncertainty and lack of financial reward were not your business dreams. Early in your business these struggles were welcome and an expected challenge. After months and years of never-ending problems, it becomes overwhelming.
The result becomes a burden of long hours and stress rather than the joys that you can and should achieve as the result of your success. Your business should be a resource for you to achieve and receive the things that you want in your life.
In his book The E-Myth Revisited, Michael Gerber talks about creating an organization where you are able to work on your business rather than in the trenches, and that when you are in the trenches, you have the equivalent of a job rather than a business. It is very difficult to own a job when you also have the risk of business ownership.
When you are working on your business, you are able to move to a point where you have more than a job. If you want to transform your company and get out of the trenches, you have to find a way to create a strategic plan that guides your decisions.
If you agree that it is important to create a strategic plan, what should it contain? Your strategic plan should start with your big-picture goal of what you are trying to accomplish in your personal life.
As an entrepreneur you have a great opportunity to create wealth that can be used to accomplish worthwhile goals. In some companies this is an early retirement, in others it can be time with family, or maybe the ability to give to people, charities or organizations the business owner finds worthwhile.
Regardless of the purpose, this is the place to start when establishing your plan. If you realize your ultimate destination, you can start to work back to your basic business plan. Once you have established an ultimate goal to be accomplished through your organization, the next step is to put a timeline on these expectations.
When you have a goal and destination for your company, you can start to establish your plan to get there. Your plan should consist of the following elements: staffing; training; capital expenses; financial goals and considerations; marketing; cash; communications; facilities, strategic goals and a vision for the future of your organization.
This process appears to be ultimately simple yet substantially difficult at the same time. One important element of your plan for success is to develop a coalition to help craft and implement your plan. The creative process is best completed in a collaborative effort with a core group of managers or an outside group of advisors.
You ultimately will want to involve a leadership team of key staff in the process since they are the ones that will help transform your company and you will be able to establish mutual accountability for the results. If you do not have a strong leadership team then you can establish a board of directors that can help you kick-start the process.
Your board can consist of your professional contacts, industry associates, family members or professional advisors. Your board should meet annually or more frequently to visit your plan and review progress.
A fundamental building block in the growth process is the understanding of industry benchmarks. When you have established the benchmarks for key performance, then you can start to build your organization.
Gerber states you should build an organization chart for the future. Create every position that you will have as your company grows and then write job descriptions for each position. You may find that you have the same name on several positions as your company grows.
As your revenues increase you will start to hire for specific positions. If you understand the industry metrics, you will be hiring based on need and will know if your staff is meeting performance expectations. You should also understand the financial benchmarks in the industry.
While every market is not the same, they are remarkably similar in produced margins, production volume and capacity, overhead, marketing expenses and other key measurements. These benchmarks will serve as the financial foundation of your company. If you do this, you will create a profitable company from the beginning; a fundamental element of a successful plan.
Many people feel that they need to lose money in order to build a company that will one day be profitable. That is not true, and your plan should include profits from Day One, a balance that you can achieve with a solid sales and marketing plan.
As mentioned, you need to take the other elements of a successful business plan and create your success on paper prior to developing your business. You can have several strategic planning meetings away from your office to establish your plan.
Each business plan should create a road map to success and have short-term victories along the way. It is important to get away from the office for at least one solid day as you work on your business and strategic plan. The notes, goals and action plan should be put in writing and follow-up meetings should be established.
Effective organizations are characterized by solid communications. If you create a business plan and have a direction for your company, you need to make sure that you communicate this plan to your staff. They need to know where the company is heading and what their role is in helping you get to the destination.
This communication is important and needs to be consistent and frequent. Have the discipline to meet with your entire staff every month, and your leadership team at least as often, to discuss the plan, progress and create action plans for departments and individuals.
This is a difficult process and requires discipline and focus. There will be fun moments as well as setbacks. In order to have success in the planning and implementation process you need to maintain focus on the plan, keep an eye on the future, learn from your mistakes and celebrate victories.
If you do not set up short-term victories, measure progress and celebrate accomplishment, you run the risk of losing focus and getting off track. However, with a solid plan and the key measurements to track progress then you can start to proactively control your opportunities and create a company that provides you with the resources to achieve your personal and professional goals.