All right, fellow members of the Executive Suite, we are staring down the barrel at 2011 and you know you need a solid business plan.
No excuses now. Don't even start telling me your company is too small, too large, or too in-between to have a business plan. I don't even want to hear it. All you’re telling me is that you don't have one and so you really don’t know where you are going. I’ll bet you have a navigator in your car as you cruise the metropolis. Well, it might be helpful to have a compass for the business as well, since it pays for that navigator.
High school, college, and pro football teams have game plans. Some of them spend as much as 20 hours a week assembling one for a single game. Surely you have 20 hours to set the direction for your company over the coming one to three years, and provide a structure within which all key decisions are made.
I have stated before that I believe the main reason so many companies lack a plan is not because their leadership does not realize its importance, but because many owner/managers do not know what a business plan really is, let alone be able to develop one. They are entrepreneurs not professors at the business college. As such, putting together some formal plan ranks right up there with cleaning out the garage.
Fret not. You don’t have to go online and download some elaborate design so your plan looks like a government report. There is a cottage industry of hustlers out there who would love to sell you more than you need to set your direction.
Forget that. Below I am going to lay out the bones of business plan. Beware: you are not going to get a lot of French pastry here. We want a business plan that is simple and drives the business, not something that sits on the shelf until next December 31.
Get Them Together
Assemble your upper management team (whether that includes just your spouse, or twelve vice presidents, get them together and go to work). If you are really lean in management then include some of your key and trusted employees. You not only want a variety of input and insights, you want your key people to "buy in" to your finished plan, so it moves from paper to committed action.
Regardless of size, you can usually divide a company up into four sectors:
- CLIENT DEVELOPMENT, and
- TECHNICAL DEVELOPMENT.
What we are going to is assess the current state of each of these and set goals for where we want to be in say, one year.
There’s an old line among Las Vegas sports handicappers. The key to success is not how big your bankroll is; it is how you manage that cash as you place the wagers. Laying a thousand dollars on the Giants when you have only fifteen hundred in your pocket is a ticket out of town.
That applies to our industry in spades. We need to know where we are right now—cash register honest—in terms of financial stability, from cash flow, to receivables to debt. Finance is the brain and spinal cord of a business, and cash is the blood. We need a thorough financial "physical."
Once done, and regardless of financial status, we want to determine where reasonably do we want to be in a year. These goals may involve volume, profit, debt retirement or all three. Spell out your financial goals.
Administration is key because it is basic to how the company is governed and how it is managed financially. Is the company administratively understaffed? Too large? Too inefficient, efficient, well-designed, or poorly structured? Take a long, hard look using only one criterion: what is in the company's best interests. Don't let personalities or emotions get in the way here. Your banker doesn't.
Now you want to hear everyone out on this. Tell them to be candid but respectful—that their jobs are not on the line due to honesty. As the book of Proverbs says, you need many advisers. Well, you have them right there and they see what you don’t see.