Too many business plans focus on goals for the coming year, without explaining how those goals were selected, and how they will be reached.
The purpose of a business plan – in my mind – is to set out a path of action, and help make strategic decisions through the year. It is not a dream on paper. There is huge value in being able to stick to your plan. A track record of achievements or progress towards your goals both increases your own reliance on the plan, and acts as a measure of success. When you talk about your business, and can mention the goals you’ve met, it increases confidence. When you want to sell, that track record illustrates a viable, evolving business.
The first step in setting your goals is to thoroughly review your financials. I always choose to do this with someone wiser than me in this realm – my accountant and bookkeeper. (Quick aside – “bookkeeper” has three consecutive double letters!). They look at the health of the company in very different ways from me sometimes. And their perspective is almost always how to make my business more sustainable – not just to grow revenue. Moderating cashflow. Acting on past due receivables. Detecting seasonal trends and the impact on cost & resources. Measuring profitability of subcontracted work.
The next step I take is a customer-centric one. What needs to change in order to maximize customer satisfaction and retention? What makes my company a better choice for attracting new customers? Which are the current processes that touch on my customers, that can leave them with a better opinion?
Then what needs to change from a business development perspective? The standard response is to find ways to increase the sales funnel volume. My preferred method is to increase close rate. Converting prospects to opportunities, and closing those sales can be more effective use of resources for owner-managed companies with a small sales force. Determining the changes needed in either case usually involves process and infrastructure, and becomes an actionable goal for the year.
Each of these should build towards measurable goal setting, and in the process answer how you will achieve that goal. For example, modifying monthly invoices to include detailed report on progress and deliverables in the month may help retain one more customer. Which has a revenue impact you can predict accurately. Mapping the planned initiatives over the year so that you can focus suitably on each rather than attempt them all at once, lets you determine when your changes might impact results.
And that is how you establish a dream-free business plan, with measurable results, and clearly defined actions to take throughout the year.
I’m going to do one more blog on business plans next, to discuss some of the more advanced options like accelerated growth, managing economic downturns and attracting investment.