Plan for Your Best Year Ever!
A study published in the Journal of Small Business Management reported that small businesses that “operate” from a strategic plan:
- Grow at a 63% faster rate
- Obtain 45% higher revenue per employee (more profitable)
Additional studies show that time spent in planning saves 4 – 10 times that amount of time during the execution. So spend a few days planning now … you’ll save weeks during the next year.
The basic question is … do you want to grow faster & be more profitable? Do you want to save time next year? If so, then dedicating some time to planning provides a significant ROI. Of course, the key word above is “operate” … the return comes from putting some thought into a plan, and then executing the plan.
So who should do a plan? Anyone who wants better results next year than they achieved this year. If you’re happy with the results you achieved this year, and are confident that those results are repeatable, then you may wonder if it’s worth the effort. But if you’d like better results, or if you’d like to accomplish the same results with less effort & more personal time, then an effective plan can help you achieve this.
Annual Plan vs. Strategic Plan
A strategic plan takes a longer term perspective … where do you want your business to get to in 3-5 years? Examples of typical goals for a strategic plan include:
à I want to sell my business for $X in 5 years, or 10 years.
à I want to double or triple my revenue in 3 years.
à I want to triple my revenue and double my profit in 2 years.
Strategic plans look in greater detail at target customers and why they should buy from you rather than your competition. Strategic plans are based on the three C’s: Customers, Competitors, and Contribution (your differentiating value to your target customers). When a longer term perspective is taken, examining new markets, new products & services, and significant organizational growth may be factors.
Besides the 3 C’s, strategic plans always include a SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats), both from an internal and external perspective. In other words, not only must you examine the internal strengths of your organization, but also what your external customers perceive your strengths to be.
Annual plans obviously focus on a one year horizon. What are the key goals you want to accomplish in 2007? Annual plans are typically built around one year financial objectives, and most likely will not get into looking at new markets, or additional products & services, etc. Your annual plan may include adding a new employee, but will typically not go much beyond that.
Rather than a detailed SWOT analysis, annual plans typically start by examining what were the actions taken this year, and the results generated. What actions generated the appropriate ROI and should be continued or expanded, what activities should be eliminated; what things were done well, and what things need to be improved.
ACTION PLANS
One of the biggest failings of most strategic plans and many annual plans is that they are not practical; they fail to include specific actions with a timetable. However, without an action plan that includes action items, responsibilities and a schedule, it’s impossible to “operate” from the plan ... which is the key to achieving the accelerated growth & profitability. Of course, there is a downside to including this …responsible names & schedules create accountability … which many of us would prefer to avoid!!
How Pretty is Pretty enough?
For most busy people, taking the time to put everything in writing can be very time-consuming … especially for those who are not gifted writers. But in reality, making the plan look formal & professional is only important in two situations: (1) if the plan will be used to obtain funding; or (2) if the organization is larger, and the written plan is used to communicate to the entire organization. For most other cases, being brief is the key. Summarize ideas & actions in tables and charts … summarize the plan in a single page format that you can keep in the forefront of your daily activities, and distribute to key employees. The ideal plan is a living document meant to guide your weekly, monthly and quarterly activities; it is not meant to be put on a shelf and reviewed once a year.
So to summarize:
|
Element |
Strategic Plan |
Annual Plan |
|
Long term financial & organizational goals |
√ |
|
|
Next year’s financial goals |
√ |
√ |
|
Short term staff additions |
√ |
√ |
|
Market Size Analysis (as relevant) |
√ |
|
|
SWOT Analysis |
√ |
|
|
3 C’s |
√ |
|
|
Strategy development & clarification |
√ |
|
|
Vision, Purpose, Mission & Values |
√ |
|
|
Critical Success Factors |
√ |
√ |
|
Marketing / Sales Action Plan Long term Review of current year First year specifics (by quarter) |
√ √ √ |
√ √ |
|
Operational Action Plan Long term Review of current year First year specifics (by quarter) |
√ √ √ |
√ √ |
|
Budget Long term (estimates) Review of current year First year specifics (by quarter) |
√ √ √ |
√ √ |
|
Time Required (depends on size of organization) |
20-40+ hrs. |
4-8 hrs. |
|
Use outside consultant |
recommended |
maybe |
IS OUTSIDE HELP NECESSARY?
A sounding board is always a valuable asset. If there are a few key people involved in the business, with the goal to do an annual plan ... then just use the table above, and do it! If the key people cannot come to consensus, then bringing in an outside advisor might be money well spent. Just think of all the arguments down the road that will be avoided! A sole proprietor should find a sounding board that can add value … your dinking buddy may not be the best candidate! If the goal is to complete a strategic plan, and no one involved in the business has ever done one before, then an outside advisor is highly recommended. An experienced business consultant, who has advised other businesses, will be well worth the cost. He / she will not only streamline the process, but will also be able to minimize flawed strategies, as well as point out options that have proven effective in other businesses, without betraying confidentiality. However, just because you don’t think you can afford outside help is no reason to not at least do an annual plan. To steal from the Nike slogan … “Just Do It!”
Don Sando is the co-founder of Strategic Results Group, a company that helps businesses develop and execute their business strategies and plans. Don was a strategic planner for Hewlett Packard and other high-tech companies, involved in new product & marketing strategies including acquisitions. Don can be contacted at www.StrategicResultsGroup.com.