Are you smoking Hope-ium?

That was a question one of my bosses asked me early on in my career. After my ego took a back seat, I was able to utter the words “I’m sorry, what do you mean by that.”
“I looked over your plan for next year, at a high level, it looks great.  While I love the numbers you have, you didn’t explain how you were going to achieve them.”  Back then I wasn’t very strategic, I was like the rest of the business world- opportunistic and reactionary.  To be honest, there was, in fact, a lot of hope in my plan. I’ve since exchanged my hopeium pipe for conversations and excel.

Over the next two months, he had me build out the numbers by product/service/ customer. then instructed me to clearly define the resources I needed, and accompany everything with monthly goals and a month by month plan of action to reach them. At times, I have to admit, I wanted to stick a pencil in my eye.  It was a lot of work and I worked a lot of overtime. Afterall, we have to keep the wheels on the bus while we’re planning to fly!

Ah! The Pain!

The most painful task in this whole process was “backing into the number.”  What is that?! Basically, I had to document what my department looked like 5 years from now- in other words, create the “vision.”  I had to provide in detail what were we selling, who were we selling it too, how many people were on the team, what the processes looked like, what company resources I would need.  A bit of hopeium here, but not for long.

Once I had the vision, I was asked to put the “Vision” financials on paper. In Excel, with formulas, ugh!  Then the fun began,  I had to run the numbers backwards to the current year.  This was painful, but wow, it ended up being one of the skills I used in all my planning over the years.  This part of the process provides your long-term roadmap and shows you where your sales and expenses need to be next year, the following year, and the year after that.  Now don’t be scared. This is an extreme exercise and my boss was a Software Engineer with an MBA.

Stick to the basics at first.  

If you’re not used to business planning every year, start off small.  Use your current year numbers to forecast and add a percentage for how much you want to grow.   For some,  just the thought of writing a business plan is daunting. I recommend starting small with just the sales/expenses and growth.  You have to plan to grow. This means looking at what it takes to maintain what you have and where you can cut cost to fund growth.  Sometimes funding growth takes financing. Before heading to the bank find ways to cut cost.  A word of caution; in cost-cutting mode, make sure you aren’t sacrificing customer value. Don’t be penny wise and dollar foolish.

Talk to your customers and vendors.

Talk to your customers to make sure they will continue to purchase from you and find out if they see any disruption coming in their industries or changes in their lifestyles.  For instance, if you service Mrs. Smith’s lawn every week but she plans on moving out of state next year; it would be a good thing to know. If your largest client plans on closing that division or is talking about doing so; you would want to know. Right? These are some of the many pitfalls we can avoid through good planning.

Once you work through the sales numbers, look at the expense side. Talk to your vendors.  If your insurance premiums are jumping 10% next year, you should know. If one of the core products you use is being discontinued, you should definitely know.  Moreover, most businesses increase their prices every year, you’ll want to have this information to properly forecast your expenses.  Take forecasting with a grain of salt. It’s an educated guess, but it puts the parameters in that you can work off of. Anything can happen anytime in the year;. being a bit more proactive can help mitigate some of it.  Being proactive is being strategic.

Be strategic, not opportunistic

In a small business or department,  it’s pretty critical we operate strategically.  When we react to everything that’s in front of us every day, we tend to lose sight of the big picture, waste time on things that aren’t aligned with our goals and spend money on things we shouldn’t. When we know what we should be doing and clearly know where we’re going, it’s easier to stay focused and strategic.

I don’t know about you, but I’ve approved an expense on a whim that in 20/20 hindsight didn’t make sense or didn’t generate a return of any kind.  Time suck, and a waste of money- nothing more than that.  I have a rule now- if there is an expense I want to incur for growth, I wait 7 days before committing. This gives me time to step back, revisit my plan, and clearly understand how this will get me closer to my goals. 9 times out of 10; I don’t commit.  Hey, I’m human! I can get caught up in a sales pitch too once in awhile.

Having a thought out plan helps us stay centered and focused. Plans are living, breathing documents. They are outlines of what needs to be accomplished. You should be flexible and ready to pivot when something isn’t working and also ready to capitalize on things that are, even if it means foregoing something else.

Chunk it out. 

How many of us write these beautiful, well thought out plans and then never look at them? I’ve done it myself and have seen it happen.  The way to keep the goals and the plan top of mind is by using a month by month action plan.  Chunking out tasks that map into your revenue goals.  You can call it a “To Do” list, but we like to call it “The Action Plan.”  This is where the rubber meets the road in the day to day grind of operating. Keeping yourself or your team focused on reaching milestones every month will help you stick to your plan.  We use one at Workbea.  Click the link below to see the planner we use. It has proven to be a huge help keeping us focused and has helped us reach our goals this year.

Happy planning!