Planning: The Road Map to Success

Think of your plan as a map. It’s meant to be a guide. The planning process helps you focus on the “how” of what you want to accomplish. It organizes your thinking, identifies the steps and gives you tools to monitor how you’re doing.

We all know that those who create and write plans have a much better chance of success, yet so many people don’t follow through. Why not? We may think there’s little value in spending the time to create a plan. Also, it’s unfamiliar territory for many of us and we’re not sure what we need to do. We may carry the plan in our head, but that leaves it in an abstract state. We want to take it from the abstract into the next stage of realization; it needs to be in writing.

Let’s assume you have taken the steps that lead you to the point of needing a plan.

After you’ve decided what you’re going to do (goals) and how you’re going to do it (strategy), you’ll need to decide the specific actions that will fulfill your strategy and lead you to your goals.

How do you know what actions to take? Keeping in mind your goals and strategy, together with the business intelligence you’ve gathered and evaluated, brainstorm a number of possible actions. You might review these with key staff and advisors, then select those that seem to have the most potential to produce desired results. At this point it might be a good idea to discuss your plans with the people who would be involved in carrying out the actions. This could save you money, time and unproductive actions.

If your goal is to increase sales 20%, what actions do you think will produce that result? If your sales were $1 million in the previous period, your goal is now $1.2 million in sales. Your strategy might focus on opening a new market, increasing the conversion rate of prospects or improving the return from marketing efforts. The specific actions will be unique to your business and your market.

Let’s say your strategy will be to open a new market. Your actions might include setting up an additional outlet, or affiliating your product or service with a non-competing one, or even choosing to market offline locally as well as online. The details of these actions are what will become the plan you will follow and translate into your calendar and your budget.

Your selected actions will likely be accomplished over time and may require additional equipment, supplies, staff, contract services, etc. So far you’ve not given consideration to what these actions will cost or how they might correspond to your projected cash flow. Most businesses have a cycle that’s somewhat predictable. If you’re trying to add cash flow in times that are usually slow, you’ll want to time your actions when your cash flow is good with results of actions predicted to fall into the time when cash flow is less. Next time we’ll go into more detail about timing of actions and expenses, but you need to know that these are considerations in completing your plan.

Using your goal and strategy as the reference, take these four steps to create your plan.

1 – Determine the actions to be taken;

2 – Calculate what they will cost;

3 – Decide when they will occur;

4 – Make adjustments as needed to correspond to cash flow.

The last item is critical and we’ll talk more about that in the next post. For now, just understand that the costs of whatever actions you are planning must be covered by cash flow, whether from operations or from other sources. This is where many people get into trouble.

The decision about when to take your actions is dependent on how you plan to cover the costs of the actions. Keep in mind that even if your action can be expected to produce additional revenues these will likely not be realized for several months. Factors like implementation time, lead time for sales and receipt of payment from time of sale will influence timing of your actions.

Once you know your actions you can fairly accurately predict what it will cost to carry them out. They should be specific enough so you can calculate if they can be accomplished with existing staff or you have to hire additional or contract help. If equipment or supplies are needed to carry out your plan, you must consider the time to obtain them and costs to purchase or lease.

In addition to your plan there are general and administrative expenses such as salaries for management and support staff and basic operating expenses (rent, utilities, office expenses, etc) that will occur regardless of your plans. A look at historical operating expenses will give you a good idea of what these might be. Keep in mind that costs, in general, will likely increase. Consider, also, if the effects of your plan will impact on these costs. If you increase sales, will you need more billing help or customer support staff?

Determine who will carry out each action and approximately how long it will take. Document all this in an organized fashion that’s easy for you to follow. I find it’s easiest to list each goal first, then the strategies that apply to that goal and then the actions for each strategy together with responsibility and, ultimately, start and finish dates. Setting this out on a spreadsheet will prove helpful.

Yes, there’s a lot to think about, but understanding the relationship between the elements makes it much easier to organize.

Your assignment before next time is to determine the actions you believe will lead to your goals and consider what costs, if any, will be required to carry out your actions

In the next post we’ll explore how to determine timing, how to make financial projections and balance the budget.