The Business Plan: Yesterday’s News
When you want to learn to ski, you take lessons. When you want to take a trip, you consult a map. When you want to start a business, you write a business plan. But what do you do when you’re already in business and you want to grow? How does the business plan guide this process? The answer… It doesn’t.
Traditional business planning has been around for years. Begin with a brief description of the business, define the product or service, identify the market need, make up a forecast and off you go.
The problem with this approach, however, is that it doesn’t take into account today’s rate of change. It also fails to consider the huge and very real impact that global competition plays. Using the traditional business planning approach, you are working with a 3 to 5 year perspective. Today, you need to be working with a 3 to 6 month perspective because one day, you can be on top of the world and the next, someone from China enters the market with a better solution and you’re out of business.
Strategic Planning: Today’s Lifeline
Today’s business plan must be dynamic. Managing growth is about having a solid grasp of the parts with a fluid strategy for optimally utilizing them – individually and collectively – to achieve the total objective. The parts still include all of elements of the traditional business plan. What’s changed is how and when you review these elements to get to where you want to go. Instead of long-term planning, it’s about continual strategic mapping.
Strategic mapping begins with the end in mind. What is the goal? For a goal to be relevant in business, it must be specific, objective and quantifiable. Strategic goals include:
- Reaching $$$ in sales by a certain date
- Expanding market share by % by a certain date
Planning Forward by Working Backward
With the end in mind, the strategic plan defines what needs to be done, by when and by whom in order to achieve the desired goal. This includes defining the financial, human, technology and related resources required to get you from where you are today, to where you want to be at a specific date in the future. With quantifiable goals, you are able to measure, track and refine your strategy along the way. Most importantly, you are also able to know when you get there.
Seeing Straight: The Hardest Part
While strategic planning is simple in concept, it can be quite elusive in application – particularly for smaller firms. Strategic-level planning and decision-making happens at the top. In smaller firms, this typically includes the owner and possibly one other senior manager or partner. Although these individuals are likely to possess the capacity, talent and desire to succeed, they are also likely to be the ones mired in the day-to-day operations. The challenge, therefore, becomes being able to clearly see the forest through the trees. It’s hard to gain strategic level perspective when you’re consumed by daily operational demands.
Medium-sized firms typically possess more capacity to delegate day-to-day responsibilities to others. At the same time, more is not necessarily better. More invites more opportunities for details to fall through the cracks. With access to critical internal and external business information broken up between C-level managers, some information may not reach some of the right people some of the time.
Corrective Eye-Wear for CEOs
One of the best ways to improve a companies’ ability to be productively strategic, is to have a set of eyes working on your behalf both outside and inside the business. This is someone who is uniquely trained to align what’s going on in the marketplace with what’s going on inside your business in a way that translates across all core business functions.
When a new competitor enters the marketplace, for example, this individual understands the impact and how to adjust internal capacity to proactively advance beyond external challenges. If this requires additional funding, this individual also understands how to leverage multiple capital solutions to achieve desired outcome. If this requires equipment, human resource or technology changes, this person also knows how to advise a proactive strategy in these respective areas as well.
This competent set of additional eyes is commonly referred to as a part-time Chief Financial Officer (CFO). Accessible to small and medium-sized firms on a part-time basis, the company pays for just what it needs when it needs it. As CFO-level expertise, the company is also assured of C-level talent applicable across all operational functions. For today’s demanding and dynamic business environment, a part-time CFO offers the busy CEO just the right touch when it comes to effective strategic planning, implementation and outcomes.