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Business Plans Don’t Last Forever

Written by: Jim Horan

Article Overview: Business plans... you either love them or hate them. They are a beautiful thing when they create a unified focus and alignment across your company... And empower your team to go out and do what they must do to produce results. But fast-growing companies outgrow their business plans. Often, it is just a matter of time, because business plans don’t last forever! It’s highly likely you have outgrown your business plan when:

Business Plans Don’t Last Forever

Business plans... you either love them or hate them. They are a beautiful thing when they create a unified focus and alignment across your company... And empower your team to go out and do what they must do to produce results. But fast-growing companies outgrow their business plans. Often, it is just a matter of time, because business plans don’t last forever!

It’s highly likely you have outgrown your business plan when:

1. You see and are acting on major opportunities that were not visible last December when the plan was created... and you can’t or won’t say no to them.

2. The programs and projects that are now the prime focus of the company cannot not be found in the original plan.

3. Management team can no longer live within their discretionary budgets... in fact they are spending money on things that were never envisioned or approved in the plan.

4. Production or service delivery functions of your business can not keep up with the sales demand, even with extensive use of overtime.

5. You have successfully hired all of the people in the hiring plan... and the requests for new hires keep on coming.

6. Your original cash plan had you comfortably living within your credit line limit for most of the year... you have now been maxed out for the last three months and next month’s cash demands clearly can not be met.

7. It’s clear the right hand no longer knows what the left hand at your company is doing. It’s obvious to you that your team is not on the same page.

8. A major competitor has either just entered your market place... or one just went bankrupt... and you must take significant action now!

9. The gain or loss of one or more significant clients has the impact of 8.0 on your Richter scale.

10. You aren’t sleeping, you’ve gained ten pounds, you haven’t played golf in months, and your wife and kids don’t recognize you... and you are wondering why you ever started this business.

If more that a few of the above scenarios ring true for you, here are some simple, effective planning strategies that can help you insure that your plan stays current longer:

1. The Plans... keep them simple. Short, concise to the point. Cut all of the fluff and filler.

Have each profit center, cost center, all major projects and programs have written plans. If it is important enough to invest in a manager or team, they need to a have a plan, it needs to be in writing, one page is probably enough…and everyone needs to be able to see everyone one else’s plans.

When plans are concise... they are easy to change! A good friend recently advised, “Be wary of excessive verbiage”. Insist that your management team write clear statements of what is to be accomplished, by when, for what purpose and be sure to have explicit, measurable goals.

2. Budgets... critical tool for fast-growing companies. Haven’t mastered the process yet... get outside help. Management accountants, consulting controllers and CFOs and some CPAs can train you and your team how to make the budget process your friend.

3. Timely, Accurate Monthly Financial Statements... without them, your company is like a Ferrari going down a dark country road at 120 miles per hour without headlights. There is a serious accident about to happen. If you can’t read your financial statements (and many executives can’t), get help!

4. Monthly Business Review... recent surveys we have conducted indicate less than 20% of businesses with management teams of five or more managers have a regularly scheduled monthly business review. This may be the most important meeting in your company; this is where you walk through the financial statements and review all critical projects and programs.

5. Forecasting... this can be a very simple, but highly effective process for eliminating surprises. Especially the “Ooops... we are out of cash surprise”! Most successful companies take their budget spreadsheets and turn them into a simple forecasting process by dropping in the current month actual results and then selectively fine-tuning the future month’s sales, expense forecasts, new hires, capital expenditures, updates to projects and programs. Keep it simple... don’t create another bureaucratic nightmare!

Final thought: In the end it is not the quality of the plans that counts... it’s execution, results and customer satisfaction.

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Article Tags: alignment, beautiful thing, budgets, business plan, cash demands, competitor, delivery functions, left hand, management team, matter of time, new hires, overtime, prime focus, richter scale, scenarios, service delivery, spending money, three months, unified focus



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