To plan or not to plan, that is the question.

A five-year plan, are you kidding me? Sorry but I have participated in too many long-term horizons in big corporations that are a meaningless waste of time and energy.

Here is the story. CEO (we will call him Don) announces to all departments that this years budgeting process will include a five-year view of the business. Conceptually that sounds wonderful. Imagine having the ability to have a crystal ball that shows the way to the next five years. Not possible. Need proof, go back five years from today and look at where you are today. Did you predict the future accurately? Not a chance. I recall being in 2006 and having a firm belief that there was no end in sight to the boom the world was experiencing. Then came 2009, Bust! Now I am not suggesting that I was arrogant enough not to realize that one day the bubble would burst, but to suggest that a five-year plan would have predicted it, not a chance. And my humble opinion of anyone who tells you they knew I simply say, “prove it”. Ok back to Don, when this CEO announced to the company we were going to work on a five year plan that was all encompassing, budgets, forecasts, headcount allocations, capital requirements etc. The organization went into a hyperactive mode for weeks, even months to nail down this plan with all the details Don required (Don was very obsessive with ego traits). Countless hours, people time and energy was focused on this initiative. All of the company’s energy from sales activity to customer service went sideways during this process. Imagine what that did to our results. The final product, Don got his plan a five-year plan that we never looked at again. Those that did look at it realized it wasn’t remotely achieved or accurate and most importantly Don, inside the next two years, was no longer the CEO. By the way that CEO change was identified in the plan. Go figure. And the 5-year plan sat proudly on everyone’s bookshelf with pages that were stuck together from the printers ink.

Ok so I guess I am against planning? No way. As a matter of fact if you have followed me and/or my blogs you would know I am very much a detailed guy who says write it down and have a plan and get it down. I am just a very pragmatic realist when it comes to planning. A business plan that changes regularly based on the business is essential. A three strategic plan is critical (notice the key phrase strategic). An annual budget and yearly plan is a showstopper. In other words if you don’t have one, you are not going anywhere. So in the spirit of assisting, here are some simple yet clear ways to think about planning and the components of a plan:

Business Plan

Start by answering the four key questions. “What do I sell or provide”? (The product) “How do I tell my audience about what I sell or provide”? (Promotion/advertising) “Who cares about what I sell or provide”? (The market) and finally, “Why do I want to do this”? (Financials/Budget). The Business Plan doesn’t have to be some scary large package that fills up a binder only to sit on a shelf. As a matter of fact I suggest you keep it simple. It could be a few pages initially and as you and your business grow it grows with you. One package to look at (and no I am not an investor or shareholder) is It is a pretty cool tool that walks you through the process.

Strategic Plan

Got to have one. And surprise, it doesn’t have to be daunting or some major document. Simply start with where you want to be in three years. Write down a sentence or two about what the company looks like in the future. Then work yourself backward from there. Have a three year view or vision, Establish your values, describe your obstacles that are in your way to the vision, identify the key indicators or key performance indicators (KPIs) that you would see that would clearly tell you are on the way to the vision, complete a SWOT analysis on the company that in essence identifies current state and finally clearly write down the tactics or “to do’s” you need to accomplish to get you to your vision or that future state. This could be down on one page. Google the 60minute strategic plan to see a really cool tool to help.

Annual Budget

You have to have one! And you don’t have to be a CA to do one. Keep this simple to, total revenue and total expenses. Yep that is it. Subtract the two and you get profit/loss. Ok yes I am simplifying but the message is big budget planning exercises are scary and many small and medium sized business owners avoid big and scary. You need a budget. So keep it simple and let it grow with you.

Yes you need a plan. I am big believer in the planning process. We screw it up when we think the plan is the end result. It is 10% or the idea. The 90% is in executing the plan. Recognize that all your most meaningful efforts go into acting on the plan. Keep the plan simple, the to do’s clearly articulated with an effective message that you refer to often. Adjust, as you need to. Life and business happens. You will be well on your way to success as you have defined success in you plan by keeping it simple and acting on simplicity!

“A goal without a plan is just a wish.”

Antoine de Saint-Exupéry

© 2013-2014 R. Todd Millar. All rights reserved.

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