About this time every year . . . somewhere around the beginning of the 4th quarter . . . is a good time to begin planning for next year. Unfortunately, planning is not an activity that most small businesses engage in . . . at least, not in any meaningful way. The owner may have in mind some sales and profit targets, but no real plan for how to achieve them. The prevailing attitude seems to be, “We’ll just work real hard and hope we get there.” But as they say, hope is a poor strategy. Or, as author and explorer Jeff Rich tells us, “A goal without a plan is just a wish.” Yet planning does have its detractors. Mike Tyson has famously said, “Everybody’s got a plan . . . until they get punched in the mouth.” And Woody Allen weighs in with, “If you want to make God laugh, tell him about your plans.” So if you’re in the same camp as Mike and Woody, and believe that planning is a waste of time, you should stop reading here. But if you’re willing to be convinced that putting together an annual plan just might have some merit, please continue reading below.
“The nicest thing about not planning is that failure always comes as a complete surprise and is not preceded by a period of worry and desperation.” ~ Richard Palmer
If you truly have no expectations or goals for next year and are content to take whatever results fate chooses to give you, then fine, don’t plan. Under those circumstances, what would be the point? But if you do have aspirations and goals for next year (and of course, you do), then to claim that you can achieve those without at least a rudimentary plan is indefensible.
To be honest, it’s amazing that there’s any resistance at all to planning in a small business. After all, we do plan for all sorts of other stuff. We plan for vacations. We plan for weddings (ugh, down to the last napkin). We use financial planners to help us plan our future. Yet, even though a business is usually the owner’s largest asset, many still resist the idea of an annual plan. Yeah, it takes time and it takes effort, but done correctly, the result is a roadmap for where you’re going and how you’re going to get there.
The first step is to identify the major strategic goals you want to achieve next year. Set SMART goals . . . goals that are Specific, Measurable, Achievable, Results-oriented, and Time-based. Vague goals that don’t include measurements or deadlines are doomed from the start. Consider limiting yourself to three. If you undertake more than three, you risk stretching yourself too thin. It’s better to achieve the results you want with three goals than to achieve only so-so results with five. And don’t set these goals all by yourself, locked away in your office. Involve the managers on whom you will depend to implement these goals. They probably have their own ideas about what the company should be undertaking next year, and you should hear those ideas. Besides, they will be more supportive of goals they helped to set than they would be of goals in which they had no input.
Make sure your goals are focused on the outcomes or results that you expect. For instance, “Buy and install a new computer system” is not a goal. “Developing more detailed, timely business intelligence,” is a goal . . . it may be necessary to buy a new computer system to achieve this goal, but buying a new computer system is only the means to an end, not a goal.
Commit the goals to writing, taking care to word them clearly and concisely. Confirm everyone has the same understanding of what we’re trying to achieve with each goal.
Next we have to do a little number crunching to make sure there’s an acceptable ROI for each goal. That is, we need to identify a benefit to the company in terms of improved productivity, reduced cost, or higher profit. If we can’t prove such a benefit (or if the benefit is significantly less than we hoped it would be), we either re-work the goal in a way that will achieve a better result, or we toss it out and substitute a different goal.
Now comes the hard part.
Each manager who has helped craft your goals must now present them to his or her direct reports and solicit their reactions/feedback. Just as you needed your managers participation in the goal-setting process to secure their support, now you need the support of everyone else. You can’t fake this. You can’t go through the motions of being “inclusive” in this goal-setting process if you have no intention of listening to what anyone may have to say. So you need to make an honest effort to get people to voice their questions, concerns, opinions, and suggestions. We’re not running a democracy here, so you’re not obligated to act on what they say, but you are obligated to listen, to hear, and appreciate what they are telling you. Besides, these are the folks who are immersed in the nitty-gritty details of your business every day, so it’s just possible they will spot something in your proposed goals that you and your managers overlooked.
Finally, we need to put metrics on each goal so they can be tracked and measured (remember the M in SMART goals?). No question, some goals are easier to measure than others, but if a particular goal defies measurement of any kind, then it doesn’t really qualify as a goal. After all, if we can’t measure it, we won’t know if or when we’ve achieved it.
If you think all this planning stuff is a waste of time and would prefer to “just work real hard and hope for the best,” that’s your choice. However, if building an annual plan makes sense to you but you haven’t done one before and don’t quite know where to start, email or call me. I’ll be happy to help.