I have talked about planning here before, but I continue to run into small business owners who seemingly just don’t get it. They don’t plan because they don’t see the value in it. So I continue to hammer away at it in hopes that the lights will come on and they will finally “get it.”
Think of a driving vacation. You can get in the car and start driving, hoping you end up someplace you’ll enjoy. Or, you can plan your trip, deciding where you want to be at the end of each day, what you want to see and do, and what your ultimate destination will be. If your goal is to have a fun vacation, which method is more likely get that result? Jump in the car and hope for the best, or plan it out?
Does a plan guarantee you’ll hit your goal? Of course not. But it does guarantee you’ll come a lot closer to your goal than you will if you just try to wing it.
We used to talk about 3-year and 5-year plans, but business conditions are changing so fast that it’s questionable how useful those longer term plans are. However, you should have some over-arching goal (i.e., we’re a $5 million company and we want to become a $20 million company). Then each annual plan should move you down that growth path at a pace that gets you there within an acceptable time frame.
Many companies refer to their annual plan as a budget. I suggest you lose that term in your corporate culture and substitute “profit plan.” “Budget” sounds confining, restrictive, and it’s there to restrain our spending. “Profit plan” is more positive, and it’s more descriptive of what we’re doing. It’s saying, “Here is the profit we expect to make this year, and here is how we intend to do it.”
If you’re not already doing it, start building annual profit plans that move you toward your long-term goal(s). If you embrace each year’s plan and really work it as a management tool, your company will move more sure-footedly and more profitably down the road you have chosen for it. Guaranteed.
