As the days shorten and the leaves fall we all know what season is just around the corner. That’s right – It’s planning season! Like winter, some people dread the planning season. Unlike winter, for some businesses it’s a season they can, and choose to skip. While it might be nice to jump over winter and go directly to spring and summer, the planning season is one that’s really necessary in order to have a great spring (growth) and a bountiful summer and fall (profitability and value creation). Planning shouldn’t be a chore that’s stuck into the calendar of things to do. It should be an exciting and reflective process and it can be that when you start early and follow a few simple steps.
Slow down and begin with the end in mind
One of the biggest reasons I see owners put off planning is because they don’t know where they’re going. An annual plan is little more than an unrewarding guess when there’s not a larger goal or purpose to give context and meaning to the plan. The first step of planning shouldn’t be a budget. It should be reflective, thoughtful consideration by the owners of where they want to see the business go and the role they want it to play in their lives. Spouses should discuss the role they want the business to play in their family five to ten years in the future. When do they anticipate retiring? Do they anticipate or want children to succeed them? How will life be different when the kids leave home and what do owners want their career to look like then? No doubt you’ll change your mind but some long-term goals require a long runway and having a plan now for the future may influence next year’s objectives.
Back to the future
With some idea for the role the business is going to play in your life, you can begin to back into a path to the future. If you have a picture of your work/life balance, income, or business valuation five years in the future, you can work backwards, by year, to plan a migration from today to the destination. If your goal is too far out for you to see the path to get there, rein it in. It might be difficult to plan to a destination that’s twenty years out, but you might be able to see ten years out or even five. Once you have the picture, document as much of it as possible. How many locations will you have? How many employees? What services are you offering and to whom? How do you see your role in the company at that time?
With all this in mind you can begin to see interim points along the journey. If you’re guiding on a ten year horizon, where will you be in five, and then three? The further out you look the fuzzier the plan becomes. But that distant plan doesn’t need to be specific nor should it be. Some things will change before your get there. However, the closer the goal gets to the present the more specific and clear it becomes for what you need to do.
Now prepare the budget
With an idea of where you’re going with the business and a path for getting there, it’s time to prepare the next leg of the journey. It’s the time to prepare a financial budget, a staffing plan and operational steps for the next twelve months. By now you’ll have an idea of how much is enough, where you’re short and what needs to get done. Work the plan and review it quarterly. How are you progressing? What’s working and what’s not? Make adjustments. Don’t wait until the end of the year to shift direction if necessary.
With each quarter behind you, add three more to your perpetual rolling 12-month plan. Planning beyond twelve months can be difficult. For some industries, six months out is a stretch. Don’t wait, like most of us were taught, until the end of a year before starting the next year’s plan. Make it a process and not a project. If you follow these simple steps, next year’s planning process will be shorter, easier and much more rewarding. The plan becomes a living and evolving document, one you’ll actually use and value.
Who as a child on a family trip didn’t ask – “Are we there yet”? If you make planning a simple and practical part of running your business, you’ll be able to answer that question. Planning provides both the windshield to your future and the mile posts along the highway. As you accomplish tasks and the months roll by, you’ll have the satisfaction of knowing that you’re that much closer to your life goal. Slow down and enjoy the journey.
If you’d like to talk about how to simplify your planning process, call or reach me through the “contact us” tab on this page.