Simplify Your Planning

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.

Posted in Corporate Finance, Human Capital, Leadership, Operations, Strategy | Tagged , , , , , , , , , , , | Comments Off on Simplify Your Planning

Test Your Assumptions When Planning

It’s fall and the time of year when most business leaders head to the conference room for their annual planning process. For some it’ll involve new goals and strategies. For others it’ll just be a budget. However you approach it, the process of planning involves a lot of assumptions, many of which are taken for granted. We often give little thought to the assumptions that influence, sometimes in a big way, the direction and distance the business will go in the forthcoming year.

These assumptions are our truth and yet, they’re likely not the truth at all, they’re just assumptions that we’ve elevated to the level of hard facts and then taken for granted. We get locked onto our assumptions and to some extent that’s OK. Assumptions are how we make sense of what we hear and see around us. They provide a framework for our work and allow us to operate in a complex world with new information coming at us from every direction. However, nothing in our world remains constant and if we don’t closely examine the assumptions by which the company runs, we’ll soon find ourselves left behind.

The foundational building blocks of any business plan are the assumptions. They are the underpinning of every strategy, idea and budget. The Rand Corporation defines an assumption as “an assertion about some characteristic of the future that underlies the current operations or plans of an organization.” Certainly market research, competitive analysis, industry research and more are important. But those things are really just input into the conclusions and assumptions we draw from it. Like the report that’s been distributed throughout the office forever that no one seems to need, assumptions have a way of surviving long after their useful life is gone. It’s for these reasons that every planning process should involve some degree of assumption validation. Testing assumptions isn’t a difficult process, but it is a deliberate activity you should include in your planning calendar. There are several simple but important steps to follow.

The first step involves creating the environment where team members feel comfortable and are expected to challenge key assumptions in the business and the plan. Let them know that you’re no longer sure that everything you believe as factual about the company or marketplace is still accurate. This is easier said than done because by definition our assumptions are our truth and when a question is raised about one of them, it’s normal to defer to the subject matter expert in the room, the keeper of the assumption, who will reassure the team that it’s still the case and you can move on to the next question.

Ask yourself – What are the key assumptions that drive the plan, that if inaccurate, would take planning in another direction? These are the assumptions that are central to how the business interacts in the marketplace.

  • What do you really know about customer attitude toward your company?
  • Is there a continuing need for a product or service to remain in the portfolio (we all have some that should go but we hang on to them thinking we’ll suffer harm if we eliminate them)?
  • What features or services do customers value most?
  • Why do your customers buy from you?
  • Is there a significant customer base?

Once you’ve considered the list of key assumptions, you have to get comfortable with the next question – How do we know? I have a friend who likes to say that in any conversation with an employee or customer, you’re always just two questions away from the truth. The truth is we stop asking too soon. Reflect on the history of each assumption – Where, when and who did it come from. Does it still serve your best interests? The answer to these questions can take some time to answer so it’s good to begin this process early or, better yet, make it a part of communication throughout the year. I’ve seen too many plans forge ahead with old assumptions because there just wasn’t enough time to dig into them further. Even when there was some doubt about their accuracy, pushing it off for another year conveniently took the team off the hook of dealing with the work that might have had to occur if the assumption was proven inaccurate.

Be honest with yourself. If you’re not sure the assumption is accurate but you don’t have the time or desire to dig deeper to find out, say so. At least you’ve got something to follow up on, maybe as a part of the annual plan. Guessing is acceptable so long as you’re willing to bear the risk and potential consequences of the decision.

In summary, don’t get carried away calling into question every assumption. Pick a few big ones that are long in the tooth and take the time to validate their accuracy. In another time you can look at a few others. The worst case would be, you’ve put in time to validate that you’re in touch with the key drivers of your business. That in itself is a pretty good outcome.

Posted in Business Technology, Corporate Finance, Human Capital, Leadership, Operations, Sales & Marketing, Strategy | Tagged , , , , , , , , , , , , , , , | Comments Off on Test Your Assumptions When Planning

Business Planning and the Art of Motorcycle Touring

One of my favorite hobbies is long-distance motorcycle touring. I’ve been doing it for thirty-five years and during that time much of it has been spent in long hours of thinking on open roads. One conclusion I’ve come to is that there’s a lot in common between planning a successful cycle trip and operating a successful business.  While each trip and business is different, there are a few important lessons I need to observe if it’s going to be a good trip.

Set realistic goals. The keyword here is “goals”, not “realistic”. While realistic goals are important, it’s the absence of any destination or goal that concerns me. I’ve never left home without some idea about what part of the country I was heading to, maybe even a specific location. I’ve seen people in business put on a lot of miles and never leave their cul-de-sac because they’ve never determined a destination other than to stay in business. The scenery on that trip is not very attractive and tomorrow usually looks like today.

Have a general route in mind. I always leave with a route plugged into my GPS, but that can be short lived. I’ve often chosen my day’s route based on the morning’s weather report. Where I can, I re-map to head in the general direction of where the sun will be shining. I also leave the door open to road detours and other direction changes that look interesting. You may have had a plan for your business but the market sunshine is in another direction. Consider how a route change could benefit your journey without compromising the destination. In business today, an annual plan that’s six months old is already in need of some revisions. Don’t throw out the destination, just re-route to get there. A strategic plan should be a work in progress that evolves in accordance with long-term goals.

Set some benchmarks to measure progress. I seldom make hotel reservations preferring instead to find my night’s stay wherever I may be when I feel the need to get off the road. While my trip may not be scheduled I still need to pace myself to ensure I get to my destination and back in the allowed time. In business and travel, strategies and plans can’t be successfully achieved without feedback that comes from reporting systems and milestones that communicate progress. A daily review helps to measure and clarify where we need to be to accomplish the mission. My loosely held milestones enable me to hold myself accountable for the day’s performance.

Travel light but take enough of the right supplies. The size of a motorcycle places some hard constraints on what I can pack. Through experience I’ve learned how to travel well within the limited space available to me. It’s much less than I would take if I were in the car but I always seem to have enough. The lesson I’ve learned from this is not how to pack more on the motorcycle, but how to pack less in the car. In business, past success or the mistaken belief that we can’t operate without something can load us down and burn precious cash; the fuel of business. When that happens we lose our nimbleness, the ability to respond quickly to new opportunities and threats. Pack light. If you run out you can always get more. It’s a better condition than overtaxing the vehicle by carrying more than you need.

Anticipate the conditions and prepare for it. If I’m going to be on the road for a while, it’s not a question of if I’ll hit rain; it’s only a question of when. To make the best of my journey it’s important that I plan for a rainy day. In anticipation of that I have my rain gear ready and accessible. In business rain gear is liquidity. Every business, if it’s around long enough, is going to experience rain, sometimes even a downpour. It might be the loss of a large customer, an economic downturn or the presence of a new competitor. It happens at different times and places for everyone, but the rain is coming and you probably can’t avoid it. Therefore, when the sun’s shining build a balance sheet that can handle a little rain. Pay down liabilities and build a cash reserve for the rainy day.

If you’d like to talk about how to prepare your business to weather the next journey, call or reach me through the “contact us” tab on this page. Happy trails.

Posted in Corporate Finance, Human Capital, Leadership, Operations, Sales & Marketing, Strategy, Training | Tagged , , , , , , , , , , , , , , , | Comments Off on Business Planning and the Art of Motorcycle Touring

Stop Being So Nice

Recently I’ve been working with a leader struggling to improve the performance of his employees and his company. He’d implemented a number of employee-friendly policies and reward systems, only to have them back-fire. What I discovered was that in his sincere effort to be kind to his employees, he’d become nice to them. The result was a lack of consequences for poor behavior and performance and a lack of respect for his leadership. His “niceness” had weakened him.

Being kind and being nice aren’t the same. Kindness has elements of fairness, compassion, confidence and discipline. Niceness involves equality, positive emotions, and pain avoidance. Kind parents set boundaries for their children and have a structure for their growth and development. Nice parents give the kids what they want and strive to be their best friend. The same is the case for leaders. Kindness is not softness. It’s not weakness and it doesn’t always have to be nice.

Kind leaders are externally focused. They are confident in themselves and engage in the growth of those in their care.  In their confidence, the kind leader doesn’t avoid confrontation. Sometimes kindness requires them to be tough and direct. They are generous to others but only to the point where their kindness doesn’t harm the ones they care for.

In contrast, nice leaders are inwardly focused. Their niceness is often an invitation for their own validation. They have a desire to please and as a result, can have a hard time saying no or making tough, unpopular decisions.  Nice leaders move underperforming individuals around the organization rationalizing their decision to avoid a termination. They allow deadlines to pass and poor performance to persist without taking appropriate action.

Sometimes, letting someone go from their job could be the greatest act of kindness you could show. It frees them up from a job that’s not the right fit and allows them to pursue something more appropriate. Kindness in termination is often respected by the employee once the emotion subsides. Tough action could be kindness in a lesson learned for the employee or a problem addressed for the rest of the organization. No one enjoys having difficult conversations, but in the spirit of the Hippocratic oath of leadership, we’re doing no one a favor when we avoid pain or suffering in the face of a problem. Failing to take the needed action can be far more damaging than the kindness in an honest conversation.

New leaders sometimes fall into the trap of being nice. They may lack the self-confidence and experience needed to lead and consequently settle on pleasing those that work for them. Such is the case sometimes where the leader originated from within the group they now supervise and are unsure of how to build a new relationship with previous co-workers. The consequence is that nice leaders create weak organizations and can be taken advantage of.

The kind leader is less concerned about what others might think and more concerned with doing the right thing. Out of their kindness for others, their style is infused with a heavy dose of empathy. Kindness requires compassion and a basis of trust. It is also essential that you always act with integrity and honesty. It means that at times you must present the truth of a situation in a direct, but respectful way. You don’t need to be nice to be kind, but you must make people feel heard, cared for, valued and respected.

The truth is we’re inclined to follow and respect the kind person showing confidence and look down on the nice person who’s trying too hard to please. My leader is a very nice person. To become the effective leader he wants to be he has to also become a very kind person.

Posted in Business Technology, Corporate Finance, Human Capital, Leadership, Operations, Sales & Marketing, Strategy, Training | Tagged , , , , , , , , , , , , , , , , , , , , , | Comments Off on Stop Being So Nice

Developing a Positive Response to Negative Events

Recently I was working with a company that had a lot going wrong. They had lost customers, key employees and money. I was asked to help restore what was lost. Before I could do that I had to address their greatest loss, that being hope. The negative events had sapped their vision of a brighter future again. What was worse, the organization was in an all-out panic which was producing fatalistic attitudes, worse than the truth itself. I knew that if they stayed focused on the negative they’d only get more of the same which eventually wouldn’t end well. They would fulfill their prophetic thoughts.

Panic stems from a feeling of no control. When we lose control we feel a strong need to regain it. Unfortunately, much of what affects us is out of our control. Our response then should not be to control what we can’t, but to respond to the situation with what we can control, that being us.

The first step in that process is to control our thoughts and words. There are doom-and-gloom people, sometimes even leaders, who for their own reasons sap others of hope. The issue is more complex though than just “looking on the bright side of things.” There are specific approaches to changing how we think and also wrong ways to do it.

The first step is to be careful who you listen to starting with yourself. This is important because it’s very easy to let others determine what we believe. A negative narrative we run ourselves can spoil a recovery. When we think the worst case long enough we lose the spirit to fight on. We also give up on engaging the creativity and problem-solving abilities that are inherently human and present in every organization. As a leader, you can poison an entire organization with the wrong words. A hopeless attitude is a dangerous attitude, no matter how “real” the facts might seem.

When we frame our thoughts properly we create an attitude of resilience. The ability to bounce back from life’s downturns is a powerful tool for success. The ability to respond effectively in times of upheaval requires honesty and courage. Leaders are not successful in spite of their setbacks, they are successful because of them. Real leaders embrace their setbacks and learn from them. They grow smarter, tougher and more resilient. While others linger in defeat and negative thought, the resilient leader sees beyond the current reality to a better and brighter future.

Being resilient requires courage, courage to face the brutal facts of the situation and to push ahead when you may be disappointed or embarrassed. Resilient leaders have to build an attitude of optimism even when it doesn’t feel natural. It’s the organizational fuel for a recovery. Leaders must operate efficaciously with a positive expectancy knowing that, despite their circumstances, they can figure out and overcome the obstacles. Their goal is not just to bounce back, but to bounce forward to a better position.

The most successful companies and leaders all experience setbacks or problems, but they see them as temporary. Sometimes the best ideas emerge from our toughest situations. As a resilient leader, you must also inspire others to participate. It’s an attitude that draws people together. The sense of a community working together to solve a problem is a powerful thing. There are few problems an inspired team cannot accomplish when working together, no matter what the obstacle.

A lot of what looks like luck isn’t luck at all. It’s the result of the right attitude. Good business practice tells us that we can only change what’s within our control. But often we fail to change the most important aspect of business, one we have 100% control over, that being our attitude. For my client, it would be wrong to not take very seriously their circumstances. But despite those conditions and how they felt, an attitude of hope in the face of their despair would not have been foolish either. If you look for reasons to be negative, you will find them. However, if you choose to look for reasons for hope, you’ll easily find them as well.

If you’re feeling burnt out and beat down from business conditions and would like to discuss how to create a brighter, more optimistic outlook, call or reach me through the “contact us” tab on this page. Better days are ahead.


Posted in Corporate Finance, Human Capital, Leadership, Operations, Sales & Marketing, Strategy | Tagged , , , , , , , , , , , , , , , , , , , , | Comments Off on Developing a Positive Response to Negative Events