How to build a culture of foresighted planning.
While you are sitting there daydreaming about your next vacation, let me borrow the use of your vivid imagination for a few minutes.
It’s mid-July and you just decided that you and your family (or friends) need a vacation on a warm, tropical island. You decide that three weeks is plenty of time to relax and explore the sights. You develop a list of vacation to-do’s and commit it to memory. (For those of you, who must write everything down, assume you write your list on a Post-It note that immediately becomes stuck to the folder you just put away.) The pressing issues of work take over and the exciting thoughts about this perfect vacation evaporate. This is why you never get to make any of the needed travel arrangements nor take the chance to discuss your plans with your family/friends.
On Sunday afternoon, July 28th, you announce to your family/friends, “We are leaving on a three-week vacation tomorrow at 6:00 a.m.!” Just imagine the uproar and confusion you caused since this is the first time they have heard this. You’ll be bombarded with lots of anger and a few heated questions such as:
- “Where are we going?”
- “What do I need to take?”
- “How will we get there?”
- “What about the plans I already made?”
- “How can I leave if I’m not ready?”
I am assuming, of course, that your family/friends will even speak to you after having thrown them this huge surprise!
By now, your rational voice of reason has kicked in and is saying, “This can’t happen. No one does that. Before we leave on a trip of this magnitude, my family/friends and I get together to discuss and plan it.”
I agree with that sane inner voice. Except for a few daredevil types, we all plan our next vacation very carefully. We decide where to go and then make detailed travel arrangements and reservations.
So what does proper planning for your business has to do with your next vacation?
Like a vacation, making meaningful plans for your company’s future is a vital component to ensure success! Here are four steps which will guarantee that your business planning process is very effective:
Step One — Have a Clear Vision
When you prepare for a vacation, you decide where you are going, how you will get there and how much time you need. Every effective business plan requires answers to these same questions.
The first step is to have a clear idea of where you are going to a specific timetable.
“By the end of the fiscal year 2003, we will reach $500 million in sales, with an 18% gross margin and a 10% operating profit,” is an example of a clear vision.
Now that you know where you are going, you complete the “travel arrangements” by deciding the HOW. How you will get there is determined by your strategy and action plans.
Just imagine what a nightmare your vacation would turn out to be if you tried to vacation in Maui without having confirmed reservation for:
- rental car
- recreation activities
Also, when planning your vacation, you decide and plan for everything you might need ahead of time. You pick out your clothes and purchase and pack the recreation items you will need. Similarly, in your business plan, you list the resources you will need to achieve the destination you set. You identify these items in detail:
- building or facility needs
- staffing needs
- employee skills and training needs
- equipment needs
Before you leave on your vacation, you pull together enough funds to pay for the expenditures such as lodging, meals, entertainment and the items you forgot to pack! Similarly, in your planning process, you choose the financial resources you need to accomplish the strategies in your plan. You also plan on where all the required resources will come from. The balance sheet budget, integrated with your operating and capital budgets, are the best tools for accomplishing this. You will be able to determine your funding options, such as from internal cash flows or from debt or equity financing.
Unfortunately, many business owners, including CPA firm principals, fail to create the vision of where they want to go. “If you don’t know where you are going, you might end up where you are headed,” advises Dr. Rod Gilbert, a sports psychologist.
Step Two — Seek Employees’ Input
Just as your rational inner voice said that you plan your vacation with your family members early in the process, the same goes for your employees. Every employee is a stakeholder in your company. They provide their reputations, their skills and their lives to your company. They have a major ownership in its success.
The second step is to get employees’ input in the plan. You, however, do not need to meet with each and every employee to obtain their input. You accomplish the same thing in two ways:
- Solicit, listen to and use the ideas of your key employees. Key employees are the internal leaders and always seem to know what is going on inside your company. They are not always employees with titles or authority. Getting these employees to share your vision is vital.
- Send, to all employees, a clear and consistent message of your company’s values (its ethics and its treatment of customers and employees) and purpose (its reason for being in business). Every owner, manager and company representative must “walk their talk.”
Consistency of Values
Here is how the consistency factor works. The leaders of Success Company, Inc. believe in the ethics of putting the customers and the employees first. This message is communicated to all employees and is included in the company logo and Mission Statement.
- When an SCI customer disagrees with the amount they were charged for a service, the company empowers its employee to settle the charge in the favor of the customer.
- When an SCI employee and their supervisor disagree on a performance evaluation of that employee, the supervisor’s supervisor arbitrates the disagreement so that both employees win. At Success Company, the culture of valuing the customer and employee is carried out in all policies and procedures.
Imagine what customers would think of Success Company if it always prevails in disputes even though the Mission Statement states otherwise. Imagine the effect on employee morale and loyalty if there is a presumption that “the supervisor is always right” no matter what the circumstances. An employee on the “losing end” would look at the Mission Statement and say, “I wonder what other things my boss is not honest about!” Imagine what this upset employee could say to a valuable SCI customer!
When you and your management team develop business plans and budgets that are in line with its stated and unstated values, your employees will adopt the plans as their own. Walt Disney, the founder of the highly successful Disney Corporation said, “You can dream, create, design and build the most wonderful place in the world but it requires people to make it a reality.” You get and keep employees on your side when they believe in your vision and plans.
Another way to share the vision
You can also ensure employee buy-in and input into the planning process by staying in constant communication with those employees closest to:
- your customers
- your products or services
These employees know more about how your company and your products are performing than anyone else in your organization. These employees will provide you with insights and invaluable information that you need for your plans. When you rely on these key people as information resources, they willingly share your vision and become the natural internal leaders that other employees follow.
Step Three — Tell Everyone
Once you have the strategic plans and budgets developed, keeping them in your head or desk drawer is a costly mistake. Business owners and managers do this quite often, keeping the plans hidden so “no one finds out about what they are doing.”
Returning to the vacation analogy, what happened when you sprung your “secret” vacation plans on your family/friends? Besides being surprised (or shocked), they had hundreds of reasons why they could not go on vacation with you. You expected that they would be excited but instead, they became angry. The same reaction will occur when you spring “secret” business plans on your employees!
The third step of making your business successful is to communicate the plan with everyone in your company. The communication starts even before you develop the plan. As stated before, you must continually share your vision with your employees. Without this vital step, you will not receive employees’ buy-in into the business plans and budgets.
Going back to your vacation planning for a minute, assume you want to go to Alaska to fish for the elusive king salmon. Part of your group wants to sun in Maui, and others want to visit Disneyworld. No matter where you end up, someone will be disappointed — no buy-in. The same holds true for your management team and employees. You must convince them that the destination is “great” and in the best interest of all of you. You do this by sharing your vision with your employees.
When you get your employees and fellow managers committed to your vision early in the planning stage, you increase their support. Eleanor Roosevelt described this when she said, “The future belongs to those who believe in the beauty of their dreams.”
Step Four — Keep the Plan Visible
Every day of your vacation you have something to do, even if it’s relaxing by the pool. If you forget to keep track of what day it is, you might miss your flight back home!
Just as you check the vacation itinerary each day to make sure you do not miss anything, the same goes for your planning process. You need to check the business’s “itinerary” every day.
The fourth step in your planning process is to keep the plan visible to you, your management team, and all your employees every day.
You can accomplish this in two ways:
- Using visible action plans which carry rewards for achievement and penalties for lack of success.
- Displaying progress on all measurable goals so that it is visible to every employee.
With this “in-your-face” approach, you and your employees will continually be reminded of the goals and be able to measure the company’s performance toward each goal. When employees see their progress (or lack thereof), while receiving continual encouragement, they willingly accept changes or increase their efforts. This participation will ensure employees follow through on each action plan. Ken Blanchard, author of The One Minute Manager reminds us that, “Feedback is the breakfast of champions.”
Getting the most out of your planning process (and next vacation)
By following these four steps you can create a wonderful vacation for you and your family or friends.
- Have a clear vision of where you want to go, what you need, and how you will get there.
- Obtain your fellow travelers’ ideas, suggestions, and buy-in before the itinerary is finalized.
- Communicate the overall plans and budget to everyone so they have time to prepare, invest in what they need, and plan your spending wisely.
- Review the year’s itinerary every day to get the most out of each day and know where you are supposed to be.
If all this sounds like a lot of trouble to go through, I would like to remind you of the higher cost of going out of business because you failed to plan for the unexpected! “When you fail to plan, you plan to fail,” is a reality in today’s business environment.
Have a great trip and a profitable year!