For a long time I have immersed myself in the topic of how small business CEOs and owners can better leverage “big business” best practices without fear!
Specifically, many smallbiz CEO reject big business practices because they fear (and loath) getting bogged down in what they view as pointless processes and bureaucracy.
I do consulting type work for small businesses and I frequently see areas for operational and strucural improvement. But the CEO is reluctant to implement change because of their aforementioned fears or, frankly, they just have a bias against big business.
So the imperative is to introduce more rigour in the business coupled with simplicity and pragmatism. Rigour = accountability leading to performance.
Let’s take annual business planning for example. Large business can easily take months to write their annual plans because they are so complex with many stakeholders and approvals levels. On the other hand, having no business plan inevitably leads to inefficiencies such as shifting or divergent priorities, lack of focus, flavour of the day management, wasted work, duplicate work, etc. etc. It doesn’t have to be that way.
So here are 10 easy but effective steps that any small (or any size) business can employ to create an annual business plan that can be accomplished in just one day (with perhaps a 1/2 day to prepare).
1. Schedule a full day meeting with your management team. If you’re very small, say less than 10 employees, bring everyone. Make it offsite to minimize distractions and emphasize importance. The meeting:
Situation Analysis: You can’t figure where to go if you don’t fully understand where you are now and why. Devote the morning to this activity.
2. Review all available numbers for past year. Revenues, expenses, number of customers, new product performance, customer retention rates, lead generation rates (leads, closes, etc). Bring whatever numbers you have that provides insight to the company performance and trends. If available, compare to previous year for greater context.
3. Have each functional leader (Sales, Marketing, HR, Technology, etc.) briefly present their top three things that went well in the previous year and top three thing that didn’t go so well. These are also known as “lessons learned”.
4. Conduct a general discussion with input from all functional areas about what things are going on in the market: customer feedback, trends, competition etc.
Strategy Development: If the morning went well, then there should be a number of self evident themes and common threads that points the company towards their top issues and opportunities.
5. Brainstorm ideas. Based on the emerging themes and trends in the morning dialogue, brainstorm and capture ideas about how to move the business forward. Things like :
- How to repeat and enhance the things that went well.
- How to minimize/avoid the things that didn’t go so well.
- New product ideas from emerging market trends.
- Competitive weaknesses that can be exploited.
- …and more!
Capture all these ideas on flip charts and post them on the wall around the meeting room. Bucket similar or same ideas wherever possible.
6. Vote on the top ideas to focus on. This is a hugely important step. Each person gets to select their top five priorities. That’s it, just five and you can’t allot more than one vote to any given idea. The result: You now have your team’s perspective on what the companuy should focus their time and resources on for the coming year. Two important sub-notes:
- What should be considered a priority? I would suggest that 90% of the time, its about revenue growth for the coming year and/or a clear choice to invest in something that will have financial payoff in future years. In any case, have a dialogue about what’s the definition of a priority at the outset of this exercise so everyone is on the same page.
- Running a business is not a democracy so this voting should be considered a very strong guideline for the CEO, not a plebiscite to adhere to. But getting employee input and allowing them to influence direction will pay off big time with improved buy in and employee morale.
7. Select the top 4-5 priorities for the company. Ever heard someone recite their top priorities and give you 10 of them? Ridiculous. When is comes to focusing your resources, less is more.
8. Establish high level goals for the company. This is where the CFO takes over with a spreadsheet projected onto a screen for all to see. Based on past trends and the aspiration of the future, develop specifc goals for revenues, broken by categories as possible such as product lines, regions, etc. Have subtotals by quarter (better by month) so there are interim targets.
9. Assign ownership for the goals. Depending on the size of the business, its advisable to assign specific goals to functional leaders. Demonstrative examples of this could be: a) the overall revenue goal being assigned to the leader of Sales and b) specific new product goals being assigned to the marketing leader. More important sub-notes:
- Develop sub-objectives for functional leaders that feed up to the macro goals.
- All goals should be S.M.A.R.T. Specific. Measurable. Actionable. Realistic. Timebound.
- I like shared goals. What better way to get sales and marketing working closely together than to assign the revenue goal to BOTH of them.
After the Meeting:
10. In one word, MEASURE! Now that all that hard work has been done and your team has had a personal hand in developing the company plan for the next year, you need to measure and report. You know that saying: You can’t manage what you don’t measure. So measure. Monthly sessions with the team to check in on how things are going are recommended.
Things change over the course of a year and ANY size organization should re-calibrate their plans as conditions dictate. But as possible, stick to your original plans.
What do you think about these 10 steps? Are they easy or am I dreaming? Please leave a comment.
Thanks for reading my blog and please visit again.
Authored by: Geoff Vincent