A business growth plan will help you to accelerate profitable growth, increase the value of your business, improve your working capital, and build your business wealth. However, planning isn’t natural for many people.
When we were kids in school, we didn’t need a plan. We simply wanted to get promoted to the next grade. In business, there is no automatic promotion just for surviving the current year and passing a few mandated tests.
During my MBA studies, I discovered research that said only one-third of privately-held businesses developed a formal business plan. So what? So, the study continued, the one-third of businesses that planned their future consistently achieved higher profits than the two-thirds that didn’t plan.
I can hear some people saying that “plans are too constraining” or “I need to respond to my customers.”
Ironically, plans aren’t constraining, but rather freeing because they create parameters around where you are focused, how you invest your resources, what things you will consider, and, more importantly, what things you will say “No!” to in order to stay on track.
Strategy and management discipline are about saying “NO” to the many distractions that pop up disguised as opportunities.
If you are a small business, the key to staying small is to avoid planning and to continue flying by the seat of your pants, without a specific focus (because focusing takes courage). If you want to grow, then focus on the business growth plan.
Water, when it’s focused at 60,000 psi, can cut through two inches of steel. Water, when it’s not focused, just splashes around, causing rust, and weakening the steel. A good business growth plan will focus your resources on creating success for your customers and for you.
Your business growth plan gives you the focus necessary to cut steel. You can still be responsive to customer requests and major opportunities, but you’re focused on cutting steel, not cutting the lawn. There’s a lot more profit in cutting steel than competing with the neighbour’s kid to cut the lawn.
The business growth plan
- Set new goals. Do not add a percentage to last year! That’s not planning for growth. Identify opportunities, eliminate obstacles, and plan for 30% growth.
- Revenue goals are floors. Expense goals are ceilings. This combination will maximize profits.
- Build on your existing strengths. Your customers will tell you what you’re really good at doing.
- Quantify your results. Ask you customers how your products and services have helped their businesses, specifically.
- Use the results quantified by your clients in all of your marketing materials in order to attract customers who want similar results.
- Analyze which resources support the delivery of these results and which resources are not necessary. Then, allocate more resources to the more productive activities and wind down the unprofitable activities.
- Set one metric that measures critical performance every day and communicate that to everyone so they’re focused on what is most important. A growth accelerator is to simplify your metrics so you can measure performance , adjust and improve in real time.
- Go to the front lines to find out how you can improve your critical activities. Have the back office functions (HR, Finance, Admin) focus their activities and resources to support the front line functions (Marketing, Sales, Production) so they are more successful.
- Measure results regularly and hold people accountable for improving results.
- Learn from failures quickly, and celebrate these as well as successes.
- Codify what you learn so that you can share it throughout your company.
- Constantly focus on growth, profit improvement, and valuation enhancement.
Your business growth plan is a living document that is revised at least quarterly, and ideally every month. All of your managers should contribute to it, support it, and know the score.
Full speed ahead!
Copyright 2015. Phil Symchych. All rights reserved.