Daniel Pink, in his book Drive, quotes an owner about his employees: “They’re not resources, they’re partners.” Here are my top three factors:
- Employees want to see their ideas at least considered, if not accepted.
- They want to feel a sense of accomplishment, understand their value, and be part of a winning team.
- Partners work toward a common goal.
Question: What’s the difference in the growth rates of companies that have a business plan compared to companies that don’t have a plan? While you can probably find a variety of answers on the Internet, the one I like to quote is from one of the large accounting firms, and it states companies with a plan grow sales and profits at double the rate of those without a plan.
Strategy is the “what,” tactics are the “how,” and they must work together. For most of you, any plan has an emphasis on sales and marketing. Most of the rest, as pictured in the diagram above, is important, but revenue growth should be your top consideration.
Marketing—Marketing is anything you do to get your name in front of prospective customers and people who can refer customers to you. There are a wide variety of tactics, including advertising, blogs, sponsorships, social media, speaking (at trade shows, for example), writing technical articles, and a lot more. Know what works and what doesn’t in your industry and get the word out.
Money– A budget, and cash flow projections are a good place to start. Remember, it takes cash to grow a business. That cash may be used to hire people or buy more equipment, or it may get sucked into higher accounts receivable and inventory. An integral part of any growth planning process is to know the cash it will take. Have good accounting systems and management reports.
Management structure—It’s important to have an org chart. If you don’t have one, do it now make it part of your plan. Know who does what, who they report to, and so on. It allows you, and others, to delegate and gives employees a clear understanding of who their boss is. A confused employee will be an unproductive employee.
A buyer is much more comfortable paying a price on the high end of the fair range when there’s a team in place and the role of the owner is reduced. Or let’s say the role of the owner is elevated to where she spends most of her time on strategy, vision, and growth.
To summarize the above section on planning, it’s important that part of your planning process be the setting of goals. Know where you want to be, both financially and non-financially. Do you want sales to grow by 18 percent next year? Is it important to take two weeks more vacation or be out of the office by five o’clock at least three days per week? What about helping your people grow into new roles? Incorporate all these categories into your master plan and share them with your management team. Keep in mind that your goals are your strategy and vision. Make them reachable, but a stretch.
Also make sure your plan covers the final four growth strategies: systems, implement, sales and finance.
The owner, the owner’s spouse, and the COO all gave the accounting staff direction. The problem was that none of them understood finance or accounting very well.
Compounding the problem was that the in-house accountant was really bookkeeper and the bookkeeper was really a data entry clerk and they weren’t qualified for the size to which the company had grown. Therefore, nobody would stand up to management (out of both fear and being unsure).
This was a three-pronged problem. There was inadequate structure and delegating systems, they had not hired the right people for the job, and because of these two factors they also had inadequate financial systems so the accuracy of the financial reports was suspect.
Implement (the right way)
Growth is often stymied by the lack of implementation. The ideas are there, they just never get acted on.
When implementing, pay attention to the right details, and the first detail on the list is time management. If you don’t block out time, for your team and yourself, to work on implementing your growth plans, how are you going to grow? Prioritizing growth, and having your team allocate all the necessary resources, is a must.
Realize the first thing almost all your people are going to say is, “We don’t have time for this.” They do, and you know it. Too many people fill their days with routine tasks instead of things that are important. Delegate and get them to do it.
Details come in many varieties, and I won’t be presumptuous and try to tell you what particular details are important to your business and you. Start by paying attention to your nonfinancial factors (below) and apply the nuances specific to your company. Do so and you’ll do fine.
Think of this like a fishing trip. Good fishers know the right place to fish, the right time to go, the proper bait to use, the depth to fish, and a lot more. It’s what allows them to catch more fish than I do.
A cousin of mine goes salmon fishing on Lake Michigan. He told me that he’s on the lake thirty minutes before sunrise and done fishing two hours after the sun is up. Because anything after that is boating, not fishing.
A mystery I read years ago had the detective saying, “It’s in the details; it’s always in the details.” Think about going to a sporting event, the theater, or a concert. The athletes, actors, and musicians practice the little things over and over so that when they hit their stage it comes together as a successful performance. You must do the same in your business.
Work on your nonfinancial factors—the value of your business is based on them. Remember, financial statements are historical snapshots of points in time. The nonfinancial factors let you (and a buyer) know the likelihood of profits continuing. They include, but are not limited to, the following:
- Space (size, lease term, rent amount)
- Financing (ability)
Follow-through is the most important detail. You can have the best strategy and design the best tactics, but if you don’t implement correctly and with speed, you will lose ground because the chances are your competitors aren’t sitting back letting you dawdle on your plans. They’re racing forward.
My client was preparing for her annual wholesale-only weekend sale. As we discussed the marketing efforts, I took it all in and said something like, “You’re missing the most important thing.”
Fast forward about a month and I get an early Monday morning call from her. She starts out by thanking me profusely because the sale was five times larger than any previous sale.
When I asked why she was thanking me, her response was that it was my marketing input that caused this—she knew because they asked people what drove them to attend. What was this idea that spurred the huge turnout? Make a follow-up call to the invitees the week prior to the sale. Simple, but incredibly effective.