Every well-run company has a strategic plan in writing, ideally also in the hands of every key executive in the company. Not just hopes, dreams and aspirations, but solid goals and targets and timelines they hope to achieve for the benefit of owners/shareholders, employees and customers. Unfortunately many CEOs who believe they have created a strategic plan for their companies really have only created hopes, dreams and aspirations, because their plans have no teeth. And by teeth I mean the means and methods to bring those plans into reality.
We’ve met a fair number of these executives over the years – usually owner/operators in most cases –who often paid outside advisors to guide them through a strategic plan development project, with the result that they got a very well written document outlining, often in considerable detail, what they hoped to achieve. When asked about their plan our prospective clients proudly produced that document, carefully preserved in a file cabinet, for us to review. When asked about the planning tools that support their plan, the discussion got fuzzier. When asked if their operating plan or their financial plan/budget was tied to the plan goals, we often got either a long pause or simply a blank look. For those who have faced that question before, the amount of effort to implement and manage those operational planning tools was considered an unproductive use of precious time, because “everyone here knows where we want to go.”
With all due respect to all the CEOs out there who have built successful businesses and hit their goals without a planning system in place, congratulations on your accidental success.
To those CEOs who truly want to build a company that is more than a lifestyle business, that is more than good enough to get by, that truly is all it can be, you’re not going to get there without a planning system that is integrated from top to bottom, meaning:
- A strategic plan, stating in clear terms the goals you intend to achieve in specific, measurable terms with a realistic, even if optimistic, timeline,
- An operating plan, defining in detail the milestones you will achieve in the next 12 months that are directly in support of one or more of your strategic plan goals, and
- An operating budget that allocates the resources – human and capital – needed to achieve the milestones set out in your operating plan.
That’s the easy part. The hard part, and by far the most important part, is managing your resources to keep them on target as outlined in your operating plan and budget. Set the milestones that move you toward the timeline defined in your operating plan, spend the money directly in support of those milestones, and don’t let anything let you take your eye off the ball.
Unless, of course, your plans change as a result of renewed thinking, newly discovered opportunities or insurmountable challenges. If that happens, and it often does, then go back to your strategic plan and see if the original goal needs to change, or perhaps the milestones need to be adjusted without losing sight of the goal, or perhaps the budget needs to be reallocated in support of approaching those milestones from a different direction. Just keep in mind that goals get met by defining the process to get there and then managing the process and staying focused. Anything else is accidental.
We help you avoid accidents. We know how this works, or how it doesn’t.
We are your CFO for Rent.