Imagine you’re in a new city. There’s a particular place in it that you really must get to. But you have no written directions, no map, no global positioning system. You’ve no idea how to get there. How silly is that?
So, why do many people in business try to get by in exactly the same situation? They know where they would like to get to, but lack the written directions, map or GPS to get there – they lack a business plan. Not a very promising start to 2011.
Part of the answer has to do with simple pressure. An entrepreneur comes up with The Great Idea and pursues it initially with great energy. In fairly short order though, he or she gets beaten down with the never-ending day-to-day hurdles, and simply runs out of time for the big-picture stuff.
A much smarter alternative might be to approach things from the other direction, getting the big picture – the map – drawn out first and then moving on to the day-to-day issues. That map – the analysis, planning and testing of your idea – is the business plan.
With the new year upon us, now might be the time to take another look at your business plan, or possibly to look at creating one afresh. The essential starting point involves reflecting on what you really want to achieve.
Set some specific targets, but do so with some outside help, because it’s often hard for a business owner to do this with complete objectivity on their own. After all, the costs of working with a financial planner will be more than covered in the resulting focus and tools that you can apply in your business.
Once you have the targets, work them back to the key items you can measure on a regular (I would suggest monthly) basis to assess how well you’re tracking towards those long-term goals. Often this process becomes overly focused on the accounting information. Yet I believe it is essential that the regular measurement and reporting on the business includes non-financial items, too. For somebody in a service-based business, for instance, a couple of obvious measures might be client satisfaction and staff productivity, and other sectors will have their own as well.
While client satisfaction can always be measured by two easily tracked measures, such as number (and dollar value) of clients lost each month, along with number (and dollar value) of referrals from existing clients, these types of additional measures will also help one’s behaviour with clients to further improve the way you service clients and build the client base.