The notion of creating a plan for your small business can be daunting for a variety of reasons, but it doesn’t have to be a stressful process. Even when the world is full of unknowns and everything feels out of control, having some semblance of a plan is always better than no plan. In fact, it’s in the midst of challenging times that we need to be 
I believe there are some common barriers to effective planning and I want to address these barriers with the hope of making the planning process less daunting. First, developing a strategic plan with appropriate goals seems like it will take a lot of time. The truth is that yes, planning does take some time, but it doesn’t need to be a long, tedious process. If you’re struggling to start your planning process for fear of the time commitment, then dissect it into manageable pieces and start simple. The goal is not to come up with the world’s perfect plan. The goal is for you to take the necessary time to focus on what is important to your business’ success and it can be as simple or complicated as you want to make it.
Summary
Business Planning Made Simple
For those who struggle to get the planning process going, I suggest that you set aside 1 hour of uninterrupted “thinking” time this week. And, by set aside, I mean literally block an hour on your calendar whenever suits and make yourself keep that meeting with yourself. Cut your phone off, don’t check emails, and get away from everyone and everything, ideally outside. And, take a pen and blank notepad (not a computer or your phone). Use this time to think about your business from a broad, high level perspective in 3 phases, spending no more than 10 minutes thinking about each phase in these terms:
- Past – why did your business start? To serve what need? How has it evolved? Has it grown or shrunk over time? Are there things you would have done differently?
- Present – Generally, how is the business doing? Is it where you expected, wanted to be? Why, why not?
- Future – If you’re where you want to be, that’s great, take time to think about how you got here and whether you want to maintain or grow. What are the implications of that choice?
Once you have allowed yourself to reflect on the general state of your business, go back and concentrate on its present state. Is your business where you expected/wanted? If so, try to identify how you accomplished this because you’ll want to make sure you continue and possibly increase these activities (i.e. make them part of your goals). If your business is not where you want, try to identify the main reasons so you can address them (later, not now). Now, think about where you want your business to be this time next year and even take a few seconds to think about your aspirations for 10 years from now. It’s important to periodically envision the distant future so you can be tying your short-term goals to achieve your longer-term goals.
You should have completed all of this within an hour, so it wasn’t a time to get bogged down by details. Whether you’re a seasoned veteran or new entrepreneur, I recommend everyone go through this exercise at least once a year, if not quarterly. It’s important to periodically extricate yourself from the day-to-day grind and see your business from a macro view. Now, congratulate yourself because you actually just completed the first phase of strategic planning. Not too painful, right?
The next step is simply to go back to your calendar and block off another hour (or more if you’re willing!), ideally within 1 week of your first session. Again, you will remove yourself from all distractions and take your pen and notepad to reference your notes from your 1st session.
Understanding the Health of Your Business
In the 2nd session, you will get more specific about evaluating your business and this is best achieved by breaking out your core disciplines – i.e. Accounting, Operations, Marketing/Sales, IT, HR, etc. The easiest way to tackle this exercise is to assign a stoplight color to each discipline, so green would mean that area is in good shape; yellow signifies its ok but needs attention, and red means trouble and significant issues to address. Spend a few minutes thinking critically about each area and if there was ever a time to be a harsh critic of yourself, now is it. There is no benefit to assigning green across the board just so you can feel good about yourself. Every business has weak areas to improve and this is the time to identify those areas or else your business will suffer.
A simple example for reference:
Sales – green
Customer Service – yellow
IT – yellow
HR – yellow
Accounting – red
In the above example, the good news is that sales are good, which means revenue is likely strong. Accounting is a mess which means the books are not organized and potentially inaccurate which could lead to significant issues. In this case, you must make it a priority to address your Accounting issues. From there, HR and IT could stand to improve, but potentially the more concerning yellow is that all your strong sales are followed by not-so-great customer service. That could eventually erode customer satisfaction and future sales so you want to take a hard look at ways to improve your customer service.
Once you have assigned a status for each of your core business areas, you can easily prioritize where to spend your planning time. The grand goal is to get every aspect of your business to green, but just know that is extremely rare. In fact, anyone who thinks their business is perfect in all areas is fooling themselves and jeopardizing the future of their business. So, realistically, your goal should be to move all red areas to yellow (at least) as soon as possible, then all yellows to green, and then see if there’s any room for improvement in your green areas.
Know Your Key Metrics
Now that you have a general feel for the health of your business, it will be important to delve into the numbers. The numbers are the reality of your business and you should have at least a few key metrics, often referred to as Key Performance Indicators (KPI), in each area of your business. Some are obvious like the average ticket price for your Sales team, but others may take some time to think about how to measure success. Be careful with these and don’t rush to set a KPI without careful consideration of the behavior it will drive. In our example above, consider if the customer service team had a goal to shorten phone calls. Achieving “success” by rushing through phone calls could be the reason customer service ratings are down. You could consider another metric like whether the problem was solved during the call which is potentially the only outcome that matters. For Accounting, you should be paying attention to how quickly invoices are sent as well as the time to receive funds. It’s probably best to ask the person in charge of each business unit what they believe their KPIs should be and then work to set reasonable goals that will help the overall business.
Once you have established your KPIs, you need to review where each metric stands currently, but just as importantly, you need to know historical performance so it can also inform the new goal you need to set. When setting goals, it can be useful to reference the SMART acronym which stands for Specific, Measurable, Achievable, Realistic, and Timely. This is the critical step in your planning process. You must understand the key drivers of your business. You need metrics to understand how you’re doing and then you need goals for each metric. If you don’t know how to set a goal, take each metric and write 0% increase as your goal. This is your baseline and while it may make sense to keep some at 0%, the majority of your metrics will likely need to improve. The next step is to take each metric and improve it by 10%. Now is the time to involve your leadership team if you haven’t already (and if you have one). Is 10% reasonable for that metric? Over what period – 1st quarter or by end of the year? What would need to happen to achieve the 10% goal and does it negatively impact other areas of the business? Challenge yourself and your team to set a goal that is reasonable for that metric. Now do this for each of your KPIs and then step back and look at them altogether from a macro view. Without knowing anything about you or your business, I would bet that your goals are too aggressive and need to be dialed back. This is the time to prioritize the critical drivers of your business so you can keep those goals aggressive but dial back on others that have a less direct impact on your bottom line.
Working The Plan
Planning is critical to the viability and sustainability of your business because it’s the first step towards establishing accountability across your organization. But that’s only the beginning and too often a plan is developed and then ignored until it’s time to do it again the following year. The whole reason for planning is to understand and evaluate your key metrics so you can monitor them and make adjustments as needed during the year. Consider the pace and needs of your business as to whether you should have quarterly or monthly planning review sessions or even more frequent. These sessions should include a simple list of your key metrics and goals so you can see where you stand on each. From there, you can make decisions and adjust as needed throughout the year.
You may notice that I didn’t address or even mention much in terms of writing as part of the development of your plan. That’s because long-winded, text-heavy plans don’t ever get read and end up on a shelf collecting dust. Write out what you need to get your point across and get your team aligned, but focus on your numbers and how your going to drive the activity your business needs to be successful.
About Me
I serve as a consultant and fractional resource helping business leaders run their businesses more effectively by providing a unique combination of analytical and strategic insights. Prior to my consulting practice, I founded and managed a successful 501c3 organization after having spent over a decade in management at fortune 100 corporations.
I would love to hear from you if you need help or advice.