Establishing “smart goals”
Every business, no matter its size or longevity, needs an annual business plan that sets forth the strategy for and direction of the business. Without a plan, you’re flying blind in trying to lead your company and your management while employees are adrift without the goals and metrics they need to help the business thrive. The business plan will provide clarity on your vision for the business in terms of products or services, customer focus, new employees needed and generally where the business is going. Including information about future growth and direction will help you plan for potential market changes, new innovations, growing or slowing trends and how your business can navigate these changes.
Essentially, your plan should include your business strategy, financial information and tactics to achieve your goals. A business plan should incorporate what we like to call “smart goals,” i.e. specific, measurable, actionable and realistic goals to which everyone in the company can identify with and aspire to.
An annual plan need not be a long, verbose document, but should include facts, figures, statistics and details and be well thought out and well vetted by trusted advisors and your management team.
Essentials of a Plan
1. Organizational Structure. Outlining your management structure, roles and responsibilities serves as a guideline to ensure your business is on track with meeting goals, sales targets and operational milestones.
2. Overall Year-End Goal. This sets forth a general statement of what success looks like – revenue growth, company sale, an acquisition or merger, the addition of new products or services and/or attracting new talent.
3. Revenue Projections. Before establishing an annual budget, you must establish your goals for growth. How much revenue do you anticipate being able to generate from both new business as well as existing customers? This includes customer acquisition goals and identifying new, untapped markets. Each department in your business needs to know what they are required to do to generate business.
4. Establish Goals for Managers. A successful leader provides the management team with specific objectives and metrics that help them track their efforts with the goal of achieving success. An effective management team needs to understand the priorities so they can, in turn, communicate them out to the company.
5. Customer Retention. Your best revenue opportunity is through your existing customers, so establishing a solid, viable customer retention policy and expected metrics on what success looks like are important.
6. Attracting New Talent. This is a fixed cost that can increase your risk, so you need to identify exactly how new employees will contribute to your growth, the steps they must take to succeed and a rationale for hiring additional employees. If these new employees are sales people, you must set forth revenue goals and tactics they need to follow that will help them succeed. Including information in how management will help/empower employees to achieve goals should also be included.
7. Marketing. Many businesses focus on sales, but forget to include marketing strategy necessary to support expanded sales and customer acquisition. Building your brand, expanding your activities, reviewing your pricing strategy all play a strategic role in helping support your sales efforts so you can grow your business, maintain a solid customer retention rate and attract new customers.
8. Technology. As technology continues to evolve, your plan should also include any plans you may have for upgrading/adding new technology. Just as contemplation of hiring new people will impact your budget, so will a large capital expense for new technology.
This highlights some of the major components of a good business plan. Your business cannot succeed without a well thought out roadmap that serves as a guide for you and your team to achieve the milestones you have established for your business. As the business environment changes, your plan will serve as a guide to help you navigate these changes and stay on course to your desired goal.