Business Planning is about setting out a pathway for your business to proceed, that will get you to the business of your dreams – the vision of your ideal business.
In order to do this effectively, the Business Planning process goes through a logical sequence to first define exactly what your desired ideal business is going to be like, then understanding where you stand in relation to his, thus revealing the gaps between where you are now and where you want to be, and then implementing strategies to bridge that gap.
It’s a logical process.
If you were going on a drive to visit your mum in the next town, you would do exactly the same thing.
You identify where your mum lives, how far it is, what time you want to get there and the time you need to be back, and how much fuel you need to get there and back. Then you check if your car will make the distance, how much time you have that day, and how much fuel you have. Finally, you make plans about when you should leave to get you there and back at the right time, and how much fuel you should buy.
In other articles, I have already written about the process to describe your vision of where you want your business to be, and how to quantify that vision so that it can be measurable.
I have also written about how you can get a clear understanding of where your business is, in relation to that ultimate vision.
The next question is how do you define those gaps and turn them into goals?
The best way to define the gaps between where you are now and where you want to go is to compare the description of your vision with the major issues identified in your current situation analysis.
You can download a free worksheet here, to help you do this.
First, you list all the measures of your vision.
When you defined your vision you may have defined success as:
- when I have attained my vision, my customers will say that my product delivery is really fast
- when I have attained my vision, I will have a good profit for my effort
- when I have attained my vision, my employees will be trained to Level 5
- when I have attained my vision, my after-sales system will follow up within 24 hours
You can define measurements of these success characteristics, for example:
- My customers must get their delivery within 48 hours
- Profit before tax must be 20% or more of gross sales
- At any one time, 70% of my employees must hold a Level 5 certificate while another 20% will be studying for it
- All sales must be followed up within 24 hours
Once you define the measures of success, you can implement systems to check and measure, but for now, list those measurements or characteristics of success on a piece of paper.
You may find it useful to group these characteristics of success under logical headings like:
- Markets, customers and marketing
- Processes and operations
- Human Resources
- Physical property and equipment
Then, after you have conducted a SWOT or Strengths, Weaknesses, Opportunities and Threats analysis, you should have identified issues that are either strengths, weaknesses, opportunities or threats representing current performance.
Some examples might be:
- Weakness – due to old manufacturing equipment, it takes us over 5 days to deliver the product
- Strength – I have really hard-working production staff
- Weakness – not having a fulltime bookkeeper I never know what my current profits are
- Opportunity – my prices compare favourably to my nearest competitor
- Threat – the employment market is such that I find it hard to find properly qualified people
- Strength – Joe the Production Manager is qualified to teach up to Level 5
- Strength – we have excellent documented after-sales procedures in our manual
- Strength – we have a dedicated after-sales team
As you can begin to see in this example, you can start to compare directly the desired state against your current state.
Write the strengths, weaknesses, opportunities and threats against the previously written success characteristics.
The next step is to compare the two states and define the gaps.
So, to continue with our example, you may be comparing the desired state of “my customers must get their delivery within 48 hours” with “due to old manufacturing equipment it takes us over 5 days to deliver the product.”
In this example, you could define the gap as “old equipment needs upgrading” and “product delivery is 3 days off the standard” where the bridging the first gap, and instigating efficient procedures overall, may also bridge the second gap.
In another example, you might compare “all sales must be followed up within 24 hours” with “we have excellent after-sales procedures and a dedicated after-sales team.” In this example, there may be no gap but you may want to measure what turnaround of after-sales service you are getting now to see if it needs improvement.
However, because of the strengths, you get an idea. Perhaps the excellent, documented after-sales procedures manual can be duplicated to create an excellent product delivery procedures manual?
When you have completed defining the gaps between your current performance and the desired state of the characteristics of success, you can analyse what goals you need to set in order to get to your desired state.
Following on from the above example, you may have written two goals:
- Upgrade old manufacturing equipment within 12 months, and
- Write an effective product delivery procedures manual.
The objectives of these goals would be, respectively, “to enable us to manufacture in time to deliver within 48 hours” and “to ensure efficient delivery of products within 48 hours.”
To recap, getting to your goals follows this logical process:
- Describe the vision of your ideal business, then define it in measurable terms
- Understand exactly where you are in current performance
- Compare where you want to go with where you are now
- Define the gaps in performance (including any reasons for those gaps)
- Write goals that will bridge the gaps.
If you want to see how you can write your own, complete Business Plan to guide your business toward the ideal picture of your ideal business, download our free Guide and Checklist here.
You can also download a free worksheet to help you identify your gaps.
Once you know where you want to go, understood where you are now, and clearly defined the gaps and written meaningful goals – well, the next step is to make it happen!
If you want to know how you might create great strategies to make it happen, watch out for my blog post next week. And if you don’t want to miss it, click here to sign up so that I can send it directly to your inbox (I don’t spam or share your details and you can unsubscribe at any time!).
I hope to see you next week!