At the end of a financial year, you should be thinking about what you are going to do in the next financial year to grow your business and take you on the next stage of your journey to your most successful, ideal business.
Think of business building as a series of steps that you take along a roadmap, the direction chosen so as to get you to your idea of your successful business as quickly as possible. Each year, you should be taking another step in that journey, always aiming for your ultimate desired outcome for your business.
Well, here’s a simple five-day challenge for you to take, to choose some clear strategies for your business in the new financial year.
You will only need a couple of hours a day for the next five days to set the direction of your business, and in doing so, clearly define your strategic direction for your business – where it needs to go and how it needs to grow in order to make it a successful business for you. In doing this, you will effectively mark out what needs to be done next year, and as new opportunities or any changing circumstances arise, allow you to decide if they help you get to your ultimate goal, or if they are merely distractions to be ignored.
That is a powerful situation to be in, avoiding overwhelm and constantly changing tactics, never knowing what really works for your business until you’ve done it – and mostly find you’ve wasted your time!
This challenge is part of the process of preparing your Business Plan, so if you want to know more about the full process of Business Planning, you can get a free resource here.
To start with, on Day 1 you are going to describe what are the critical success factors of your “ideal” and successful business.
Just dream a little and think about what your business will be like when you have built your successful business and think about who you serve and how you do that. Who works for you and what they do to help the business succeed? Think about all the processes and systems you will employ and how they work. Consider how this will turn out in financial terms.
Then, review your mind’s picture of your successful business and ask what are the critical factors to make it this way? Critical success factors are unique to your business. They are the key things you need to get right if you want your business to eventually develop into the successful business you dreamt of. Get one of these critical success factors right and you might fix a whole load of other smaller issues that depend on these critical success factors.
Here are some examples:
- Innovative and unique products (or the innovative and unique way otherwise standard products are provided to the customer)
- Constant building of customer relations
- The efficient and timely way you will produce and supply the product
- Key staff with the right expertise, in place all the time
- Loyal staff who will always go the extra mile for the customer and the business
- Finding new talent every year
- Very responsive customer service
- The ability to get new people or new processes up to speed quickly in the business
- A good project management or customer relationship database
- Getting paid quickly
- Maintaining a minimum profit margin
- Accumulating reserve capital to expand every year
Write down your list of critical success factors. This exercise should not take you more than a couple of hours.
On Day 2, take each of your critical success factors and ask where you stand now in relation to them.
For example, one of your critical success factors may have been “key staff with the right expertise, in place all the time”.
However, when you look at your current situation, you might find that you only had one employee with the right expertise. In order to grow, you need maybe another 4 or 5 people with this expertise eventually. The reasons you don’t have them now may be varied – you may not be able to afford more than one at this time, or that type of expertise may be rare so those people are hard to find.
What you are doing is identifying the gap between what you need to get (the critical success factors) and where you are now.
Of course, not all critical success factors will have gaps. For example, perhaps you already maintain your minimum profit margin and as you scale this will continue.
Write down all the gaps that you see between your critical success factors and where you are now. As you do so, consider why you are in your current position and some alternative strategies to close the gap. In the example given above, you might have noted that you only have one employee with the right expertise because you can’t afford more at this time. In that case, your strategy may be to budget more for salaries as you continue to grow in sales and profits so that you hire 2 more in three years’ time and a further three more people in 3 or 4 years after that. An alternative strategy may be to train a few more employees over the next few years so that they develop the expertise you need.
Write down your identified gaps and any strategies to close those gaps. Again, a couple of hours should be enough to do this.
On Day 3, you will choose the most appropriate strategies that you have written (from the various alternatives) and work on them.
You won’t need more than an hour to do this.
Review the gaps identified and your alternative strategies for each.
By considering practical issues like cost and time, capacity and capability, choose the most appropriate strategy for each gap.
Then identify those strategies as being short-term (you can complete it within a year), medium-term (it will take 2 to 5 years to complete) or long-term (it will take more than 5 years to complete). As you allocate these strategies, consider things like whether you have the capital to invest in the strategy now, or if not, how long will it take for you to afford it, whether you have the time to do it within a 1 year, 5 years or longer timeframe, and so on.
This is not a strictly scientific assignment of the term, but based on how you feel under the circumstances you know of today.
Granted, your thinking might change if you win the lottery tomorrow, but you can only make predictions and plans based on what you know right now.
One piece of advice – be realistic about not biting off more than you can chew. As you implement your chosen strategies you will have other, “normal” day-to-day things to do in your business. Be wary of allocating everything as if you will work on them and complete them all within the first year! It is better to spread them out realistically than to list them all as short-term and fail.
Label each strategy “S” for short-term, “M” for medium-term, and “L” for long-term.
Then on Day 4, you will continue to work on the strategies by deciding on some milestones for each medium and long-term strategy over the next 4 or 5 years.
This should take about 2 hours, but maybe a bit longer if you have a lot of strategies.
Once again, heed my warning about having too many strategies to implement in the next financial year. In fact, before you start Day 4’s challenge task, review your list of short-term strategies to make sure that you are confident in being able to implement them in the first year – along with working on the early milestones of some of the medium and long-term strategies!
When you are ready, take each medium and long-term strategy and decide on the type of steps you need to take, and what kind of outcomes you would like from each step. Then decide on which ones are the major outcomes you would count as being important “milestones” toward the completion of the strategy.
In the above example of getting more expert employees, the steps might be:
- Have our current expert take on an apprentice in Year 1
- Put aside some of the annual profits to employ a second expert in Year 2 and a third in Year 3
- Make sure the apprentice is tested in Year 4 and qualifies
- Start another apprentice training in Year 4
- Hire another expert in Year 4
- Hire another expert in Year 5 and make sure the second apprentice qualifies that year.
- By the end of Year 5 have six suitably qualified experts.
The major milestones of this strategy are marked out in bold – being outcomes 1, 2, 4, and 7.
The next step is to write your complete list of all your action items for Year 1.
These are all the short-term strategies that you think you can complete in one year, plus all the milestones of the longer-term strategies that you have allocated to the first year. In the above example, item 1 goes on the list.
Once again, before you finish – look at the complete list of strategies and milestones for the first year and ensure you are confident you can complete them in the next financial year. These will become your action items to plan for on Day 5.
On Day 5, the final day of the challenge, you will plan to implement your one-year strategies during the next financial year.
The amount of time you need will depend on how many strategies you have chosen to implement next year and the complexity of these strategies.
An estimate is about 10 to 30 minutes per strategy. You will need the time to take each strategy in turn and lust the steps you need to take in order to implement the strategy, then allocate a person who will be responsible for each step, a deadline by which they will complete that step while noting any resources they may need. These are called Action Plans.
So, to detail this further, take each strategy, in turn, to work on.
Make sure that you label the strategy and identify what the goal (outcome) is. This will keep your planning focused on achieving the goal and keep you from distracting yourself with unnecessary steps.
Write the steps you need to take in order to implement the strategy, in chronological order. In the above example, in order to implement the strategy of “have our current expert take on an apprentice” the goal is to start a training program where an apprentice qualifies as an expert in 4 years time. The steps are:-
- Discuss the training responsibility with the current expert and negotiate any new remuneration
- Identify the type of apprenticeship and qualification required
- Choose one of the existing employees and negotiate their participation
- Enrol them in the apprenticeship
- Start the training program
Outline any specific actions required in each step so that everyone is clear about what needs to be done. Make sure that you also identify any special resources that may be required before the action can be undertaken.
Define the required result of each step so that everyone is clear that there is a purpose to the action, and not just taking action for no outcome. For example, the required result of “discuss the training responsibility with the current expert and negotiate any new remuneration” is to sign a new contract with the current expert to provide the training.
For each step, identify the person responsible to get it done. This is not necessarily the person who will undertake the action, but someone responsible to organise everything around it.
Finally discuss with the person responsible and agree on a deadline for the action. Obviously, each following action will have a later deadline.
That’s the end of your five-day challenge to design next year’s strategies to take your business to the next level.
During this challenge, you will have thought about your Vision for the future successful business you really want to build and defined the critical factors that will make it a success. Then you will have understood how far you are from those critical success factors (“the gap”) and then created appropriate strategies to close the gap, before isolating strategies and achievable milestones for longer-term strategies to implement in the year ahead.
This is part of the process of Business Planning and if you would like to learn more about how you can prepare your own Business Plan, I have prepared a short four-part video-based free training on how to do just that. It is a practical course taking you step-by-step through the process and you can get it here.
All you have to do now is to start implementing your Action Plans, and schedule regular reviews to monitor your progress and achieved outcomes, and make adjustments to strategies as required.
Well done on completing the challenge and good luck next year!