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Ask SCORE: Effective planning in small business: 5 ideas for successful plan development and execution
Effective planning in small business
5 ideas for successful plan development and execution
By Richard Walton, Assistant District Director for SCORE
Small Business Planning can be made more effective, even without the infrastructure that larger companies use to create highly detailed and comprehensive plans covering all phases of their business operations. They can differ from small business plans in their complexity, time horizon, focus, and goals. Small businesses plan for a short time horizon and are usually focused on sales, profits, and cash flow. In many cases, the real emphasis is upon survival, particularly during bad economic times. Yet there is the potential for even the smallest firms of doing far more than merely surviving; Planning can be the key to prospering, regardless of present day business conditions. And effective planning coupled with efficient implementation can help bring about productive outcomes. Below we present 5 areas of concentration for optimal small business planning and execution.
1. WRITE A STRATEGIC PLAN AS THE BASIS OF A BSINESS PLAN
A Business Plan is typically focused on the start up of a new venture covering the business concept, products and services and expected financial results. It is not focused on the longer term objectives of the business, its vision, mission and values. Yet these are important concepts and a failure to address them leaves the firm adrift and rudderless in the potentially stormy seas of marketplace competition.
What is needed is a Strategic Plan to be used as the basis of a Business Plan. The strategic planning process begins with an assessment of the strengths and weaknesses of the proposed enterprise and the opportunities and threats it faces in the marketplace. This analysis (commonly referred to as SWOT) gives a clear picture of the internal strengths and weaknesses of the firm, and the external opportunities and threats present in the outside environment. It is then used to develop the vision and mission statements for the firm followed by a statement of values and principles that the firm, its managers and employees will utilize in its operations. Thus the strategic plan forms a sound basis for the establishment of both an identity and a clearly defined goal set as well as a way of operating, all of which lends structure and power to the business plan.
2. USE BOTTOM UP PLANNING AS WELL AS TOP DOWN
Top down planning is focused on the total enterprise, sales, costs, profits, and cash flow. While these top down measures are valuable and necessary, they do not form the basis of an action plan for employees who have to work on the bottom up details, such as individual products and customers. For example, field sales reps deal with customers on a one to one basis (bottom up) and need to be effective in that contact work. Individual employees are all about working from the bottom up. In fact most organizational work at every level except the top is done this way, and plans have to take this factor into account in order to be effectively implemented.
3. KEEP IN MIND THAT PLANS ARE MADE TO BE IMPLEMENTED
Planning at all levels in an organization must take into account how the plan will be implemented. It is basically a waste of time to develop a plan which cannot be executed as planned due to constraints in resource availability or capability, or unrealistic time frames.
Implementation takes place within the context of other work that employees and managers are going, and must therefore be considered as additional to existing job requirements. All resources, including personnel as well as equipment must be capable and available for the new work required by the plan as well as maintaining previously assigned tasks.
Execution also typically involves new requirements for data management systems as well as new forms of personnel interaction and collaboration. Managers must be diligent in ensuring that everything needed for the new plan is in place while at the same time making certain that the regular work of the organization goes on without interruption. Depending upon the magnitude of required change and potential gain that is involved in the plan and its execution, top management participation on a daily basis could also be required.
4. BE FLEXIBLE IN IMPLEMENTING AND REPLAN WHEN NEEDED
It has been said of military planning that the best made war plans rarely survive the first shot fired in combat. The civilian counterpart to that theory is that a carefully crafted business plan based on an equally strong strategic plan may not survive completely intact its first exposure to the realities of the marketplace.
This is to be expected. We can never fully anticipate everything that may happen in the constantly changing business world of today. But we can adjust both our procedures and our goals, whether up or down, to address these new realities. We must remember as well that new realities are not always going to have a negative impact on our plans. It is perfectly possible that changes could uncover new opportunities and thereby raise our performance potential.
The important point is to be open to reality on the ground, and adjust expectations either up or down, as the case may be, but never remain focused on a plan that field conditions have rendered obsolete.
5. KEEP A RECORD OF ASSUMPTIONS MADE IN PLANNING
The value of the planning process is judged at least in part by the outcome of its execution. This forces a separation between the could be and should be of the planning phase to the was and is of the execution phase. It is difficult in the face of either success or failure to determine whether the outcome was due to the excellence of the plan or to its expert execution. Whether good or bad, the outcome is likely to be a function of both factors.
Which brings us to the need to record the assumptions made and incorporated into the plan and its execution. We can only learn from the why of faulty decision making and implementation, not the actual results alone. Why any given action was taken is a function of our assessment of the correct course of action on the basis of information available there and then, but the outcome is realized here and now, and as we all know, hindsight is always 20/20.
The ideas presented above can form the basis of a new energized small business function that effectively creates the foundation of a profitable and resilient enterprise. SCORE and its counselors are experts at helping small business owners and managers realize the true potential of their businesses and are available without charge to help you create and implement sound business plans.
Mr. Walton teaches Entrepreneurship and Quality Management at Frostburg State University. He is also Assistant District Director for SCORE, Western Maryland, and the President of ERMACORP, a Hagerstown based Management Consulting Firm. He may be reached at 301-462-9850, or by email to Richard@ermacorp.com.
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