Hope is Not a Strategy
While running a business accelerator workshop about a year ago,I found myself in the midst of an intense discussion about the challenges that business owners had faced in the past few years. One particularly animated and successful business owner of a heating, ventilation and air conditioning (HVAC) business shared severe frustrations with his current year revenue projections—describing how revenue had dropped by about $2 million. My first question to him was related to what his strategy was for the upcoming twelve months to remedy this dire situation. He didn't hesitate to explain that he hoped it would be better, then he smiled and said, “No, I am confident it will be better.”
Naturally, I was curious about what he was doing that made him so confident he would turn things around. He explained, “I have a lot of ideas that I plan to implement.” I asked if he had any type of written plan or if he had shared these ideas with his team. He was clear that the ideas were simply in his head with nothing formally in place.
I applaud great ideas. We all have them rolling around in our entrepreneurial heads. Not having a specific plan, however, can be dangerous. Ideas that sound good in our heads very often turn out to be not so great when put to paper and shared with others. In good times, we sometimes can get by on a wing and a prayer because there’s a strong demand in the market. While I don’t suggest cruising during good times, when demand is strong it is easy to become complacent with the opportunities surrounding us. I believe most business owners genuinely want to grow their companies and aren’t sitting around basking in glory during good times.
However, it’s the truly committed business owner who will go the extra mile to look for new opportunities to expand, both in good and bad times, rather than simply take what is presented because it’s a wealth of riches. But even this person needs a plan that takes ideas and transforms them into an action plan that he and his team can deploy. After all, execution is the key to success, not good ideas.
If you’re relying on hope or perhaps a little luck without a plan, there can be severe implications for the impact it will have on your business. In good times it means you might be missing opportunities that are just beyond your reach. Perhaps you don’t see them because they’re a stretch or more difficult to achieve than what is simply showing up at your doorstep. However, not having a plan during bad times might lead to the end of your business. This HVAC owner’s inability to articulate the ideas made me (and his colleagues sitting around him) ponder how he would move beyond hope as a strategy for growth and come up with a real plan to execute. Unfortunately, I don’t know what he did but after our discussion he recognized the importance of having very specific goals and I certainly “hope” he created a plan for his company.
It’s June and we’re almost halfway through the year. What's your strategy for the rest of 2011? Are you translating your vision onto paper and then into reality since this will give you the greatest chance of driving profit and revenue into your business?
Ask yourself the following questions to help determine next steps:
1. What are the two most important business goals for our company to achieve by year’s end?
2. What external challenges, if any, do we face in making these happen?
3. What internal challenges, if any, do we face in making these happen?
4. What tactics do we need to launch in the next 90 days to achieve these goals?
5. Do the people on my team have the right mix of experience and skills, and are they empowered to support the goals?
6. Are there new opportunities that my company should consider in the next 12-24 months? If yes, what tactics will I need todeploy now?
7. Are there markets (different industry or perhaps a new sector) I successfully cantarget that my competitors don’t dominate?
Once these questions are answered, you should be ready to articulate two critical goals to achieve by the end of 2011. While writing the goals, make sure you describe the specific actions, deadlines, measures of success and individuals responsible. Keep in mind, as you grow, the resources needed may change, so approach this document as a living, working tool for you and your team.
Sit Right Down
Take out a piece of paper and write down your top two business goals for the next six months—right now—before you have the chance to get involved with some part of your business that is calling you. There’s always going to be another distraction for your attention. But if you don't articulate your goals, then your chances of successfully achieving them are rather slim.
One important criterion for success: Make sure these goals are S.M.A.R.T. goals. If you’re not familiar with that concept, here’s how it works. Each letter represents an important aspect of goal setting:
S=Specific: This may seem obvious but you’d be surprised how often I read useless, wishy-washy goals. For example, a non-specific goal is something similar to, “I want to increase sales in the next year” or “I want my customers to be happy with my services.” These may be typical “goals” but you have to consider if you’d be happy if you increase sales by just one dollar even if your costs increase by two dollars. Naturally, that’s absurd. But if that’s the goal you set and you achieved it, then your goal wasn’t worth the time it took to create it.
Here’s an improved goal: “I want toincrease my profit (not sales) by $50,000 in the next 90 days.” That’s better, right?
The question about happiness (customersatisfaction) is a little more complicated because you have to measure and benchmark customer satisfaction in order to know if you’re achieving it. A goal might be to launch a survey to measure specific customer satisfaction levels with various areas of your business and set target figures for that (e.g., all measures must achieve at least a 4 out of a 5 score).
M=Measurable: Measuring goals is a fundamental part of being specific. If you can’t or don’t measure a goal, you can’t manage toward it, and are that much less likely to achieve that goal. Again, setting a benchmark that you hope to achieve is important. Let’s look at a goal that might appear to be easy to measure on the surface but in fact is difficult. I want to increase my profit margin on all of my products by 3 percent. Here’s the catch: Do you know what your current profit margins are? Many of you may. However, I’ve worked with a lot of clients over the years who have a general sense of their profit margins (this applies to many manufacturing firms) but don’t really know specific margins because they have been estimating costs and applying them across the board to all products or groups of products.
The important aspect of setting a margin-driven goal is that it very likely will shed light on what data you know and what you thought you knew but in reality don’t have a handle on. This plays into the “A” of the S.M.A.R.T goals. Is it achievable?
A=Achievable: Now is the time to figure out if the set goals realistically can be reached. Let’s say you’re running a bakery and the goal is to increase production of the most popular item—biscotti—by 30 percent in the next 60 days. Can you actually achieve this given the nature of your business? Do you have the manpower and/or expertise to achieve this? How will you do it, and who will be responsible? What will this do to the rest of your operations? A key element of having an achievable goal is ensuring that you have people on board who not only have the expertise required but the time to commit to the initiative. This tends to be where great ideas end up in the trash. It works on paper but if there isn’t a dedicated individual responsible to make it happen (it doesn’t have to be the business owner), then usually it won’t get far.
R=Realistic: Realistic is similar to achievable except the difference is that you might be able to achieve this given all the resources needed, but it’s totally unrealistic in terms of the overall goals for the business. For example, if your strategy is to grow profit by 20 percent year over year, does this align with your other goals? You might be able to achieve it, but the reality of its impact on long-term goals might cause major conflict or severe damage.
T=Time-based: Time-based always seems to be the simplest notion yet one that people simply forget.Increasing sales by 30 percent in the next year needs some more dates around it. Are you increasing sales for specific products by the end of your fiscal year? Do you have a date when you will review the goal and determine if you achieved it, or is “whenever” good enough (I certainly hope not). Do you have interim deadlines and milestones that will help keep you on track for the entire year?
Once you have your top two S.M.A.R.T. goals, post them to share with your team. Look at them daily and note how you are executing your plan. By doing this, you should stay focused on achieving what matters to your business.
Consultant, nationally recognized trainer and speaker, author of "The Ultimate Small Business Marketing Toolkit," and educator at Boston University, Beth Goldstein helps manufacturers grow their firms through increased profit and improved customer satisfaction and loyalty. Beth can be reached at beth@m-edge.com.