The Big Picture, Do you Have One?
I am sure you will agree that the most difficult part of running a business is not being able to see the overall woods because the trees get in your way. How can you pull yourself out of the woods long enough to see clearly how and what you need to do to take your business to the next level?
Let me ask you this, if there were no obstacles in your way what would your business look like in 2016? How much would your sales be? How would your business be operating? How much more time would you have to spend with your family? How would it look if everything were exactly like you wanted it?
To get where you want to go you have to have a plan. Sitting down and creating a Strategic Plan for your company will pull you mentally out of the day-to-day and help you to develop the overall “Big” picture for your business.
There was a wise man who once said in order to succeed you have to plan your work and work your plan. I have known people who spent more time planning where they were going on vacation than they spent planning their future. In this economy, if you are not planning to succeed, you are planning to fail.
The rest of this article covers the simple steps of putting together a Strategic Plan. A Strategic Plan is the “big” picture for your business. If you want to have huge success in 2016 and beyond this could be one of the most important tools you can have.
What is a Strategic Plan? Simply put, a Strategic Plan is the overall “big” picture plan for your business. Without painting the “big” picture, it is easy to wonder around and not get anywhere. You may think that strategic planning is something a large corporation does. That is true. The fact is the smaller the company, the more important having a strategic planning is. The reason is because with a smaller company, the owner or manager is wearing a lot of hats and is doing a lot of the day-to-day production related activities of the business. A fire here, a rush of business there, followed by a crash there and it is very easy to lose your direction if you don’t have a plan.
I use the term “big” Picture Plan because you are going to paint how you want your business to look in the future. From there you simply work backwards planning what you need to do to make the picture you painted a reality.
To develop the big picture you need to first take an assessment of where you are and compare it to where you want to go. The basic information you want to pull together is from 2013 and is as follows:
- Where did your business come from this year?
- How much did your average customer spend with you? Divide your total revenue by the total number of customer transactions in 2013.
- How much of your total business came from one or two customers? Having large customers is a double edge sword in that it is good to have a few large customers to handle, but on the other hand you are one or two phone calls away from being in real trouble.
- How many customers make up 80% of your sales?
- How many customers make up 60% of your sales?
- What are the characteristics of your top customers?
- What products sold the best?
- Did you make money selling these products?
- How did you promote?
- What ad or medium pulled the best?
- Who bought the product?
- Why did they buy it from you?
- What areas of your company are most overloaded?
- What areas in your company are giving you the most trouble?
- Do you need to hire someone to cover those areas?
- Do the employees in those areas need more training? An untrained employee can create a huge amount of extra work and turmoil.
- What current capabilities, facilities and equipment are needed to produce your product?
- Do you have equipment that needs repairs?
- Do you need new equipment to deliver your product?
- What were your total sales for the year?
- What were your profits for the year?
- What product or service generated the most profit?
- Do you have debt you need to handle?
- How much do you have in reserves?
- Do you have an emergency fund?
Now that you have taken an assessment you have a picture of where you are today. Let’s chart a course to where you want to go. Working backwards from Finance, how much money and finances are needed and what do you need to do to produce it. Write down what the annual sales volume would be to put you above the make-break point in your finances and then add 15% to that number. The 15% is a sort of a safety net that allows you a buffer for unforeseen occurrences and expenses.
Now you want to find out roughly if nothing changed in terms of the number of customers you serviced from 2015 to 2016, what would your average customer need to spend with you in order to put you above your make-break point. Simply divide your 2015 revenue goal by the total number of customers you had in 2015. This will give you an idea of where your average sale per customer needs to be to hit your number. (You can also work this equation on a transactional level by dividing your goal for the 2016 by the total number of transactions in 2015). You are going to plan to grow the number of customers in 2014 as well as the amount each customer spends with you. This is a 2nd buffer in your equation for success.
Now let’s determine the other side of the equation, how many customers you need to sell in order to hit your 2016 goal. Take your 2016 sales target and divide by what your average customer spent in 2015. This will give you the total number of customers you will need to service to hit your sales target in 2016. You can divide this number by 12 (months) to get an idea of how many customers or sales you need to average each month.
Between one and two above you will be able to develop a strategy that is a combination of increasing your average sale amount and also increasing the total number of people you need to service to hit your sales goal for 2016.
The final step is to take the data you gathered and write (in a simple understandable form) an overall plan for 2014 including timelines and targets. Start with a simple overall statement of where you are now, briefly explain what the problems were in 2013 and areas that performed well. In the next paragraph state what is needed to be done to get you where you want to go. At this point in the Strategic Plan you are using broad-brush strokes. You are stating your overall broad goals and intentions for the upcoming year. In this next step you will get more detailed.
The last step, you take the major areas and set specific production targets and goals. For example: Increase our sales forces and the overall (broad-brush stroke) part of the plan becomes 1) Hire and train 2 sales people by March.
Under that you would list the actions. 1) Run ad. (with date done by), 2) Do interviews and hire best candidate, 3) Get the new sales people trained and on the job producing. Be sure to include the time when each action needs to be done. Go through each of the areas of your company you covered in your Strategic Plan and work out the exact steps you need to do.
After you finish you will have your plan for the year and you can easily see what you need to do each week to progress toward the “Big” picture you created. You will have a tool that will keep your employees and you on track for 2014.
It was once said that a journey of a thousand miles starts with a single step, now you have direction to guide your steps.
A marketing plan should be part of your Strategic Plan. Here is an article to help you develop a marketing program to boom your business to the next level.
I hope this helps you have a great year.