Last week I met with a small business owner who was having trouble “executing” her business plan. It turned out that her “plan” had been developed for her by a trusted advisor and was largely devised from a template which looked predominantly at financial indicators. The “plan” told her that she needed to achieve a certain gross profit, achieve certain ratios and keep costs to a certain level.
She has been meeting with her advisor on a monthly basis for the last 5 months and she tells me that each meeting comprises of him looking at her financial indicators and simply telling her “to do better next month because your not achieving your targets”.
And that is where the “plan” stopped. When I asked if they had devised any strategies to achieve her targets, she told me that apart from setting the level of the indicators, there was nothing else.
Now, this small business owner had been referred to me by one of my clients. My client believed that the Small Business Owner was not receiving good value from her trusted advisor.
I tend to agree – financial indicators are targets or indicators of performance, they are not strategies in themselves. If your business “plan” comprises solely of financial indicators, you are missing an important point – in order to achieve those indicators, you need to implement activity to achieve them.
No activity towards your targets means you do not achieve your targets – simple.
Business planning is much more than financials, it is about the four pillars of any business – Customers, Finance, your internal processes and finally, your ability to learn and grow (your business and yourself). Without activity in all four of these areas, some part of your business development is likely to falter in the long term.
When developing business plans for our clients, we look into the activity needed in each of these areas and come up with strategies in each of them. This way we ensure sustained, achievable growth designed to meet the needs of the Small Business Owner and the Business.
Finally – That small business owner is now a new client, we met yesterday and begun developing strategies and activities to achieve those financial goals. We worked together, we developed goals and at no time did I just tell her “to do better”.
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