Here’s the problem: The characteristics that make up a great entrepreneur—good business instinct, passion, unrelenting drive, single-mindedness (ability to focus), decisive action (ready-shoot-aim)— tend to make the small business owner a poor formal planner. Why waste time creating a plan on paper when you’ve already done it in your head many times over? Why set aside time for “formal planning” when one already knows what needs to be done? Why would anyone document a plan when he or she might be the only leader in the business? Reason: Because any business is a complex system. It’s too easy to overlook, underestimate, or not fully address one or more elements of the business with all of the day-to-day stuff swirling around in your head. I know. I’ve worked with countless brilliant entrepreneurs. I have yet to work with a small business leader that didn’t benefit from an infusion of planning discipline. That said, let’s look at what I would consider to be the two most common and detrimental planning faults and how these can be corrected.
Common Fault #1: Ineffective planning or, more likely, no written plan at all
A traditional plan should include: 1) Vision and purpose. This is why the organization was formed, where it’s going, and what it will look like when it gets there; 2) A mission statement or “What you are striving to achieve”—looking out 18 to 24 months; 3) High-level objectives. These represent the key areas of action for the next 18 to 24 months and serve as the framework for any plan. The test of a solid set of objectives is “If these objectives are accomplished then the business will be successful”—or, at minimum, milestones are achieved, and 4) Initiatives or projects that need to be completed to achieve those high-level objectives. These initiatives usually fall into the functional categories of Sales, Engineering, Marketing, R&D, Finance, etc…
If you have a written plan then you are ahead of the game. If your plan isn’t the topic of conversation at least bi-monthly in your leadership meetings (or reviewed individually if working by yourself) then you’re missing boat. A plan is dynamic. It must be nurtured, evolved, tested, adjusted. A written plan provides context for action: assumptions are documented, history can be examined (what’s worked in the past and what hasn’t), and most of all a plan provides discipline—because if you are working your plan you will invariably learn, grow, course correct, and constantly true-up execution so that you get the best bang for your buck. Also, a written plan is like an orchestra’s musical score. As you bring more specialists (musicians in this example) into the company they too will be able to jump in and contribute in tune and in synch—minimizing ramp-up time.
Additionally, planning is many-times short-circuited. In other words, the company has a plan but how the plan was developed is problematic; not well thought through. This is the kiss of death since something on paper can look official but in reality it could be based on faulty assumptions and incomplete or missing data points. A poorly conceived plan can provide false security—which is worse than no plan at all.
So, create your plan and work your plan. Quality planning doesn’t need to take a lot of time but the planning investment can’t be shortcut. Otherwise resource deployment will be out of focus—costing valuable time and money.
Common Fault #2: Deploying resources out of sequence
Planning always produces a list of work that needs to be done. It’s never a short list. In fact, many times it is a list that exceeds the time and money available. The common complaint of most managers is: “I don’t have enough time and resources.” What’s the solution? All too often the solution is to prioritize a list of initiatives. This is where the fun begins. Bright, motivated leaders spend time debating priorities and making a case for resources. I call this activity “resource roulette” because at this juncture resource allocation might as well be gambling since the logic on which it is based is severely flawed.
Why? Building a business is not simply about executing on a list of priorities. Building a business is more like building a house. When building a house a foundation must be finished first. There is no debate about this. Next, walls must be erected before plumbing and wiring can be installed. No one would dream of putting on the roof before the walls were built—and in reality it couldn’t be done. When one builds a house there isn’t debate about priorities. The house is built on the basis of sequence or the logical order in which work needs to be accomplished. And here in-lies the root problem: organizations (large or small) are very, very complex systems (even start-ups) with a high sequential relationship between high level objectives and initiatives (where the work gets done)—but this sequential relationship isn’t obvious. And, “the sequence” is further hidden when bright, energetic functional leaders (sales, marketing, engineering, etc…) act independently to create (and prioritize) their respective plans of work to be performed. Without a company-wide sequenced based plan the organization is doomed to essentially work against itself as an army of motivated employees pursue goals and objectives that aren’t in unison. This creates over-investments in some areas, under-investments in others, and even no investment in yet other critical areas that might have fallen between the cracks.
As an example: Updating a computer system might not seem like the highest priority when compared to hiring sales people—especially with pressure to generate revenue. However, when examining sequence, one might find that upgrading the computer system is higher in sequence than hiring sales people because it provides the infrastructure to perform efficient customer demographic research for existing sales people and will help maintain optimal customer service—both critically needed foundational aspects for business health—that sequentially precedes hiring sales people. This is not to say that many concurrent activities will need to be performed in companies. That’s life. It is to say that the effective leader understands the inherent sequence in building the business and invests accordingly.
Given this discussion, throw away your list of priorities. Examine the 6 to 10 high-level objectives that are being used to drive the business. Put these in sequence (like building a house). Then, map all initiative and other project work to these sequenced objectives and you’ll discover the most efficient resource (people, time, money) deployment scheme for your business. A business can experience 12% to 20% productivity gains with effective resource sequencing.
There is surely nothing quite so useless as doing with great efficiency what should not be done at all. –Peter Drucker