How would you respond if someone asked “what’s your growth plan for next year”? In answering the question, you may find that you really don’t have a satisfactory answer. One of the causes of this lack of planning is the tendency to derive business planning from the budget process instead of the other way around. The budget should give the financial backing for the business plan to be executed. By deriving the business plan from the budget process, managers often miss critical business issues that need to be addressed in the coming year. Throw in the year-end reconciling of financials and it’s easy to see how planning is dominated by analyzing and discussing numbers on spreadsheets.
Effective business planning requires a more holistic approach where management not only is aware of the financials, but also will evaluate each core driver of the business to identify areas of improvement for the upcoming year. The three core drivers that need to be reviewed and challenged include your sales strategy, operational effectiveness, and the performance driven culture. You can find more information on those drivers and how they drive your overall business strategy here.
Some questions to get you started are listed below.
Sales Strategy: Is defined by your value proposition, the buyers you are targeting, and the sales process you have to execute.
- What accounts provide the best opportunity for growth?
- Do we have the right/enough resources allocated to those accounts?
- How healthy is the target account funnel?
- What parts of the sales process need to be strengthened to remain competitive?
Operational Effectiveness: Increasing competitiveness by improving productivity and driving out waste.
- How can we improve recruiting responsiveness?
- How can we lower the cost per submittal without significantly impacting quality?
- How profitable are our accounts? Are there some that are unprofitable?
- Are there any processes or tools that must be improved in order to remain competitive?
Performance Culture: Ensuring that the company has the right policies and techniques to drive individual and team performance.
- Is the compensation plan driving the right behavior?
- Are we effectively communicating with the team?
- Do we need to add/modify non-monetary incentives?
- What training/coaching do we need to provide to drive the right behavior?
- Do we have the right people in the right roles?
Contemplating these questions will give some insight into how the core drivers can greatly impact the priorities for the upcoming year. While the questions above are by no means comprehensive, they give clarity to the nature of each driver, and the types of challenges that are appropriate.
It’s also important to keep in mind that many of these questions provide the framework for the type of metrics that a company should be utilizing. The development of those metrics will be the topic for the next newsletter.