The First Thing in Business Plans

One of the challenges of being a Business Coach is that people approach us with a Tactical Mindset.  They want me to tell them what I would do for their business today.  I do have people hire me that way, but I consider that Consulting and it is almost always project work.  I perform a specific task or set of tasks for them for an agreed upon price.  There is nothing wrong with Consulting and there are cases where people should hire me as a Consultant.

Coaching is not Tactical.  Coaching is Strategic.  When I meet with people, I want to talk about Vision, Mission, and Values.  This is a hard conversation because they see the Tactical.  It is natural.  The thing is that the Business is a journey.  Without knowing where you want to end up, then it is really hard to know if you are headed in the right direction.  So when people ask me about Tactical work, I know they either have a really good handle on the Strategic or no handle on the Strategic.

The place I start to investigate this is via Vision.  When I ask for a Vision from many owners, I often get a Mission Statement and I have to back up to what a Vision actually is.  A Vision is a Destination in the Journey of the Business.  For ongoing businesses, this may be a Waypoint to the next Vision.  For other people, this defines the end of the Journey as they are exiting the Business.  Either way, it has a number of S.M.A.R.T. attributes.

One of the ways that I find that this is a Mission statement is that what I am told that they are “The Best at Some Occupation”.  That can be part of a Vision, but then we need to define how this will be measured and what other Parameters can be defined.  For example, maybe I could be “The Best Business Coach” by having a specific number of speaking engagements, a specific number of books sold, or a number of blog followers.  I could also use Revenue or Number of Customers or Customer Revenue Growth as potential Metrics.

A more typical example of a Vision would include specific Revenue, Profitability or Business Valuation.  When Business Owners write down a Vision, this is not normally where they Start.  Once a Vision is defined, there is a lot more work to do.  However, with at least this much in place we can start looking at the Tactical Work and see if it makes sense it the current content.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

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Business Plan Building Blocks

I just finished a series of blog posts on the primary causes of small business failures.  One of the best ways to avoid this fate is to have a living Business Plan.  We will get to the living part over time, but we need to look at the right way to build a Business Plan.  This blog mini-series will help owners organize their thoughts coherently to be able to produce an effective plan.

Most people think that creating a business plan is a linear process.  You fill out some forms and some spreadsheets and it is done.  You then put that document in a drawer and leave it until you clean out the drawer.  A true Business Plan is a living document that requires iteration, even at the beginning.

There are two overall portions of a Business Plan.  They are the narrative and the financials.  These portions need to support one another.  This means that if you have a financial projection to grow revenue, then you need a narrative on how you are going to achieve that growth.  It needs to be obvious on how these connections are made and how any changes will work.

Most Business Plans are three (3) to five (5) year documents.  You will have a supporting Annual Plan for the current year and that needs to line up and be the next step in executing the Business Plan.  The reason that the Business Plan is extended is that you want to be able to produce the Business that you want.  If the time frame is too limited then there will not be enough time to change the direction of the business.

I will talk about the narrative first in a series of posts, but this will break down into several major sections:  Mission/Vision/Values, Market, Customers, Products/Services, Sales and Marketing, Operations, and Administration.  Depending on the business, some of these sections will be significantly larger than others.  But each area needs to be touched upon and has a definite purpose.

Have a great day!

Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

As we Approach the 4th of July

I sit here and wonder what our founders would have thought of all the troubles we face today.  I think that they would be shocked by our society in general, but understand that the things we argue about now are often things that they argued about.  Sometimes they use harsher rhetoric and move violent methods than we see today.

We use the 4th of July as the Celebration of the Declaration of Independence.  We announced that Life, Liberty and the Pursuit of Happiness was rights of all.   We declared that all men are created equal.  We formed a government that lasted for about 11 years.  Our replacement government had slavery written into its fabric and it would be another four score and seven years before this was overturned with blood.

Our conflict reaches back even further with direct causes in the English Civil War.  Parliament inserted its rights, especially over taxation.  British Colonies (including the US) were under the direct control of the King.  The pushback on taxes was about being taxed at all, but also over the right to vote on those taxes like English citizens in the United Kingdom could.  Having Parliamentary representatives would not work due to distance.  You could not expect to get a fair read from voters that were months away on news.  The King did not want an American Parliament to be formed (like the Continental Congress).

Before we sorted out these major early issues, we had fought four major wars.  We had duels over policies.  There were fist fights in Congress.  There were many horrible acts of violence in places like Kansas.

But here is the thing.  In the end, we have always come back together.  My neighbors are not my enemy.  We might disagree.  But my fellow Americans are not my enemy.  Demoguegory and Mob mentality is the enemy.  So, be civil and work together to govern.  In a Republic (and the US is NOT a Democracy), compromise makes governance possible.  Calling the other guy stupid or evil does not help.

So, please have a safe, fun and Happy 4th of July.

Jim Sackman

Focal Point Business Coaching

Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Make Your Business Plan Live

As I finish up this series, I want to talk about Business Plans and Annual Plans.  As I mentioned last week, they are only useful if they are living documents.  By that, I mean that you use the process to help manage your Business.  Many people write plans or at least outline them.  Most beyond that do not use them to manage their business.

I have often related the story of how AFC went through its business planning process that ultimately led to The win of the Verizon FiOS business, the purchase of the Marconi Access Business, and the Sale of AFC to Tellabs.  It is this last that you must recognize as Vision.  We had concluded that we were not going to thrive through the consolidation of the telecom carriers.  Our vision was to sell the company before that and profit our shareholders as best we could.  The other outcomes were steps along the path to making AFC more valuable to potential buyers.

So, how does this work?  To start, there needs to be definable metrics along a plan defined.  AFC was a public company and thus a quarterly review was quite natural.  Smaller companies might want to do a monthly review, but quarterly is completely reasonable.  These metrics were not strictly financial.  What we are all looking for is Key Performance Indicators (KPIs).  KPIs are business activities that companies do that lead to the bottom line.  The simplest example is in Sales.  How many prospects need to be contacted over what period of time to generate a certain amount of Revenue.  It is easy then to verify that the correct number of contacts.

The idea being that if you are doing the things that drive business then you will get the business that you need.  By measuring them you will find out how well your plan is working and be able to make adjustments.  If you are not getting enough customers from those contacts in our example, then you have two choices.  You can either make more contacts or adjust your strategy on who to contact.  The goal does not change but the way to achieve it does.  Without these metrics and plans, then you are unlikely to make adjustments to your business activity.

Now, you are likely sitting there saying that you are not sure what business activity drives the bottom line.  I will point out that this is a problem and you probably will want to think about this over the upcoming holiday.  Alternatively, you might want to hire a business coach or consultant to help you wrestle the problem.

Finally, I also suggest that you put these metrics in a Stop-and-Go format.  Think of them as a traffic signal.  Green is good.  Red is a call for change.  Yellow is caution, where it is okay but you are in danger of going Red.  And keep these charts relatively small.  I always suggest that the three common financial metrics (Revenue, Gross Margin, Net Margin) are always included.  No more than two or three others should be included.  Many more than that dilutes the process.

That should help you make your Business Plan come to life.  If you have any questions, feel free to contact me.  Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Time and the Path Forward

I have posted about the top 3 things that make businesses fail.  Now I want to talk about the primary wake a business succeed:  Time!  I know that sounds a bit crazy.  But in the end, companies that use Time well are those that make great businesses.  Let us look at our 3 negative factors.

Capital is required to perform functions efficiently.  Underfunded Companies bottleneck themselves.  I was talking to a prospect the other day about challenges with his Marketing.  He expressed a Time Crunch to get the work done.  We talked about a part-time position that he could use a College Intern to do.  He had considered other options but they were all “too expensive”.  Not Marketing efficiently is “too expensive”.

Sales and Marketing are all about bringing good prospects to your business and converting them into Clients.  I had a client that was searching far and wide for customers but had a place of business right next to 250 ideal prospects.  I got her to understand that she should focus her marketing on that 250 before she expanded out to other audiences.  This helped make her business grow and thrive quickly.

People and Organization are all about scaling effectively.  I have a client who was always looking for entry-level employees.  I showed him a way of hiring higher end employees to manage sub-contractors.  This allowed him to expand his business by 3x in profit over 2 years.  Having the right people and having them do the right jobs is the way to build a path forward.

If you want a positive initiative, then build a living business plan (not just one that sits in a drawer).  You can write measurable objectives and hold yourself accountable for meeting them.  You can see where you are off-track and correct your course to hit your goal.  It is the right thing to do and will help you spend your time on the right things.

Have a great day!

Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

http://www.jimsackman.com/

Do You have the Right People?

We have talked about the challenges of Finances, Sales, and Marketing.  Now, we come to the last of the big 3 company problems:  People.  For most companies, people directly contribute to about 70% of Operating Expenses.  That means having the right people and employing them properly is a top priority.

To start with, this means that the people in your business need to understand their job descriptions.  Many small businesses do not have formal job descriptions and employee handbooks.  You should consider that unless you tell people what you want them to do then they will what they consider is correct.  The first step here is to define the job and the rules of employment.  By doing this, you provide a shortcut to productivity increases.

The second thing is that there needs to be a model for delegation.  I prefer the Trust Model of Delegation.  This means that people are given more discretion and more freedom over time.  This needs to start with what I call Bright Line decision making.  When you have a new employee or an employee in a new situation, give them Bright Lines to make decisions with.  Things that fall out of those stark choices should be escalated.  This gives the employee a front row seat to you making decisions and the reasoning behind it.

Finally, on the topic of decision making, this is the place for Mission, Vision, and Values. By guiding your employees to what is important to you as a business, you make it more likely that they will make decisions the way you want them to.  Remember, they represent you in the public. You need them to represent you as you want to be represented.

If you are a sole proprietor, this extends to any partners and vendors that you have.  You need to be sure that they are clear on what you are doing and their role within it.

Have a great day!
Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!

Do You have Effective Sales and Marketing?

Last time, I talked about companies that may not have enough capital to succeed.  The second common way that businesses fail is around poor Sales and Marketing.  I want to differentiate the two functions.  The job of Marketing is to get people or businesses to express interest in your business.  This is the creation of Leads or Prospects.  The job of Sales is to take those Leads/Prospects and convert them into Customers.

A metric to think about in this mode is the “Cost of Customer Acquisition” (COCA).  The way to figure this out is to divide the spend on Sales and Marketing by the number of new clients.  If you spend, $10,000 on Sales and Marketing and have 100 Customers, then your COCA is $100.  This number is important because it defines how much value each customer costs you incrementally.  If you are selling a haircut for $20, then $100 COCA is a bad number.  If you are selling Luxury Yachts, $100 is an awesome Cost of Customer Acquisition.  A good COCA is very dependent on the business.

One thing to note is that various Networking and Referral Marketing systems are relatively low cost from an out-of-pocket standpoint.  However, time needs to be considered.  For example, I am a member of BNI.  BNI recommends that you spend about 3.5 hours a week on meetings with other group members.  If you have an hourly rate of $50/hour, then this costs $175/week or $700/month or $8,400/year.  Without pocket expenses, this is really $10,000 per year.  There is nothing wrong with spending $10,000 on Sales and Marketing if you get your money back.

So, when we are talking about having an efficient and effective Sales and Marketing process in your company, calculate your COCA.  You can break this down and see what your cost for different Marketing Channels is.  You can look at your Sales Conversion Rate for your Marketing Channels.  With that information, you can begin to understand if you are being effective.
Jim Sackman
Focal Point Business Coaching
Business Coaching, Leadership Training, Sales Training, Strategic Planning

Change Your Business – Change Your Life!