Successful business planning isn’t about having a crystal ball. It’s about a culture that discusses goals, actions, and results on an open and regular basis.
The end of one year and the beginning of a new one is the season of preparation. We prepare to close out the year, report results, and then get ready to launch into a newer – and improved – version of the prior year. The business planning process can be a real headache to leaders of business units who don’t get to take a break to develop their plans while hitting various year-end deadlines. And, the business planning process can feel totally fake to the unit leader if they make the plan, then it gets changed by others around them without their buy-in, and ultimately the leader is supposed to be held accountable to goals that they didn’t set and don’t particularly believe are attainable.
To achieve success in business planning – which means not just hitting targets, but also learning from misses and wins alike – there are frequent areas for improvement that we recommend:
- The shorter, the better. Too often, we see 50-page business plans that end up saying very little in terms of actionable concepts and big-picture ideas. A business plan should come down to what the business unit did last year, what the unit plans to do next year, what will drive next year’s performance in terms of client types, marketing/business development efforts, and staffing/training needs, and what steps will be required to get there. And, the plan should be as short as possible to address these areas.
- One leader of the business unit, one author of the business plan. Let leaders of respective areas develop every part of their business plan. Too often, we see budgets, hiring plans, market analysis, and other critical aspects of a business unit’s plan outsourced to different areas of the firm – finance, HR, and marketing/business development. The leader of the business unit needs to “own” the plan in every way if we hope to hold that leader accountable to the results outlined in the plan. Although an area may be outside of that leader’s wheelhouse, if we want this person to learn the skills that will eventually help them take on more responsibility, they have to learn how to think about more than their business line, and business planning is a great way to expand that skill set.
- Set goals and metrics that support the final revenue/profit figure. It is tempting and easy for leaders of business units to set two goals, a revenue goal and a profit goal. But there are so many targets that have to be attained in order to achieve these figures, and thoughtful business planning can be a way to get different functional areas of the firm working together to do something more comprehensive. For example, if the goal is to increase public school work for a particular market sector, identify the number of superintendents currently in the CRM database, set a target number of new additions of superintendents to add each month, and report on progress to that end. This forces actions that support the ultimate goal – a revenue and profitability target – but causes a different conversation. Where do we meet these superintendents? What events, meetings, and conferences should we attend? What boards do we need to be on? How much will all this cost? What’s the market size of this group?
- Stand behind the plan. Business plans should be presented verbally – pitched, actually – by the leader of the unit to leadership. The plan should be questioned verbally with back-and-forth discussion and suggestions made, then a deadline should be established to resubmit the edited plan. This is the process where the numbers should be discussed with finance leadership and marketing should weigh in on an appropriate budget and marketing message for the focus of the year. The final plan should be shared as widely as possible – firm-wide, if we can – to get as many people as possible working hard in the same direction with a clear sense of purpose.
- Discuss the plan all year long. The biggest shortcoming in most business plans is that the plans are made, crafted, fine-tuned, then set aside. The plan has to be a document that we live in. Report progress against plan goals as regularly as possible, and discuss the step-by-step action items needed to achieve the results. If we aren’t on track in one area of the plan by the set target date, such as if we know we need 15 new hires to perform the work we’ve sold, we need to involve the leaders of the recruiting area to talk to them about how we stay on track.
Successful business planning isn’t about having a crystal ball. It’s about a culture that discusses goals, actions, and results regularly and openly, not just once or twice a year, or – worst of all – in reviews after the year has ended and we can’t do anything to get back on track. Using the business plan as a guideline, the rest of the areas of the company can come together to talk about what everyone can do to support the success of that unit’s plan. This only happens if we incorporate a culture of business planning into projection meetings and other internal discussions.
Jamie Claire Kiser is Zweig Group’s director of consulting. Contact her at email@example.com.