When the Ink is Dry

Business Planning (Part 14)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011.

The business plan is written and everyone is glad to have that big task off of the plate. The day the ink is dry, the last I dotted and T crossed on the plan is indeed a point of celebration. It is also launch day.

Mission control must be positioned to ensure the success of the launch and the mission as objectives are met and new opportunities discovered. Each person on the team has a role and a responsibility in the success. Defining these roles and responsibilities may seem obvious. Communication of objectives, roles and responsibility with an accountability structure in place will help insure your best chance of having your plan succeed.

Launch day is very important and should be celebrated. It is an opportunity to engage and bring everyone on board. Most people appreciate the insight of where the company is headed and knowing how they can be a part of success. That will require communication.

Consider having a mini event to launch the plan. This should occur before the actual dates that the plan is active. The following suggestions may be helpful in your launch and mission.

  • Create internal and external PR featuring highlights and limited detail. It is a great time to profile the mission team and gain great advantage in the momentum that the feeling of success in motion can create.
  • When profiling the mission team, outline some of their key objectives and responsibilities as well as the talent, skill and or qualities that positioned them for the role.
  • Paint a picture of the future with the plan realized in a way that the success of the plan is the obvious choice of a path to the future for everyone involved. Consider how you will talk about value and results in a way that objectives are in reach and the realization of impact, tangible.
  • Calendar a timeline of updates and points for celebration. You may want to have 100% of goal recognition for those meeting at least 100% of their objectives. Recognition should include increments achieved above and beyond. Recognition is valuable capital that is a great motivator.
  • Treat planning and plan objectives for all producers with the importance and alignment to the company and unit plans. Make sure that everyone sees that their role in the mission is important to the overall success.
  • Integrate communications and accountability throughout your group. Even if you are not on track for plan, don’t hide from it. Have diagnostic meetings planned at reasonable intervals to determine areas of underachievement, reasons and solutions. Triage, communicate and correct integrating those who must be a part of the solution.

This post will conclude the Soltys, Inc. September Business Planning series. We certainly hope that the information, tips and vignettes of both success and failure have been helpful in your business planning. We offer business plan consulting, reviews and tools to assist with business planning. We will be announcing the launch of our business store in the very near future. It will feature publications, templates, tools and programs such as our Business Health Partners program which is designed to assist companies throughout the year in alignment, accountability and execution of their plan. The popular Help Desk consulting service to help with issues as they arise and many others will also be available. Call us at 770-573-9715 or send an email to info@soltys-inc.com. We look forward to working with you.


Reality Check

Business Planning (Part 13)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011.

Some plans I have reviewed make me hear the song from Man of La Mancha, “The Impossible Dream”. Unfortunately, there is not much honor in chasing the unreachable business star, no matter how valiant the effort has been.

Business plans constructed in dreams or need rather than reality are expensive in every way conceivable. It is like working with the seller who has determined the price at which they will sell their house, irrespective of what the market will bear and some real estate agent will take the listing in hopes that if an offer comes in, the seller will change their mind. So, how about a reality check up front?

Remember when you took elementary math classes, you checked your work by calculating the problem backwards. We can do the same with business goals and plans using basic items and Key Performance Indicators (KPI’s). Here is a look at a very simplified check of a sample company that sells services (click on the graphic to view full size).

(* Note that the production for new hires is an average based in the fact that not all join
at once and there is usually a curve for production that must be applied.)

In this example, the numbers are checked against the goals in a very simplified format. This company will not make its net revenue goal and consequently will miss its profit goal by nearly 20%. Should the top two producers leave, get hit by a bus or otherwise, the company stands to lose an additional $540,000 and it will take another eighteen recruits to replace that production on top of the twenty in the goal. This potentially makes the actual recruiting goal 38 to meet goal. If the top two producers do not leave, nor others who would impact the numbers, the company will most likely exceed its goals by hitting the higher recruiting number.

Business at risk calculated on the basis on the production of the top two producers is a reasonable factor to cover loss of potential producers. The top two are used as it is not unusual that when one of the top two leaves the other does as well. It also gives insight to the impact of these producers who, in this example, account for over 11% of the company’s gross revenue in the current year.

The company could change any of the variables to quickly see the potential outcome. In most cases, reality checks are created for all KPI’s and most major initiatives. When applied to any part of the plan to check goals, questions will result that need to be answered.

For example if the number of new recruits is far greater than previously recruited, what is the change factor that will make this an attainable goal? Where will these recruits come from? Is there anything that can be done to raise production numbers in the first year?

As important as it is to create a business plan, performing reality checks is perhaps more important. No one wants to mourn the impossible dream. It is a lot more fun to sing songs that celebrate your achievement.


Key Objectives

Business Planning (Part 12)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011.

The grand scheme of business planning seems to suggest a regular examination of the company and setting of goals. It is not unusual to start the process and abort planning because of time, lack of information or the sheer size of the task. How do you attack planning?

The most successful companies I have dealt with understand that you cannot eat the elephant in one bite, you have to start somewhere. Here are a few suggestions.

Before you start, select five areas where you would like to plan changes to your company. These might be production, revenue, process or development driven. Once selected, ask yourself the following questions related to each.
  • Why do I want to make the change?
  • What is the benefit of making the change?
  • Is it worth the effort and priority?
  • Who will the change impact?
  • What can I do as a result of making this change?
  • Do I have the money, people, information and processes in place to make the change?
  • Who should be involved in writing the plan relative to the change desired?
  • Do I have the control needed to make the changes?
  • What outside factors could impact my ability to achieve the desired change?
  • Can I either utilize outside factors to propel the change or make modifications considering these factors to make the desired changes?
  • Am I willing to commit to the time necessary to develop the plan?
  • How will I get others to own the plan and the results we create?

The answers to these questions for each of the five areas will give you a good foundation for beginning the planning process. In some cases, you will find that five may be too many and rarely too few. Remember Newton’s laws mentioned in yesterday’s post, Crunch Time, any changes you make will create other changes. So five key points are really many related changes.

Next, once you set the five objectives, quantify them as to the impact they will make. All business plan objectives at some point reduce to numbers.

After that, with your team, define a strategy to which your tactics will be aligned. Too many in the business planning process define tactics before strategy and find that they are aiming with a shotgun when a sharpshooter will gain better results and usually with less cost.

Finally, determine interim points to inspect the plan and the progress toward objectives. This is very important rather than waiting until next year’s planning session. All successes along the way deserve celebration and communication. The celebration can be as simple as a status report with kudos to those making it happen, to milestone and team rally celebrations. If interim objectives are not being met, consider how you will triage and amend your course.

Whether or not your company creates a full business plan, having five key objectives will give you momentum, focus and a greater opportunity to meet all goals.


Crunch Time

Business Planning (Part 11)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011.

Perhaps my favorite part of business planning is crunching the numbers and watching one number change another and another as a part of the process. It can be as beautiful as a kaleidoscope in which each turn brings new patterns and color combinations.

I have seen a lot of business plans in which numbers were simply put into the blank labeled as appropriate for that entry. In many cases, the number is basically pulled from the air with little thought as to the impact that will ripple throughout the company or the strategy required for the number to become a reality.

Crunching numbers requires that we think in terms of all of the moving parts that are connected. Crunching the numbers applies force to aspects of the business and creates movement. Consider how Newton’s Laws of Motion (summarized below) really apply to business planning and number crunching as well. Replace the term body with company, unit, or any other quantifiable business unit of activity.

  1. The velocity of a body remains constant unless the body is acted upon by an external force.
  2. The acceleration of a body is parallel and directly proportional to the net force and inversely proportional to the mass.
  3. The mutual forces of action and reaction between two bodies are equal, opposite and collinear.

Each time we put a number in our plans it is not an isolated number. It changes other components of the plan and can be impacted by external and internal forces.

It is these forces that we really need to consider when choosing the numbers we really want to change. Forces are often divided into two categories related by control.

What do or can we control? What don’t we control that can impact our decisions and results? Consider the examples below of three companies wanting to positively impact results.

Example 1:  A packaging company, decided to increase the units it made in the packaging for beer products. They thought that since many of the sunk costs of production had been met, this might be the quickest way to increase profits since beer drinking was definitely on the rise and demand from the breweries they supplied should not be a problem. The numbers they did not factor in were the cost of getting the raw product to their factory since petroleum prices were increasing. Adding to the challenge was the cost of petroleum based products in the dyes they used and to maintain their machinery. The number could be met but would not return the same profit they had planned on.

Example 2:  A company decided that if it could grow its sales staff by 10% that they should be able to change their bottom line significantly. If people are units, without any conditional influences, that can work, but was far from the case. Their plan called for 70% of the new hires to be experienced and 30% to be new to the business. They calculated a time for hire to production for the new to the business hires to include training time. The experienced hires were given very little time with the expectation of some transitioned or carry over business. They did not factor in the consideration that there would be some training to their products, services, tools and methodologies as well as time for assimilating into the company culture. They also failed to consider the impact to support staff, greater demand on tools and systems and breakage where some of the existing team will leave or new hires not make it. End result, the numbers did not produce the result intended even if they hit the number.

Example 3:  A small medical practice in a growth mode decided to add another physician to be able to maximize revenue through capacity to see and treat more patients. The doctor hired was a good doctor but not used to working at the pace needed to drive the numbers. Additionally, no new patients were brought to the practice as a result. Consequently, patient numbers and appointments which are billable revenue did not increase and the revenue was not made in spite of the additional cost.

Each of these companies could have changed the outcome if they had considered the laws of motion as applied to business, seasoned with an understanding of who is in control of what. They could have changed tactics and strategies. Crunching the numbers is not restricted to business planning but should be a part of regular review. All business is like the kaleidoscope with a new view at each turn. We do not have to be surprised.


Stunted Growth

Business Planning (Part 10)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011.

Sometimes we are our own worst enemies when growing our companies. It is not that we want to limit growth; in fact, it is the opposite. We are often so concerned about all aspects of our companies that we find ourselves involved in every part of the business and consequently stretched very thin. As entrepreneurs, our businesses often are our lives and it is normal and comfortable to be involved. It is not unusual for business owners to have a very difficult time working through others to the degree that they actually stunt the growth of their company.

This week, our blogs have portrayed the growth plans of several companies with examples of success and failure. The final story this week is about an owner whose company will never reach its potential.

Betty was a visionary with great plans for her company. She could see the growth and expansion opportunities and knew what had to be done to capitalize. Being a hard worker, she invested her time, money and effort into building and perfecting every component while launching the company. The company grew adding staff - administrative, marketing and accounting including producers to work with customers and clients. The plan was working and Betty kept a tight rein on the business.

She had her hands full and realized that she needed help. The tough part would be finding someone who would do the job as she would. Betty searched for the right person to be her #2 and found a person she had worked with before. Growth made it easy for the #2 to be extremely busy and take on some roles in new business development that were a part of the plan. While that was great it really did not take anything off Betty’s plate and in some ways added to it.

The #2 told Betty that it was time to hire a third person into the core leadership team. Without the third to take some of the work off of both of them, they could not grow. Growth would stop when it reached the point that neither of them could do any more. The #2 had a person in mind for the role. Betty knew the person and their work. Still cautious, she did not bring them on to the team but contracted for project work as a test. The combination of more growth and good work by #3 led to employment. The core leadership team was formed with #2 and #3 as near peers, able to take significant work off Betty so that she could propel the company’s growth.

Challenges started to show up not long after #3 was on board. Betty still wanted to be involved in everything. It wasn’t exactly a lack of trust as much as it was that Betty was a control freak and could not fully delegate. While she was a wonderful visionary, hard worker and entrepreneur, she had not learned key management skills that would give her confidence and business safety points to work through others.

After trying to work with Betty for a while, but never given the opportunity to really apply talents and skills without constant micro management, both #2 and #3 left the company for similar positions with competitors. Betty found herself back where she had been a few years earlier.

Betty still has a good company and her hands are full but her company will never grow beyond her capacity to work and is in fact vulnerable if anything should happen. She is still complaining about never being able to take time off. She is somewhat bitter, still, that #2 and #3 left her and especially that they have demonstrated success in their new companies. In spite of the writing on the wall, she still does not understand that until she can work through others, her company will be stunted in growth by what she is personally able to do.

The plan, no matter how strong, is not enough unless it factors in growth that leverages and works through others with expectations set, communicated and inspected regularly.


Big Plans & Train Wrecks

Business Planning (Part 9)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011.

It all started with a phone call out of the blue. The voice seemed hesitant and shy, perhaps it was the accent. The message was specific. “I want to buy your company.” The broker had been thinking about an exit strategy for a while but options were few as there are not many buyers for large, multi-office real estate brokerages.

The answers to initial questions of who, what, why, when and how were all met with information that provided a scenario screaming for caution. Suggestions were made regarding due diligence, agreements, and counsel as well as really sketching out the objectives the broker wanted to accomplish within the sale. It seemed like nothing would really happen.

The buyer who called had a real estate license but not a broker’s license and there were no visible transactions under his name. More research indicated that he was indeed a man of verifiable substance that, in spite of his attempts to fly under the radar, had made it to one of the lists of the wealthiest in the United States.

The man was the owner of a holding company with many diversified business interests and concerns. He had a plan for growth and integration of products and services from his various companies but to accomplish his goals, he needed a real estate brokerage, a large one.

The broker did sell the company to the man and went to work for him, heading up one of the business units with a role of helping to acquire real estate brokerages to build a nation-wide entity. Real estate was just a part of the plan which included building 500 locations in key metro areas across the US. Each of these locations would house everything related to the home and home ownership with the flagship entity being retail furniture stores. Whether you needed to buy or sell a home, finance or refinance, insure or even have comfort foods such as a warm chocolate chip cookie, everything could be found under one roof and one owner. It was an ambitious plan.

To execute the plan, the man sought out some of the best talent in the nation to be the brain trust and leadership of the entity. Acquisition targets in many industries including banking were sought, considered and analyzed. Letters of Intent and contracts flew as fast as the legal department could write them. Proformas were created and calculated over and over with unit specific data rolled up to the enterprise level. Information from the big picture to the very granular was calculated with capabilities to isolate even the smallest of variables. Buildings were designed and drawn, land acquired, concepts and names vetted. It was an exciting adventure for all connected, full of energy, ideas, and creativity, all well-funded by the man.

There were actually two sets of leadership in the enterprise. The more formalized “C” team which were the newly combined brain trust, and then the “D” team who had helped start some of the foundation businesses under the enterprise. The “C” team was moving fast on the track and the plan for the future. Until the plan was in operation and generating cash, they were a cost to the company. The job of the “D” team was to make sure that the existing businesses ran smoothly and efficiently producing the money that funded the enterprise and the dream.

A key player recruited by the man had even bigger ambitions than the man himself. He considered himself to be a financial and strategic genius and as CEO for the enterprise was really the only person other than the man to be on both the “C” and “D” teams or have full perspective of activities. The man trusted the CEO and used him as his key advisor. The CEO was a smart, quick thinking and creative person who could look at a situation from six sides and cut a path through three of them. He understood the machinery of business and saw it as his job to build efficiencies and leverage all components of the enterprise. His initiatives and the direction he gave did indeed leverage the enterprise, but were also costly, requiring more capital. His experience was primarily in driving numbers and not the business entities behind them.

Unfortunately, some of his efficiencies and leverage were short cuts that should not have been taken. Worse yet, the two teams did not have a view of the entire picture and were pursuing the objectives placed before them at full speed. It was like having two trains on tracks that were sometimes parallel but often crossed without signals that both would be able to interpret. It was an accident waiting to happen.

The train wreck occurred with every element mangled and tangled together. People, both inside and outside, were shaking their heads wondering what had happened. How could such a great plan and an extensive enterprise simply implode? It boiled down to greed and a personal agenda. Being unwilling to wait for all of the work and planning to produce results, the CEO and the man had taken shortcuts that undermined and cut the business from its foundation. Without a foundation, the future that was being built could not stand and a great plan became a memory.


Big Dreams, Bad Timing: Business Planning (Part 8)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

C. C. & Company was the brainchild of two people who were friends, neighbors and related by marriage. Having kicked around the industry in big companies and small ones for a number of years, they felt that there was a definite void in the business, a void that created opportunity.

The big companies had a tendency to hire large numbers of people, many new to the business and reap all of the production that they could before they either burned out, failed or developed their own stride. Those who grew up in the company took one of three paths.
  • Some were drafted into management.
  • Many left to pursue careers in companies with a different culture or go independent.
  • Some stayed to become the veteran core.
The small companies offered little opportunity and in some cases tended to be needy and a little too close for professional growth.

That was the void. No company offered a professional culture, opportunity and would be known as “the best in the business”. One in which the highly talented could co-exist with those on the path of growth. Support personnel would be advocates to ensure that administrative aspects of the job never slowed down the professional. The finishing touch was a marketing machine that ensured a constant flow of business and opportunity.

C1 was considered to be the business person of the two, with well-honed skill in business management, insightful analysis and financial acumen. C2 was somewhat of a “Columbo” type of character. He wandered around the issues, was highly inquisitive and was easy to talk to, although you were never sure whether he was on task. His favorite saying was “What was my point?” In spite of all that, he usually came up with the right answer, developed the most meaningful partnerships and had a killer instinct for marketing coups.

Over the years, they grew the company to over 500 of the best in the business and were envied by competitors for their ability to find, keep and grow talent. Their leadership team included people with expertise, passion and personality. They expanded the business carefully without incurring debt and enjoyed about ten years of outstanding profit and enough business that there was always some that had to be turned away.

Then one day they saw their dream on the horizon. A beautiful building designed for the business and to house other businesses which would contribute to the rent. Attractive acquisition opportunities which would expand talent, customer base, product mix and market share seemed ripe for the picking. For the first time C1 and C2 thought that it would be prudent to access the capital to realize their dreams now since everything seemed to be aligned. They brought in a couple of minor partners, prepared to distribute stock and financed the building of the facility that would be their legacy.

The business growth was even greater than they had anticipated, they felt that they had again made the right decisions and became a bit less nervous about the debt they were carrying including building costs that were over budget. They were planning the grand opening of C. C. Center as an event that would spur even greater growth.

Then all of the sudden. as if someone had pulled a plug, the business climate changed. Their lenders did not want to extend the promised funds and became a part of their board of directors. Customers became more cautious and cancelled contracts that were not absolutely necessary. Contracts held often required a negotiation of rate. Cash, margins, projected revenues and opportunity fell sharply. For the first time, the company was faced with downsizing their prized staff. Marketing opportunities were cancelled and any obligations and expenditures that could be cut were.

The cuts were so deep that the advantage they had held was now gone. The lenders, seeing the decline, became more involved in the business, eventually calling all notes and bankrupting the company. Not only was their dream lost but also the dream of many who worked for the company.

Yes, they had become a bit over-ambitious acquiring companies and taking opportunities that stretched their resources. The building in other economic conditions would have been a good move, for not only housing the company but as an investment with a positive revenue stream. The timing of things that they did not control was the trump card of their demise. Their plan was built on a continuing best case scenario. They had not calculated any other scenarios to see the potential impact of a worst case scenario.

Both C1 and C2 got back on their feet and started new competing businesses. Both businesses are built with conservative plans and satisfaction in their slower rate of growth than comes from the school of hard knocks. Both are still dreamers but keeping their feet on the ground as they pursue goals and opportunity.


Growth By Plan: Business Planning (Part 7)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

A company I had the opportunity to visit earlier this year is an excellent story of growth by plan. Their plan for growth has sought dominance in their industry specific niche.

They started out as software publishers at a time when they were one of many providing a single solution to an industry. In those early days there were many solutions for all industries, with few integrated software options within the budgets of most companies. If you were investing in technology, you probably had an accounting software package but it did not talk to anything that handled transactions or any of a number of functions in your company. There was little rhyme or reason to the array of solutions being offered by almost anyone who could write a few lines of code.

At that time, the company was somewhat of a purist, sticking to accounting and doing it without error. But growth by attending trade shows, offering the product in advertising venues meant pretty slow growth. The owner, a visionary who has always looked for what is next and loves challenges saw an opportunity to create solutions that were franchise friendly by handling some of their specific royalty and fee issues, with appropriate naming. This was a great idea as it now engaged the brands as a part of marketing being a preferred vendor with a product that was tailored and branded to the needs of the franchisor. The same idea could be replicated throughout many brands with little additional cost. In addition to being a preferred vendor, it opened up opportunities to meet with leadership franchise consultants and others in the industry. People who could either make a decision or influence a decision. Some brands now even required that new franchisees buy one of the approved products so that accounting and reporting requirements could be accomplished. The plan had created a strong foothold and enviable position in the market.

Now challenges started to appear on the horizon with software products that went beyond single solutions, the beginning of integration. The company saw the other companies spending lots of dollars, with limited return, to be everything anyone could want in a box. Their plans with rapid expansion brought some good ideas together but the speed of development meant code patches, errors and a very steep learning curve. Rather than jump on the band wagon, the company kept doing what it did best and provided a solid solution. That didn’t mean that they were not growing, they were but without the wild expenditure of dollars invested in other strategies.

Keep in mind that the company is operating in a specific industry where there is a somewhat limited customer base. Having achieved strong vertical growth, it was now time for horizontal growth. Remember all of those competitor companies investing heavily to integrate processes and functionality? Many with the changes occurring in the market were ripe for the picking. Owners had aged and were tired of driving hard for a piece of a very costly market. Some had exhausted their resources – both people and money. In some cases, the company and products had been sold from one parent company to another.

Rather than spend all of the money to develop another competitor product, why not simply buy up the competition? The price in many cases was pennies on the dollar. This was a brilliant move as it did not require a change in the core product but did take competitors out of the market retaining user income stream opportunities and brought the development that had been done to be used or discarded depending on the fitness to product and vision. Anyone shopping for solutions in the industry had few choices with most paths leading to one door.

Purchasing and assimilating users from competitors is not without headaches. Even if the goal is to have basically one product, there are legacy user issues to be taken care of, keeping the customer base and working to take the best from all to development and integration. Now as the industry leader with few other options for buyers it is also incumbent to stay ahead so that no one can catch up.

That brings us to the current phase of the growth plan which is horizontal growth, leveraging the customer base into expanded products and offerings. Rather than trying to expand into other industries which would have been costly and full of competitors ready to have lunch, the company seeks to not only maintain market dominance but additionally grow the dollars that each dollar invested returns.

When considering the growth of your company, does your plan feed your growth or consume you with the efforts required? Smart planning goes beyond the plan year and looks beyond the company’s own numbers.


Numbers Work But Something’s Missing: Business Planning (Part 6)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

Recently I visited the Republic of Georgia. While there, I had the opportunity to meet a man who owned a company that sold bee products. His products included not simply honey, wax and serums but also specialty types of honey, hives and basically anything related to bees. The two hour tour of the facility was impressive, state of the art and high tech, demonstrating the science behind his products. He gave us information and detail in Russian which was translated for us by our daughter. We ended the tour in his showroom which was set up to demonstrate differences and educate. It was not really a store, nothing could be purchased. When we sat down to talk, the problems of the business came gushing out.

Several years into the business, he had basically drained his resources and cut staff to a skeleton crew, including eliminating all marketing and sales people. His business now needed an infusion of cash and he was seeking partners. He had really done his homework to ensure superior products that were different than his competition. The numbers for production, time to market, costs and sale prices were precise and well-articulated with vigilance to objectives, keeping variances within finite norms. We saw a lot of product inventory ready for shipping but learned that the amount we saw was only a small percentage of his capacity.

Here was a man who had done everything he could to have a stellar business which followed a plan but did not have an engine. We found that the sales force was only the owner. He had tried to engage different points of distribution including the largest store chain similar to Wal-Mart in the US. This chain and others were glad to sell his products but wanted to discount the price to both his company and to the consumer severely, forcing him to run a significant part of his production line with very little margin. He had also been trying trade shows but they were expensive and a long term investment in building relationships.

I started asking questions relative to the marketing portion of his business plan. He could show me numbers and state objectives, goals and performance but additional questions regarding business generation strategies and tactics were limited at best. He understood his business but not how to sell or work through others to create sales. These were not even a part of the plan.

He felt that because he knows the business best, he was naturally the best sales person. He also admitted that he did not have much time to sell as he has to run the business. Few businesses will survive or grow without a sales engine to propel them to their destination.

The business has wonderful growth potential due to the quality, uniqueness and extensive product line, but an engine is needed. The company and its production facilities are housed in a restored fortress on a major road at the entry to the capital city of Tbilisi. If you did not know what was there, you would never stop, there are no signs. Even our tour guide who is considered an expert on the area had no idea it was there.

A visit to their website shows the product line, facility and more. However, potential visitors to the site would have a difficult time understanding the products, seeing buying opportunities or even making contact unless they read Georgian or Russian. The language used in addition to Georgian and Russian in most Georgian businesses is English, but that is not an option on the site.

Consumer avenues of information are not a part of the plan, distribution channels in most cases would need to have a direct conversation with the owner and multiple obvious marketing opportunities are not even under consideration.

The bottom line is that there is a great business adrift in the sea of opportunity without an oar in the water.

When you are building your business plan, communicate your plans and objectives with someone that is not a part of your company and maybe does not know your business. They may see the challenge that is right in front of you, something you may be missing but is so close that it is hidden.


Working Plans: Business Planning (Part 5)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

Kudos to those who plan and do make their plan a working company document, but often these companies are the exception rather than the rule. Even rarer are the companies who have communicated essential elements and objectives beyond the leadership of the company. How can you expect your plan to be executed if those who are expected to make the plan a reality do not know what the plan is? The plan must pulsate life into the opportunities ahead, meet challenges and become a path for bringing objectives to reality.

Perhaps you are one of the companies who have tracked your progress against plan. How did you do? Did you implement the strategies and tactics planned or was your plan simply calculated numbers. Were you accountable to the plan?

When writing plans, a lot of companies and business units take out and dust off last year’s plan as a starting point for writing the next plan. This, unfortunately, may be the first point since the plan was written that there was any real review. Other companies work without a plan and hope that the “Ready, Fire, Aim” methodology will work for them. Where there is abundant opportunity with little finesse required, it may seem to work for a while but has little ability to deal with change or be sustainable over the long term.

The real estate industry had enjoyed abundance for a fairly long time. Just about anyone who could spell real estate could sell something. Then almost like a date on the calendar, the industry hit a brick wall. As some put it, the bubble had burst. Most were not ready to believe that the industry would be changed forever. Not only was the volume significantly less, there had been several years of downward pressure on commissions, a rise in the commissions paid to sales associates, and rising costs of operations. The next few years saw real estate prices drop with competition for REO’s and short sales impacting valuation. New construction virtually stopped and commercial buildings now faced even more pressure as the demand for physical space was reduced by consumer use of the Internet with often virtual based workforces.

The bottom line was that every one of these forces impacted margin and the ability to operate a viable business based solely on commission driven revenue. Significant cuts in expenses were made everywhere possible. It was almost impossible to drive increased business in most markets without mergers and acquisitions to take the business away from someone else. The industry was bloated in just about every way imaginable. Accountability that had not been important now became critical but difficult to implement in the business culture that existed.

The industry faced structural changes that had not been seen in decades.

Companies that really worked by a plan often saw the changes quicker than others. The writing had been on the wall for a long time, simply ignored while there was money to be made. Management and leadership teams, many developed during the high growth period, did not have the experience or tools to consider other options for creating revenue and increasing margins. Fewer still saw ways to implement changes in the culture that had been created by the Independent Contractor sales people who had bought into the concept that since they were a commodity of value, it was all about them.

The structural changes companies needed to make with pressures to commissions and fees included expansion of services and products where the real estate brokerage business was often the initial point of business generation for business units and related services. These companies had also, in many cases, given up relationship and ownership to the consumer base served by their companies to individual practitioners and anyone who could post a property search engine. Few plans dealt with these issues or had strategic initiatives in place to counter the challenges.

The good news/bad news is that the industry is a bit less bloated than it was in terms of practitioners who are actually competing for the business available. Some markets have shown definite signs of improvement including some that had not suffered the full impact of the bubble, claiming stabilization. Yet many large markets have a long way to go to recovery and the economic environment remains the elephant in the room.

When writing your business plans and calculating the related numbers, consider several points of analysis – worst case scenario, anticipated scenario and scenarios which are a definite stretch. Look at each source of revenue in terms of its potential, taking into account the pressures the create change. Challenge each area of expense against the desired operational model.

Plans written as working documents, communicated as a path to execution and utilized are often one of the best tools a company can employ. Best of all, it is mostly an investment of time, effort and thought rather than hard dollars.

Vision, Mission and Values: Business Planning (Part 4)

The Business Planning series will posted on Tuesdays, Wednesdays and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

You probably wrote your company’s vision, mission and values statements a while ago. Maybe some of these have been made into plaques or posters and hang in the office or are found in company documents and marketing materials. There are a number of statements that are traditionally included in a business plan, these may include a vision statement, mission statement and/or position statement as well as recitation of the company’s core values. They are proud statements that were written with care to define and show direction for the company.

Companies writing growth oriented business plans will regularly review these statements making sure that they are still relevant to the company and convey the passion that drives the company forward. These not only embody and communicate the definition of the company and guiding principles, they are also sales tools. These statements represent key differentiators including the culture, principles, objectives, commitment and passion of the company. We pre-sell, sell and resell these not only to clients and customers but to the people who work in the company and have the privilege of a leadership position. These statements are always written clearly, concisely and with carefully chosen language – not an easy task.

While these are not always the first statements written, the business plan will be reviewed prior to finalization to make sure that the plan is true to the vision, mission, values and objectives of the company. If you are reviewing your statements or writing them for the first time, you may want to ask these five questions.
  1. What do we do for a living?
  2. When and why do we do it? 
  3. Who do we do it for? 
  4. Why are we in this field? 
  5. Where do we want to go and what do we want to achieve?

Your values should be principles that are aligned with beliefs and actions that exemplify the characteristics of your company and by which your people are defined. These should not be casually adopted from another source or brand and must be frequently tested, constantly promoted and recognized.

As you build or review your company’s statements perhaps it is especially appropriate in this week where we have observed the anniversary of 9/11 to look at one of the greatest and most enduring mission statements in the world, known as the Preamble to the Constitution.

We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity…”

The events and impact of 9/11 ,while tragic, drove the passion of our nation and many around the world. We were reunited in spirit and purpose rallying patriotism and activism. Your company’s statements should have similar strength and vitality for your company, your clients and the business you serve.


On Your Mark! Business Planning (Part 3)

The Business Planning series will posted on Tuesdays Wednesdays, and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

Once you have completed your preparations, you are ready to write the plan that will propel your business forward, so you are on the mark, ready to go. Right? Not so fast. There are two key things to be decided before you begin.

What type of plan are you going to write? Who will need to review, work from or be accountable to the plan? When will the plan begin and how does it transition to the next period. Do you have periodic reviews and potential corrections scheduled into your management systems? What format will you use?

These questions, if not answered before beginning the process, will lengthen the work and or require additional work if not suited to your objectives. The term business plan is well understood as a concept but there are many variations that must be considered.

Most likely the plan that you present to your banker will not look much like the plan that you will use operationally. Plans written for selling a business do not look like business continuation or growth oriented plans. Deciding the purpose of the plan often determines format and material to be included.

Perhaps these stories from real business planning work sessions will be helpful. All are from good sized, established companies.

Company 1 – Instructed all of their divisions to bring together key people with their business plans for their units. The work session had been planned to take the information from the unit plans and roll up to a divisional plan. Each of the key people brought their interpretation of the request – one in PowerPoint, one in Excel and one in Word. There was little similarity in information, determination of objectives or supporting data.

Company 2 – This company gave direction to the managers of each of their locations to submit a plan addressing recruiting, production, revenue, and profit. The plans submitted addressed each of those areas as requested. Rather than showing strategies and tactics, the plans were written to cloak the weakest areas that the manager really did not want to address. Great hiding places were created with little opportunity for roll-up or accountability. Again, these were all in different formats.

Company 3 – This is a company that is going through very large growth plans and has worked to realign the infrastructure of the company to facilitate meeting future goals. Each of the 25 business units bringing a plan were eloquent in addressing their part of the business locally with little though or strategic planning to the company objectives.

Company 4 – This company, owned by a person seeking an exit strategy from the business, was written more like that of a new company working toward high growth. That was a great plan but required significant infusions of cash and did not address the changes of ownership or retention of cash that would have made more sense.

Company 5 - The senior management of the company needed to address management and location issues. Rather than working toward those objectives in the plan, they asked the persons who would soon be released from duties in the company to write a plan for a location that would no longer exist. The people who were to be let go or repositioned are still there even though the locations are gone. Costs for personnel have not met plan in three years and there has been no growth in the areas under those people.

Company 6 – Initiated talks in a merger strategy and had written their plans in full anticipation of a successful merger. The deal died and there is no viable plan in place.

Company 7 – Each year there is a business planning retreat. Everyone works hard and there is a lot of synergy. Ambitious goals and awesome strategies are created in prose that is worthy of a writing and number crunching award. Once written, each year, the plan is put on the shelf like a revered book and there is no accountability.

There are many stories that include successful business planning. The vignettes are meant to stimulate thought as you get ready to plan. Take a look at the prep information in yesterday’s post Ready, Set, Prep! There is also some gathering of docs and information and questions to be considered. To assist you we have created a Business Planning Prep Worksheet for download. Next week we will start diving into plans.


Ready, Set, PREP! - Business Planning (Part 2)

The Business Planning series will posted on Tuesdays Wednesdays, and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

Many companies will sit down to write their business plans over the next couple of months. Probably less than 20% will finish the plan and even fewer will put the plan to work. If the plan is the recipe for success, why do so many leave all of the ingredients on the table? There are several reasons that seem to be prevalent.
  • No time to do it.
  • Not sure where to begin.
  • They have downloaded a template they do not know how to use.
  • Key players are not involved in planning.
  • Little if any preparation has been done.
 If we take care of the last one, preparation, most of the other challenges will resolve themselves.
Over the years, consulting with all types of companies, I have found that a business planning retreat day or two is often the most effective way of getting the business plan written. Whether the retreat is off site or onsite, it needs to be concentrated time with few interruptions. There will be breaks and meals to take care of the urgent items. The following preparations will help you accomplish your business planning goal. Get commitment from all key players that they are ready, willing, and able to participate and contribute fully. This includes the commitment to clear the required time from the schedule.

  1. Set a Date – Choose a date(s) where your entire team can meet. Usually it is best to avoid Mondays. Generally no more than two days as people will have trouble clearing their schedules and staying focused. If two days, determine overnight arrangements if any are needed.
  2. Book your place. The place you choose does not have to be very expensive. It can be a training room, a community room or a retreat center. Whatever you choose, there should be tables where you can gather with reasonable work seating, room to use computers and write, electrical access, Internet access, cell phone service, simple snacks and access to lunches or dinners if needed.
  3. Designate the project leader. This person is often the head of the company or a key management person who has both positional and personal leadership. Their job will be to make sure that everyone is prepared and that all data gathering ahead of the date is complete. They are also responsible for making sure that all key players attend ready, willing and able.
  4. Make sure that everyone has the preparatory checklist with their responsibilities clearly stated. The project leader will need to do a status check or two prior to the date to make sure that all prep work is done.
  5. Ask everyone to think about the following: (a) What would you like to accomplish next year for your unit, area or for the company? (b) What goals from last year were met and why? (c) What goals were met from last year and why? (d) What are the greatest challenges you see ahead?
  6. Prior to the business planning date, share these, discuss and seek input or addition from all. This will help you begin the process and create a mindset.
  7. Create a central point for data collection. Whether you have a shared access drive that you can get to remotely or use tools such as Google docs, Windows Live Skydrive or Dropbox and give each key person access to contribute and view. Later you will want to organize data that is created or loaded for sharing.
  8. Prepare to be a leader. The success of working with your group to create a plan will demand your best in leadership to keep everyone focused and committed.
Tomorrow’s post will continue to go over some of the prep work needed. A Business Planning Preparation Worksheet will be available for download to help you. Business planning is not necessarily complicated and becomes much easier to accomplish successfully when prepared.


Making Bread: Business Planning (Part 1)

The Business Planning series will posted on Tuesdays Wednesdays, and Thursdays through the month of September 2011. A number of business planning issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

I like making bread, both the kind you eat and the kind you spend. There are a lot of similarities if you think about it. While there are basic ingredients, changes in ingredients, process or shaping define the bread and give it special characteristics.

If it is leavened bread, dough is made that must rise using an agent such as yeast. Profit oriented businesses also need to make dough, utilize an agent which causes change such as new or upgraded products and services, demand, supply, or even the requirements of another client or related business to increase volume and return. Nonprofit businesses and government services are more like unleavened bread providing sustenance for those they serve without the rising process or agent.

All of these are made by following a recipe which stipulates ingredients, process and variances to successfully make the bread. In business, this would be a business plan.

Well established companies may choose to rely more on experience and history. Like an experienced baker, the owner may not physically refer to the plan. However, any alterations or desired changes often require returning to a recipe or plan. The plan originated as a concept or grouping of thoughts and goals, committed to writing with evaluation of “this – then” scenarios and potential consequences.

Over my years of consulting, I have seen and experienced many types of plans. I have also witnessed the challenges of companies who do not plan, inadequately plan and/or simply rely on experience as the plan.

Most often, they do not have the basis to make changes when need.
  • They have difficulty seeing and forecasting the ramifications of changes they would like to make.
  • There is little chance of empowering others to carry their business forward without their direct involvement.
  • Their companies are difficult to sell or transition when exit strategies are needed for key people.
  • The life of their company is directly tied to the people who hold the knowledge base.

Because we feel business planning is so critical to companies, we will dedicate the month of September to business planning. Watch for our blogs which will address key elements of business planning, types of plans and best practices. Several new downloads will be added to our download site including a business plan template.

Our company has helped many companies with business planning from writing through team facilitation and will now offer business plan reviews as an additional service. Let us help you turn dough into bread.


Say Cheese! Operations & Opportunities (Part 16)

The Operations and Opportunities series will posted on Tuesdays Wednesdays, and Thursdays through the month of August 2011. A number of operational issues will be addressed in the blog. For more detail, depth or individual information and answers, please contact Soltys, Inc. Comments and questions are welcome. We will post answers and responses.

Do you know these people?
  • Tom Hunk, a bit on the vain side still uses his high school graduation photo in his marketing. The handsome young man in the picture is fit and displays a bit of mischief in his smile. That smile is still there but over 40 years after graduation, the hair is thin and much lighter and the man has not seen weight south of 250 lbs. in over 25 years.
  • Suzy Queue is using a photo from a commercial photographer who was creative with lenses, lighting and Photoshop. From across the room, there might be some resemblance.
  • Harriett Hero uses a caricature to illustrate her super powers. No one knows who she really is or whether or not she is a real person.
  • Others you are sure to know include - Mike Mugshot, Daisy Doglover, Bobby Andhiskids, Wendy Washout and Cathy Casual.
While we may chuckle thinking of pictures we have seen, the pictures, information and items related to you become your persona and identity to potential business.

Companies suffer from the same type of image problems which may be compounded because these ofteninclude all of the individual representations and reflection. Look at the profiles of the people related to your company which may range from blank or insignificant one-liners to information overload which loses value as a reason to do business with you.

The company facilities are often profiled in street shots rather than a look inside showing what you do and giving a virtual experience of working with you. It seems that most happy people on company web sites are from stock photos that rarely convey the differentiators of the company.

What do the pictures, profiles and information I might find about you on your site and on the web tell me about your leadership, the community of your company, the services you offer and what it would be like to work either for you or with you? Does it appear that people on your site are looking for a job or offering valuable services?

They say a picture is worth a thousand words. Thanks to 24 x 7 Internet access there are countless numbers of words and in some cases picture of all of us. The information and images come together as a collage that becomes our identity on the web. The collection is not only what you have fed to the web but in many cases information and images that may or may not be related to you. It really changes the game and will impact most company’s operations from marketing through policies and management.

The Internet is the single most important media today for marketing with greater reach and efficiency. It is also a great source for disinformation, confusion and potential for blending into the noise. Like every other part of your operational machine, it requires maintenance.

Just like the anchors on the morning news shows, the experience and visual recognition should bring a feeling of comfort in working with you and a reason to select you and your company. Take a look in the mirror of the web and see yourself as others see you. If you do not like what you see, it can be changed.