You are in the midst of preparing your 2010 plans, right? Setting objectives and making a budget have never been more important as the economy slowly begins to climb out of the Great Recession, as it is now called. Your approach to next year’s plan needs to be a little different since so much uncertainty remains.
The process of planning has always been more important to me than the product (plan) itself. That is because the process is where you think through alternatives and bounce ideas off of your planning partners. It is the time to ask the “what if” questions that lead to identifying options and contingencies. This year it is difficult to peer through the haze into the future because so much remains in doubt. Major government actions are bound to impact even the smallest business and probably the impact will be negative. But that is no excuse not to plan.
So here are some comments designed may deserve some deeper thinking as you prepare your plan.
• First, be sure that all your objectives and actions are “SMART.” They need to be Specific, Measureable, Attainable, have a Responsible person assigned, and include a Time requirement. You will be operating your business within a tight budget, and the SMARTer you are, the better chance you will have to accomplish things within budget.
• If you have a strategic plan that looks out several years and you have not revisited it in 2009, make that one of the first steps in your 2010 planning. Be sure your longer term goals are still valid and that your time frames for them remain realistic. If not, update them now so your 2010 detailed plan is in sync with your long term plan.
• Determine the breakeven point for your operation as it is currently staffed and also for the contingency that sales might vary by 10% up or down. If you cannot cover your breakeven point after a sales dip, what can you do to lower your expenses? Develop sidebar contingency actions for this and set a trigger point so you take action in time. Remember that for most businesses, labor is not a variable expense, although you may be able to shorten work hours and reduce pay somewhat, maybe you should simply cut headcount. What other expenses could you cut? Likewise, if sales grow how will you cope with additional workload? Overtime is often the best way until you are truly comfortable adding people. Contract labor is another way to do this, but be sure you are not mislabeling an employee as a contractor. That can cause serious tax and insurance problems.
• If you have not evaluated your customers individually for their contribution to your profit, that is a worthwhile exercise now. You may find that at the bottom of the list are some customers you would be better off without. They may cost you more than they are worth and it is time to “fire” them. If it is a large customer that may be hard to do. But a realistic discussion with them may enable you to raise your price to cover the loss they are generating. On the other hand, if you have too many customers costing you money or time you could spend more profitably elsewhere, then you need to examine your pricing and marketing to be sure you are focused on prospects that are good for your business.
• On the flip side, what are you doing to keep your good customers happy? Perhaps you should meet individually with them at year-end to thank them and to discuss their needs for 2010. You need to be market driven, not the other way around. Unless you are a really big business you cannot drive the market. Also, are you keeping TOMA (Top Of Mind Awareness) with them by “touching” them regularly with newsletters, direct mail, sales calls, etc. Sometimes we think such actions are only needed with prospects, but your 2010 plans should be protective of your current revenue sources, too. Remember your competitors will be trying to steal your customers’ business so do not take your customers for granted.
• What about a written marketing plan for 2010? The best way to do this is to determine what kind of a marketing budget you can afford and then devise the best way to allocate the money to generate business. Not enough businesses actually produce a realistic marketing plan. And few allocate enough money to really accomplish their plan properly. Consider manpower or the purchased services needed to execute the plan. And do not underestimate the challenge of coming up with the material needed to produce newsletters, brochures, an updated website, etc. Outside marketing firms rarely have the knowledge to do that for you. They will take your work and improve on it, but cannot do it all on their own. Once you have a plan and an idea of the manpower, post a calendar on the wall and mark in when each item in the plan is scheduled. Look that over and see if it is realistic. Can you do all that work? If not, then scale back to the things you can do. And do them well.
• Have you met with your loan officer recently? What actions should you build in the plan regarding finances? If you are being hounded by your bank, what other banks might want your business, and how will you go about making those contacts? Who do you know who can help?
Planning is much more than setting revenue and profit goals. That is easy. But determining the realistic actions that will get you to the goal is much more difficult. While I am not an advocate of letting the resource availability hamper creative thinking, at the end of the day, the plan needs to be achievable. If your actions require more resources than you can devote, then you need to devise a different approach.
Next year will be a challenge for most, but even if it is a cake walk for your business, you need to produce a “thinking person’s” plan, not simply an exercise that gets put away and never seen again. In my experience, if a plan is thoughtful and documented, it has a real chance of being met.
On the other hand, if you do not know where you are going—as the saying goes—any road will get you there.
