How Business Planning Leads To Better Management

Here are three steps to help get you planning better, and putting those plans in motion.

In my experience leading dozens of business planning workshops in countries all over the world, I'd say only about 10% to 15% of teams I've encountered have an effective business planning process. Sounds low, doesn't it? What many business owners fail to understand is that good planning equals good management.

Let me explain. Planning is about managing resources and priorities in an organized way. Management is related to leadership, and it's related to productivity.

Here are three steps to get you planning better and, in turn, improving your management.

1. Devise a plan. As the business owner, you start by writing important details down. You don't need to sweat every detail of creating a long document. Instead, jot down essential points as bullets, and tables, and bare explanations. The strategy element of planning is to focus on what you're good at, what matters, which people are most important to you and what you can do for them. It's about positioning, determining your target market and product focus.

It's important to document these details in order to communicate your vision to employees. If you don't have a team, there's value in referring back to your original thoughts regarding the path for your business and comparing them to actual results.

2. Define success. In order to chart your path, you'll need to define long-term goals. Think broadly about how you see your business in several years.

From there, get specific. You'll want to establish milestones for when you want to accomplish certain goals, and know who you will want to carry them out. Go beyond sales, costs and expenses, and look at what really drives your business. It might be conversions, page views, clicks, meals, trips, presentations, seminars and other engagements.

Then, establish a review schedule -- when you and your team review changed assumptions, track results and make changes as necessary.

3. Put it in motion. Can you see the management brewing? Tracking and analyzing numbers can help you manage the work behind the numbers. You'll be in a better place to recognize and highlight what's working and what isn't working for your business and your team.
Suppose traffic is up, but conversions are down. You collect your data, review it with your team and develop a plan to make changes toward reaching your goals. That's management.

Managing your business successfully requires more than just praise and pats on the back. Sometimes it means focusing attention on problems, helping people solve them if possible, discussing and embracing mistakes, and, in the worst case, weeding out people who don't care about bad results. This can all be accomplished more efficiently when you have a plan in place.

Either way, whether results are better than expected or worse, the planning and tracking makes your follow up easier. The process itself adds commitment and peer pressure to the team. Highlighting good performance is easier when there are agreed-on numbers to define it. And, probably most important, dealing with poor performance is always hard, but not quite as hard when you can focus on the specific numbers instead of personalities or office politics.

Which brings me back to where I began: Planning is management. Without planning, your management is at a real disadvantage.

Tim Berry is the president of Palo Alto Software Inc., based in Eugene, Ore., which produces business planning software. He is also the author of 3 Weeks to Startup and The Plan-As-You-Go Business Plan, published by Entrepreneur Press.

 

Thanks to Tim Berry / Entrepreneur Media, Inc.
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