Business planning in a recession

Upholstery Journal | February 2009

by John Baker

Dwight Eisenhower, when contemplating the plan for the invasion of Normandy and northwest Europe during World War II said, “Plans are nothing. Planning is everything.”

His view was that while both are necessary, plans are nothing but static documents, yet planning is a responsive and dynamic action that brings focus to uncertainty.

Consider a pilot flying a 747 from Los Angeles to Japan. The plan is to land at the Narita International airport. Unexpected winds, other aircraft traffic and mid-ocean storms alter the plane’s course. Unmanaged, the pilot would just as likely land in Seoul. The flight plan sets an initial course and a final destination, but the process of planning ensures that the pilot takes the appropriate action to get the airplane where it needs to go.

In business, planning is just as vital, especially when things are rapidly changing and the economy seems to be in constant flux. With the market in less-than-perfect shape and so much uncertainty in the air, many business owners forego the discipline of establishing a business plan under the assumption that it is a waste of time. This is a mistake. The most essential reason to write a business plan isn’t to set a course of action, but to provide a management tool to use in the present and the future.

Business planning is fraught with misconceptions. The biggest is assuming that the planning process needs to be complicated and burdensome. A sound business plan only needs to address four questions:

Where are we?

The plan should clearly define the financial, environmental and market realities facing the business. This should not be addressed in overly technical language, but rather with straightforward words that define the health of the business and its competitive position. The plan must have its foundation in what is real, not something assumed or hoped for. Someone reading this section of the plan should understand the strengths and weaknesses of the business, and have a sense of the company’s potential given the current reality.

Hint:The best way to lose any enthusiasm in your business plan is to make this section a complex, statistical dissertation. Readers care nothing about your plunging ROI, but care intensely about what that means to your business. Use only those financial matrices that truly explain how your business is performing.

Where are we going?

The plan should spell out what the organization wants to accomplish in the coming years. This section is a statement of business aspiration, balanced by the reality set forth in section one of the plan. This creates a reasonable prediction of the momentum needed to achieve future goals. It is foolish, for example, to state an aspiration that is no more than a pipe dream—aspirations need to be tied to reality. This section of the plan allows the reader to understand the potential of the business based on three factors:

• Financial:Why should one invest in us?
• External: Why should clients and prospects do businesses with us?
• Internal:Why should employees work here?

Hint:Abstract vision statements are as credible as Britney Spears speaking at a parenting conference. The best plans are insightful because they balance bold market aspirations with commonsense business acumen.

How will we get there?

The plan should set forth the imperatives of the business, the tasks that are absolutely non-negotiable to achieve success. This section not only defines a critical path for the business, but it identifies the important, but non-essential objectives. By doing this, leaders define where they are willing to fail in order to secure the critical path.

The plan sets a context for decision making around competing goals, such as delaying a product launch in order to achieve bottom-line results. After reading this section of the plan, the reader should know not only what keeps the owners of the business up at night, but also what lengths they are willing to go for a good night’s sleep.

Hint: Want to break down organizational silos? Make sure each employee knows where his or her job fits within the critical path outlined in this section. If not, he or she is not fully a part of the team.

Are we on track?

The plan needs to define what success looks like and who is accountable for which measure, when measurements will be taken, and the corrective actions to be taken in the event of a deviation from the plan. A sure way to add frustration is to create a business plan that sits on the shelf unopened, with an expiration date of one year. The best business plans are constantly referenced and regularly amended.

Hint:This section should flow directly into the formulation of team and individual goal documents. It provides a uniform template that ensures everyone has goals and measures aligned to organizational vitality.

During uncertain times, key business constituencies—clients, prospects and employees—need to receive heightened levels of information. The business plan provides an excellent communication tool and sets forth a clear path of action that can be referred to in unclear circumstances. This generates comfort and confidence in the business, its leaders and the planning.

John Baker is author of “READY Thinking—Primed For Change.” As a leadership expert, speaker and founder of READY Thinking LLC, Baker has helped hundreds of organizations achieve success by adopting a practical framework of thinking during times of change and opportunity. He has over 20 years experience as a senior executive with companies including American Express and Ameriprise Financial, specializing in sales, client loyalty and customer service. E-mail johnbaker@readythinking.com or visit www.readythinking.com.

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