As analytical as I am, it took me way too late into my career to discover that I should always be planning backwards. My hope is that you learn this tactic earlier rather than later in your business life.
If we establish a benchmark of where your business is today and then set a goal of where you would like/need to be at a point in the future, we can then establish the difference, or delta, between those two numbers. Let’s say that your business revenue is one million and you need it to be two million within two years, or two years from today. That means we need to develop a 24-month plan that can grow our revenues by one million dollars…right?
All too often, we open the doors to our business and work as hard as we can and let our business grow organically, at its own pace, if you will, this is a mistake that I made years ago, please learn from my mistakes rather than your own. Growth needs a plan, and owners need to work to a plan to realize the business that they richly deserve and have put their life savings and efforts into.
A farmer without a plan is a gardener. A farmer plans to maximize the yield of his/her crops, and so too must the business owner. If we have a goal to add an additional one million to our top line revenue within 24 months, then we best get started figuring out how we will accomplish that. Perhaps it is projecting out how many more units we need to sell each month, how many new customers we need each month, what additional products/services we can offer to our existing customers, or possibly a price increase.
If revenue is the goal, then there are only so many ways to achieve that:
- Higher prices
- More volume
- More frequency
- Additional Products/Services
If net profit is the goal, then you have some other options too:
- More efficiency
- Controlling the cost of labor
- Automation
- Minimizing overhead
- Better purchasing of raw materials
- And others
The answer usually a combination of your choices above, and once you have decided which vehicles to use to get you to your destination a route must be established.
- How much should I increase my prices?
- How can I improve my marketing to drive new customers to my door?
- How will I increase the frequency of purchases?
- What additional products or services are wanted by my customers?
- Where should I advertise?
Most of these questions, that answers are required for planning, will not be answered immediately, but will become apparent over time IF YOU stay focused. Getting distracted can derail your plan before it has had a chance to succeed.
So now you have decided (for example) that you need more customers. How many will you need to add each month for 24 months to get you to your goal. Map that out AND each month write how many you got. If you fall short this month you now know that you need to make up that shortfall next month. Keeping track each month is your early warning system which allows you to analyze and adjust.
When you are not hitting your targets more analysis is required. Ask yourself why. Do we need to adjust our marketing message? Do we need to audit to make sure everyone is asking “do you want fries with that?” Did we give our customers a reason to say yes to us over our competitors?
You are probably saying, “When you lay it out it is a simple concept. But I see it as overwhelming in practice.” And I say, “The simplification is so you can understand what needs to be done. But you are correct it can be a handful.”
But here is why it is important; the big players in your market are out planning you. They probably have dedicated people that do nothing but these planning, strategizing, and marketing. And your small competitors are not doing these things at all, thereby giving you a competitive advantage.
This is your opportunity to carve out your fair share of the market, to hold the big players back while eating the other competitor’s lunch. If it were easy, you would have even more competitors.