used with permission from SBA.gov
by Tim Berry
Do any one of these five simple refresh ideas and you’ll help yourself manage your business goals, growth, and execution. Do all five and you have a perfect lean business plan.
Strategy is focus. It’s what you do and what you don’t do. It’s who is in your market and who isn’t. It’s how you’re different, and you hope better, than your competition. Take a step back from the day-to-day details and look at the long-term course of your business. Don’t do a big text, but do write down your key strategy points in bullets, do use as reminders.
Here is a simple strategy framework for any business.
- First, think about your identity as a business. That’s what makes it unique. It’s strengths and weaknesses, core competence, history, and long-term branding.
- Second, your target market. Think about an ideal customer. Remind yourself who isn’t a customer, and why. Don’t try to please everybody. Try to please your specific target buyers.
- Third, think about your business offering. That’s what you do, as a business; what you sell. Relate that to your identity. Relate that to your target market.
Ideally, the three strategy poles work together. The mesh. Write some points down to remind yourself later.
The benefit of doing a simple strategy refresh is staying focused and on course. As business owners, we want to do everything for everybody; but that doesn’t work. Trying to please everybody is a ticket to failure. Your business offering should match your identity and your target market. But we get involved in the day to day, and we forget.
Tactics are how you execute strategy in everyday business. They are decisions you make and follow about business basics including pricing, delivery, channels, promotion, personnel, policies, and so forth. Set down your most important tactical decisions in bullet points and consider whether they match strategy.
The benefit of comparing tactics to strategy is strategic alignment. What you do with tactics match what your strategy is. So, for example, you make sure your pricing matches your tag lines and key marketing messages, and suits your identity, target market, and business offering.
Refresh the Key Metrics
Metrics are those numbers you can use as indicators of business growth and general health. The obvious ones are sales, costs, and expenses; plus profits and cash flow. But aside from those, every business has metrics it runs on, and you want to define those for your business to help you manage better.
Look for numbers that anybody on your team can see and understand, and refer back to, and work towards as goals. Aside from accounting there might be unit sales, customers, repeat customers, percent of sales from new customers vs. existing customers, calls, leads, closes, closing percentage, traffic, views, unique visits, conversion rates, subscribers, minutes per call, attendees per seminar, blog posts published, tweets, twitter followers, re-tweets, likes, and so forth.
The benefit is that managing by key metrics gives you, and your team if you manage a team, something to shoot for that is objective and measurable. You can track progress over time. And you make good and bad results visible, and actionable.
Milestones are events, achievements, and accomplishments that a business can work towards. It could be the big promotion, the new product line, the website refresh, or metrics-base milestones such as 100 or 1,000 subscribers, a $100,000 sales month, the new menu, adding an additional service, or whatever works. We set milestones because people work better towards reachable, manageable goals, than just vaguely towards a better future.
A few good milestones for the near and medium-term future are good for focusing a business on the right kind of progress.
Refresh Your Forecasts
For most people, it’s automatic. When you do a sales forecast, or spending budget, you think of the big picture while you do. You have strategy and tactics in mind.
Most businesses run with projected profits and cash flow. Forecasting profits means forecasting sales, direct costs, and operating expenses. We have posts on this blog to help you, including this one and this one on sales forecasting, and this one on cash flow.
Business forecasting is not just for MBAs and CPAs. All business owners benefit from a simple forecast. Don’t think it’s supposed to be very accurate; it’s about getting your assumptions into an organized form, understanding the drivers, and setting up something you can track monthly with plan vs. actual analysis that leads to revising and refreshing often.