Don’t waste your time with a business plan
It's that time of year again, spending many hours of your management team's effort developing the business plan for next year. Too many companies spend hundreds of hours on the plan and miss their targeted results because of an inability to implement actions in support of the plan. Break this cycle and start developing an activity plan that will allow you to monitor results during the year and meet your objectives.
An activity plan allows you to develop a set of metrics that your management team can track the effectiveness of their department on a short term basis. Once you identify the correct actions and the frequency of those activities your managers can track their departments on a daily, weekly, monthly, and quarterly basis. The following are some of the areas that you can start focusing on that will result in increased sales and an improved organization:
Your sales organization is a great place to provide a daily metric for your sales team. Identify the activity that will allow your sales people to develop the pipeline necessary to close your desired level of sales. This may be the number of cold calls per day or number of meetings and demonstrations per day. Throw out what you know about the level of activity that worked a few years ago, the economy has changed and your sales pipeline needs to be at least three times larger than it was then.
In most industries, sales cycles have gotten longer and the average sale size has shrunk. This demands an increased level of activity that will drive a larger pipeline. Many sales people have the same level of activity that they did two years ago and the result is a sales level that is on average 30 percent lower than prior year.
Many companies focus on measuring customer satisfaction, but use this information reactively to address the symptom of a poor rating. Instead, use this data to uncover the root cause of issues in your organization and focus your activity around solving these issue to improve. In one business, we provided maintenance services for computer companies and IT outsourcing firms, and we did it very poorly.
During an evaluation of the customer satisfaction data we found that the majority of our field service organization met expectations, and the poor ratings came from approximately 20 percent of our technicians and managers. We focused our efforts on those in this poor performing group and had an immediate improvement in customer satisfaction.
These efforts included communication of our expectations in their daily activity and more importantly holding these employees accountable for reaching and maintaining that level of performance. Many companies take the poor ratings and start immediately dictating changes in their entire organization, do not manage to the exceptions, and find they do not get the improvements necessary.
Start by identifying your financial objectives for next year and break them down into the activities needed in each part of your company to achieve those goals. Make sure your organization has the right measurements in departments that are dependent on sales. For example, if your activity in manufacturing is not tied to actual sales you may end up with a large unsold finished goods inventory if sales are weak or an inventory backlog if sales are above planned levels.
Activities drive results and developing the expected level of activity for your entire organization will allow you to drive those activities that generate results. Your managers will have a much easier way to tracking the activities in their department, and also allow them to track the effectiveness of each employee. We typically focus our monthly measurements on financial metrics, but by focusing on activities the financial results will follow.