Saturday, October 27, 2012

A Strategic Plan For All Businesses Part 2.



In our last article we established a business should be designed to satisfy the personal needs and wants of individuals working in the business. They want money. They want enjoyment. They want security. In order to provide these goals a business must be built specifically to provide them. If the business does not provide money, enjoyment and security to the individuals associated with the business it will more than likely not succeed.

A business must establish its goals to make certain that it will be able to provide money, enjoyment and security for all associated with that business.


The business goal for providing money:
Management should have a clear understanding (and they more then likely do) that those working in the business have a need and desire for money. Also that need and desire will grow on a regular basis. As one gets older their level of aspirations will rise. Therefore it is essential that the business expand and grow its profitability so that those involved with the business will have an opportunity to earn money and meet their ever expanding  aspirations. 

Goal number 1: Provide sufficient income to enhance the standard of living of all those who are associated with the business.

Please  note the goal is not that everybody should have the same standard of living.  The goal is that the company should make enough income so that the people within the organization will be compensated fairly along with some level of increases on a regular basis.

Is this a goal that will last forever?...You bet.

The business goal for providing enjoyment:
As you know the term enjoyment can mean many different things,  During the course of my travels I've spoken to many people about what the enjoyment is they get from work (contrary to popular belief most people do enjoy their work). What makes people feel good I asked: They want to know they are contributing to a greater good. They want to know that there's value in what they do. They want to feel good and proud of the product and or services they are providing.  

Goal number 2: Provide the highest quality product and/or service commensurate with the marketplace.

It is very important that the quality of products and/or service be commensurate with the marketplace a business serves. You wouldn't want to provide a Neiman Marcus product in a Target Store. Both have good quality products and service for the markets they serve. But each market is substantially different.
Provide a high quality product and/or service and the people within your organization will feel good about the organization and themselves. That’s what they enjoy.
Is this a goal that will last forever?...Sure.

The business goal for providing security:
The personal goal of security means different things to different people. Clearly younger people will have a different view of security then older people. Also whether one works for a company or owns the company will have an impact on how an individual views security. For example employees may believe that security is having a lifelong position, a pension plan or the hope of future ownership

The owners may want exactly what the employees. However the owners may also be looking at the potential of a sale or some kind of an event where they can cash in on the value of the business.
It is extremely important that owners of the business take a hard look at whether they are creating value or not.  Wouldn't it be awful to be working 30 to 40 years in a business to find out that you have built a business that has no value. It just fades away when you do.

Goal number 3: Build a business that will last forever.

When a business is built to last forever, it will attract better employees, build value for the owners and provide some level of security to its people.

The business must be built to last beyond the lives of its owners.
Is this a goal that will last forever?...Yep.

 A final thought:
These three goals have no priority as to which one takes precedence. Economic conditions existing at the time of decision-making will determine which of the goals will take precedence over the others. For example in the current economic condition of the nation which goal would you favor over the others?
The goals will conflict with each other. For example a company may wish to buy new equipment which will help improve existing products. The purchase of this equipment in the short run may conflict with the goal of providing “sufficient income”.
Decision-making for management becomes clearer once the goals of the business have been established. It’s almost like a decision making matrix. Management must decide, at the time a decision is to be made, what the impact of that decision will be on the three goals of the company. Management will then decide which of the three goals will take precedence. Of course we're not talking about every day decisions, but we're talking about substantial decisions that will impact the goals of the company.

Next time we’ll begin a discussion  of the strategies for achieving the company’s goals.


Monday, October 15, 2012

A Strategic Plan For All Businesses. Part 1.


The first step in developing a strategic plan, for any company, is to determining what the individuals involved with the company want to receive from the company. Throughout my years as a speaker I often asked my audiences: when you get up in the morning to go to your place of business what is it you want? Often times I need to clarify the question to what is it you personally want from the business.
After some prodding I get the following answers:
Money.
Of course. Everybody wants money.

Enjoyment.
When I asked people what they mean by enjoyment I usually get a get good feeling type of responses. Such as a nice environment to work in, camaraderie with the other workers, team work etc. The most universal response is, they like to feel good about the job they are doing and that the work is meaningful.

Security.
The last item people have indicated is security. Most people realize security is very difficult in this economic environment but those involved with the business would like to have upward mobility and job security of some kind.

In summary, people get up every morning to go to work would like to accomplish the same things whether they be owners or employees. Everyone is looking for money, enjoyment and security. And the quest for these three items seems to be universal.

Bear in mind that these three items take different precedents based on the age and other factors of the individual. For example younger people may be more interested in enjoyment and money whereas older people may be more interested in security. So even though the goals are universal the weight of each one of these items is different and depends on the individual.

So if all of the individuals, who are associated with a company (owners and employees) all have the same personal goals of money, enjoyment and security then the business must be built in such a fashion as to be able to provide these things.

What happens if the business fails to provide money? People leave.
What happens if people do not enjoy the environment they're working in? People leave.
What happens if there is no long term security for the individuals associated with the business? People leave.

So we can conclude that the primary purpose of all businesses large and small is to provide the owners and employees what they personally want to achieve their individual goals of money, enjoyment and security. Furthermore if the business fails to provide the owners and the employees these three things then the business has no basis for existence and it will not survive.

The next step in developing a strategic plan is to design and set up the company's goals. Now I'm not talking about the goal of say $5 million in sales this year or reduce overhead or any of those types of goals that management thinks are company goals. In essence they are strategies to achieve the real goals of the company. The real goals that often times are never discussed. The real goals that are never laid out in a plan. Interesting that it is not unusual that management will achieve the real goals by accident and not by any specific plan.

The goals that I am going to discuss in the next blog will be the real goals of the business that will never change, that will last forever and be the guidelines that management should follow in creating annual strategies.