For every startup the development of a business plan is a  required first step. It is so obvious – business schools have course on writing the business plan and it is impossible to get funding without one. Teams coalesce around the labor. So, every startup has a business plan.

For the going concern, the ones that are now three or so more years old, the business plan (also called strategic plan -really the same thing) is forgotten, only stumbled on when a move forces someone to pick it up and wonder, “Should I just relegate this to the dumpster?”

This is not a good situation. A business without a plan is like a boat sitting in a pond just waiting to sink to the bottom for nature to compost it. Or, if it has the fate to be afloat in a stream, it will be carried along willy-nilly until it bumps into a stone or dead branch or reaches the ocean where nature will also send it to the big composter.

Every business exists in a world that is changing and filled with opportunities and threats. Your business plan is your set of oars to provide the means to pull in the direction you want to go in, to avoid the rocks. You might even row to shore and portage around the falls, to move to an entirely new river.

But, many people, even accepting the wisdom of having a plan, find it a painful exercise, all too easily avoided. This may be driven by the idea that a business plan involves dozens of pages of writing, lots of spreadsheets with numbers they really don’t believe (sometimes don’t understand). Business plans, strategic plans, these are just the exercises one does in business schools. Or it may be the folk wisdom that business plans are not a useful part of managing and they always end up on the shelf or hidden in a file cabinet only dusted off for display when in search of a bank loan.

However, shift your thinking to view the process of building a plan as a value in and of itself, and adopt a simpler more flexible business plan model you will find that building that set of oars for your little boat is fun and productive.

The Business Plan Model

Lets talk about the business plan model first. Since we are developing a business plan for our internal use it does not need to look like or contain everything that bankers, MBAs, venture capital funders expect. This is a working document to help us move the business in a definite direction.

First, I have found that setting an arbitrary limit of 12 pages focuses the mind and edits out all the useless boilerplate that populates many plans. Second, if you and your team prefer not to write a paragraphed narrative, use an outline, PowerPoint approach. Third, get out your most recent Income and Balance Sheet statements – these will be the starting point for the financials. Fourth, establish an outline of the topics that you feel must be covered and keep to it.

Basically, the plan will include these twelve topics.

1. Describe why you are in business – what value are you delivering to which customers. An important corollary to this topic is to identify why customers buy from you and not someone else?
2. How do you find customers? Who are your current customers? List the big ones and their share of your business
3. How do you produce the service or product?
4. How do you make money by making your customers happy?
5. What are your objectives for growing a larger customer base, adding a new market segment, new products or services, or other growth strategy?
6. What are the external obstacles to accomplishing these objectives and how do you intend to get around them? This is where you might look at competition, SWOT and PEST analysis and apply other analysis tools.
7. What resources do we need to put in place to achieve the growth? Money, people, technology….?
8. What strategies are we going to apply to achieve our objectives over the next year to three years? This should be limited to three to five strategies. State clearly what the objectives are for each strategy – how many new customers, new products, dollars of sales, profits, etc? When will these happen?
9. What key tactics are needed for each strategy? Who is responsible, what resources do they get, when will the accomplish the tasks and what results are you looking for?
10. Build a financial model. The spreadsheet should be not more than 25 rows with columns containing quarterly projections for three years. Starting numbers must link to existing financial statements.
11. What is the schedule for follow up business review sessions where you will examine progress on the plan and take required actions to revise and push the plan forward. The first meeting should be one month after you kick off the new initiatives. The, not less than quarterly.
12. How does all of this fulfill the management team’s personal objectives? The answer to this is not money?

The Planning Process

Now, how do you actually develop the plan?

Four to six two to three hour working sessions with all members of the management team present usually suffices. Some homework will be required between the sessions, typically a  couple of hours. You might imagine a month to six weeks as a useful window of time.

Who should be in the room? Every significant stakeholder – owners, chiefs of marketing, sales, operations, technology or product development, finance, and HR. In small companies this sometimes means that one person has to cover several functional areas. Do not let the group get larger than six to eight people. More than that and you can not have good, deep interactions – the work sessions will be more like a conference or convention. Two or three is fine as long as every key stakeholder in the business is present.

These work sessions are more important, in many ways, than the plan itself. During these sessions, the team will talk out loud and write things down. Arguments, discussions, innovations, deletions, new agreements about the business emerge. These flow out of the group and the whole team understands and owns these discussions and the conclusions.

In my experience, if the management team represents all of the key elements, all of the facts and concepts about the business are sitting in the room. Some people think that business planning is a research project. But, with a team, the process is more a sharing around the table of the facts, consensus building about the situation, goals, and strategies to get to the goals. The most powerful outcome of the planning process is that it arms the management team to convert the strategies into actions to reach the goals.

You Need a Consultant

All of this seems quite straight forward. You may be thinking, “Well, I am the Owner, the CEO. I am a seasoned veteran.  I can lead my team through this planning process.” Resist this line of thinking and here is why, and I say this despite the obvious self-serving nature of what follows.

A good strategy consultant who knows how to lead groups through a planning process will do the following, much of which you as the Owner, the CEO can not do just because of the fact of your position. First, the consultant stands outside of the actual business discussions, runs the sessions, and keeps the team moving forward. Second, the consultant establishes an environment in which the team is a group of equals for the purposes of the planning. This assures that one person will not dominate, that the less forceful personalities, who frequently have significant contributions to make, will be heard and participate. This increases the breadth and depth of the team ownership of the plan. Third, the consultant can bring up the elephants in the closet that no one wants to talk about. Overcoming the baggage of history can be difficult and painful. The consultant can drive the conversations to confronting the facts of the business situation. Fourth, the consultant will bring appropriate analytical tools to the table. The bag of strategy tools is enormous. All of this liberates the Owner, the CEO from the burdens of running the work sessions to focus on the content of the process. This is where their highest value is.

How Do You Convert the Plan Into Action?

For most strategic plans and business plans the end is the document itself. This is the critical moment and here is where Step 11 above, that asks about the schedule of review sessions, converts the plan into action. This is where the Owner, the CEO must take the lead. Otherwise the plan is just a plan and is not converted into action. If you have done a good job of establishing the tactics you will know who is responsible, what the success metrics are and the timetable for action. By tying the planning to the existing financial reporting system, you will be able to measure results directly. The review sessions are not designed to be dull reports, but opportunities to understand where the difficulties lie and where new opportunities pop up. A review session brings together the management team to work on the most important strategic activities of the firm.

Summary

Let’s wrap up this discussion.  A business plan is the result of a process in which the management team comes to a common understanding of:

• • the business situation
  • the value the business provides to customers
  • strategies to achieve new goals
  • obstacles to be overcome or avoided along the way,
  • tactics to bring the strategies to life – this includes who is responsible, resources available, timeline, and results expected
  • schedule of review meetings to take corrective action and make course corrections

The business plan is converted into action through the tactics identified supported by active supervision and follow up by the Owner, the CEO. The plan also provides a common language about the business and a platform to communicate the business’s goals beliefs, and values to everyone involved, employees, vendors, and customers.

More information is available on the strategic planning process in our white paper: Introduction to the Strategic Planning Process here

This article was the subject of an earlier podcast of the same title. It is available here.

• My coach yelled and screamed at me in high school, do I need that?

  Is business coaching touchy feely – therapeutic stuff?

  You don’t know anything about my business. I have been at this for xx years, how can you help me?

  How long before I see results?

  Do I need to meet with you every week?

  Am I signing up for a long contract?

  This must be expensive

  I’m not a business owner, just a manager, is this for me?

  What about start up businesses?

  Do you work with management teams?

  ---

  My coach yelled and screamed at me in high school, do I need that?

  Business coaching is all about you and not about the coach. I will challenge with questions that will help you think more clearly and anew about your problems and opportunities. My coaching is successful when you state the best solution, then it is your solution not mine. I measure my success by how little I talk and how much you produce results.

  Is business coaching touchy feely – therapeutic stuff?

  Business coaching is about business, about getting the right things done. Sometimes this touches on the way in which you listen and communicate with people, or, your focus on facts and not emotions. But, always, our discussions are about your business results and how to improve them.

  You don’t know anything about my business. I have been at this for xx years, how can you help me?

  There is an element of truth in this. If you really need help with a specific technical issue, business coaching is not the solution.

  On the other hand, every business is about customers, products, services, employees, sales, profits, capital, marketing, sales, operations, product development, quality, and more of these basics. It only takes me an hour to ask enough questions to know the basic shape of your business, to provide me a platform to engage you in productive discussions of how to push you and your business forward.

  And, another key role for me is to help you establish the short list of tasks to work on each week to drive ahead. I provide the constant reminder of how day-to-day work connects with the big picture goals and the tactical accountability for getting the work done.

  How long before I see results?

  You will see results in your personal management approaches and skills within a few weeks. Business results typically take longer, three months is a good timeframe, though it depends on the cycle time of the business issues you are tackling.

  Do I need to meet with you every week?

  Most clients find it valuable to meet every week. It keeps up the pace of the work, makes for better, more immediate feedback on progress and problems, and maintains better self-accountability for the important future-building tasks. On the other hand, some clients find every other week to work fine. We just need to identify what works best for you.

  At the outset of a new relationship, I insist on at least three months of weekly meetings. This gives us the opportunity to really dig in and accomplish something important and useful. It also assures that I have a sound understanding of how you work and the important facts about how your business works.

  Finally, most clients really look forward to talking with me. I am the one person they speak with each week who will listen with interest to whatever they say, not be judgmental in anyway, and be supportive through good questioning and sound advice.

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  How effective is telephone or computer based coaching?

  I have been working via telephone and Skype for four years, after years of face-to-face consulting. To my initial surprise, I have found the telephone to be better in many ways than face-to-face meetings. When I sit down to talk with a pad of paper at the ready for notes, and my notes from earlier discussions, I am totally present and focused on the person on the other end of the line. I am listening to every word and, not being required to provide visual focus, I can process the conversation and think of different questions to reframe the issues or bring up new avenues to explore very consistently. I can hear the body language through the audible cues given during a conversation.

  Sometimes we need to talk about financial management issues or other document based topics, then, we can turn to our computer screens and refer directly to the facts in question. Some clients keep detailed notes and create an agenda for every meeting. I print this out in advance and I let the client manage our meeting as they see fit. Other clients come to the meetings with topics that are pressing on them that day. For them, I have to be sure that I bring up the tasks from the previous session so that we close the loop on their progress.

  Am I signing up for a long contract?

  No. My contract with you includes a clear statement that either party can cancel the engagement on a one week notice.

  This must be expensive

  Most clients budget $350 to $500 per month. This means that business coaching that will produce significant results, measured in sales dollars, increased profitability, more customers, and a more productive, happier you, the business owner or manager, costs on a par with your CPA. So, when you think of adding a new senior manager to your staff, this looks outrageously inexpensive.

  Back to Top

  I’m not a business owner, just a manager, is this for me?

  If you manage people, have a budget, and are responsible for results, business coaching can help you be more effective.

  What about start up businesses?

  I work with start ups regularly. In fact I have a discounted rate for start ups. Go to this page for more about how I work with startup companies.

  Do you work with management teams?

  Yes. This is where a Skype videoconference works really well. Unlike working with individuals, I do need to see everyone so that i can effectively manage the group and keep everyone involved.

  Back to Top

Here is a conceptual model for improving how customers value services.

There are three basic phases in a service event or client engagement:

1. Pre-service awareness – establishing expectations
   
2. Service engagement – making the process visible
   
3. Post-service follow up – the ongoing engagement

Lets walk through each of these phases and explore opportunities to increase customer perception of our value to them.

Establish Expectations

Typically we think of marketing as a tool to attract customers to our services. Filling the sales funnel with leads is what marketing is all about. If you think this way about marketing, you are missing an opportunity to radically improve your success rate.

Inevitably, the initial contact with potential clients establishes in their minds expectations about who you are, what you do, and how they might interact with you. There is no escaping this fact. First impressions do count. You had better manage them.

A first step in managing customer expectations is for you to understand your value to customers and plan to develop the set of expectations you want to set based on that value. If you do not have a clear and convincing value statement your prospects will fill in the blank with whatever assumptions are already in their heads. Why should a client engage you instead of someone else? Once you have this figured out,  your marketing needs to establish these  expectations when you make the initial contact with a potential client.  If you introduce your company simply as “wealth management firm”, “web design”,  ”financial planning”, “estate and wills”, or, the one closest to my heart, “management consultant”, you are immediately allowing the prospect to imagine what you do and who you are. As soon as you utter that first phrase they put you in a mental box. This is true whether the message comes verbally or visually.

Lets look at an example, to shake up our thinking a bit. What do you think of when you hear the words, “I am a general contractor”? For some of us, this will be an image of a guy with a tool belt, hammer dangling off, with whom you have had unpleasant  conversations about why a remodeling project is late and over budget. Think of what iamge comes into your mind when you hear the words, “general contractor”?

Here is what a general contractor really does (thanks to Rob Ferree at the Ferree Group in Boston, MA^[[1]]  for this):

• Accountable for project results
  • Schedule
  • Budget
  • Quality
  • Overall client satisfaction
• The more complex the project, the more value a GC should deliver
• Healthy and productive relationship with client (and other constituents)
  • Communicate, communicate, communicate
  • Manage expectations
  • Wear the client’s hat / work in the client’s interest
  • Be discerning with client’s budget
  • Problem solve the inevitable glitches
• Organize the project and manage the work flow
  • • Team building (and bench building)
  • • Planning and scheduling
    • Phases
    • Trades
    • Materials
    • Inspectors
    • Client meetings
    • Invoices and disbursements
  • Constantly strive to deliver time efficiencies - Deliver upon commitments
  • Plan for zero punch list
• Trade experience and understanding of dependencies
• Financial and accounting skills
• Attention to detail
• Completion orientation
• Strive for the “Wow Factor”

How would you set client expectations for a general contractor?

The benefits I expect from  a general contractor include:  WOW (Wow, this remodeled kitchen looks super!), on time, no surprises, within budget, and the comfort that someone is looking out for my interests. I think a great way for a general contractor to introduce themselves is: “I create WOW for homeowners.”

So, to repeat the rhetorical question: “How can you set client expectations from the very first meeting?” I am not going to explore how you set client expectations from the very first meeting here. Determining your value in customers’ eyes and coming to a useful marketing strategy is outside the scope of this discussion. You might take a look at Stephen Melanson’s Jaw Branding for a challenging approach to the branding portion of this task.

As an aside, when formal proposals and contracts are used, they should carefully reflect the expectations that you have so carefully worked to establish.

Use Processes to Engage and Transmit Your Value To Customers

So, now you have set your customer’s initial perceptions of who you are and how you create value for them. For example, if you are a business lawyer, they understand that you will help them prevent future problems by putting the right legal structures in place now. They don’t think of you as the guy who turns on the clock each time the phone rings.

How do you make your value visible during your engagement with them?

Before getting to visible professional services, we need to reemphasize that value is entirely determined by the customer. This means, reflecting back to our general contractor example, they are not thinking about all of those tasks Rob Ferree outlined. Customers think about the benefits delivered, not how the benefits are produced, nor the features of a service. Customers perceive and buy benefits. So, as we go through this upcoming discussion of processes, think about how you can demonstrate the end benefits to the customer, not every task and technique you use.

A useful approach is to develop a clear process that encompasses your value creating work. A process is all of the steps required to create the service value. We won’t spend time here describing all of the details of how to develop a process description. But, keep in mind that a component of your process description must be describing how you work with clients and how this reinforces the expectations you set in the marketing phase of your relationship. Consistency and honesty are a must. People are very sensitive to anything that even hints at deception. Do what you say you do.

A simple block flow chart is the single most useful way of presenting your process to your clients. Keep it simple and high level. This is not a cook book nor should it look like a checklist or template^[[2]]. Emphasize the steps where you help your clients to create a new vision of the solution to their problems. Then you can move on to the steps where you add specialized information and analytical tools that bring the solution to life. Don’t forget the final steps in which you help the client to convert the work into actionable tasks. For instance, an estate planning attorney can make part of their processes steps that put the state planning into action, like funding the trusts, assigning trustees, and establishing anniversary dates for planning reviews.

A General Rule of Professional Services Production

In general, in professional services, the more you engage the client in the production of the service the higher the level of satisfaction and engagement by the client with the end result.

Follow Up – The Ongoing Relationship

In professional services the service event or engagement should never be thought of as just a one-shot activity. A professional service is best thought of as an ongoing series of services, ideally a working relationship with a long life. One way to accomplish this is to build follow up into your business process. In this age of the Web, it is extremely easy to communicate new, useful information to your clients. However, too many newsletters and emails contain old information or worse information that is readily available elsewhere. Regurgitating the Wall St. Journal is not a good approach. If you are in a niche, exploit it. On another hand, make some part of your newsletters actionable and clearly connected to your core business values for clients.

In many cases you have legitimate, if not compelling, reason to contact the client again to assess results and make course corrections. By making this a visible part of your service process your clients will understand why, how, and when this will occur. Even if your service is like that of a general contractor where you might imagine the service to end when the owner takes occupancy, there are still opportunities to contact them in the future. Just be aware that if you contact them it must be genuine. If there are problems with the service, you had better be ready to tackle them.

Summary

You can get your profesional services’ clients to have a stronger perception of your value to them by:

1. Manage their expectations of what you will do and they play a role through good fundamental marketing. Think through your fundamental value proposition and make sure that is on display the first time you met a prospect and at every step through your services to them.
2. Make  value creating processes visible to the client. Engage your clients as much as possible in the value creation process. The higher their engagement the higher their valuation of it merits and the more likely they will follow through.
3. Follow up after a service engagement. Many professional services lend themselves to long life cycle management.

1. Rob can be reached at rob@ferreegroup.com
2. Lisa Morrisey at Lido Consulting Group pointed out to me how important it is that clients not think that simple cookie cutter templates can solve significant business problems.  There certainly are areas of business in which templates are very useful and appropriate, for example small company employee procedures and rules. However, fundamental value-creating business processes are far more complex and interwoven.

PODCAST

The podcast is 6 minutes 14 seconds long.

Transcript of the podcast (download PDF)

Just this morning I was speaking with a manager about efforts to refocus a business on new services and the difficulty of dragging along the old, tried-and-true services that still have a customer base and generate revenues. Drucker had quite a bit to say about this problem of the past. In the chapter titled, First Things First, he wrote, “Systematic sloughing off of the old is the one and only way to force the new.” And, “Yesterday’s successes ….. always linger on long beyond the productive life.”

Drucker wrote in the same chapter, “It is more productive to convert an opportunity into results than to solve the problem — which only restores the equilibrium of yesterday.” This seems like quite a provocation to most managers. After all, managers and management are all about problem solving. Or so we seem all to think. But, from Drucker’s perspective, problems are always about the past. This is very clear from his notion that solving problems only reestablishes the status of the past, some sort of guarantee that we can reproduce the results of the past. Whereas, opportunities are about the future.  The future is where customers in the real world are, not in the past. Drucker sees the world as continually evolving and requiring new solutions to new problems, always defined by customers.

So, then, back to where I started. One of the hardest things for any manager to do is to look away from the products and services of the past. These may very well still be producing revenues and profits, though analysis and planning are telling them that future customers and revenues must come from elsewhere.