Plan Your Future Now!

It is the Saturday before Christmas- I am sitting at home, it is snowing out with expected accumulations of 15 to 20 inches (snow is not the norm in Northern Virginia), the tree is not decorated, we have guests arriving on Monday for the week, the girls' Nutcracker performance is delayed until January 2 (thankfully), none of the gifts my wife bought are wrapped, and most importantly, I have not completed my Christmas shopping. This is not the way I planned.

We bought the tree on December 2; it should have been decorated by now. My wife started the Christmas shopping before Thanksgiving, so we should have the gifts wrapped by now (guess who was supposed to do the wrapping -hint: not the one who did the shopping). She planned to spend tomorrow, Sunday, baking cookies for the week ahead, and I expected to have time on Sunday to go out with my daughters to do some Christmas shopping for the baker. With the snow, we will be lucky to get out on Monday, after work and my daughters' school, just as the guests arrive, provided they get out of New Jersey. What a mess!

I share my experience with you, not because I lack planning skills (I don't), but because it brings to light the importance of planning, especially business planning. I am confident that with a little extra stress and aggravation, all that was planned will be in place by the 25th and we, my family and guests, will have a very enjoyable holiday.

If you look at our situation, at least we knew what we had to do, what we wanted to accomplish, when it needed to be accomplished by, and what resources were available ( I failed to mention this earlier because for some reason the resources available and the amount spent is not matching up, but that's a different story). Anyway we had a plan. Knowing the important details will enable us to complete all that is necessary and we will enjoy the holidays as a result.

Business planning is not much different than knowing what you want to accomplish today, this week, this month or beyond, how to accomplish it, and what resources will be needed. But it is a very important process. A process that is necessary for any business to grow, to improve, or to survive, and it is one that we, Strategy Development, often find is overlooked by businesses In the Document Imaging Industry.

For those who do prepare a business plan, it is usually a wish list of goals to accomplish. It has no resemblance to what opportunities exist (industry projections), what skills the organization has, what weaknesses must be improved, or what resources are available (both financial and human capital). In most cases, it is a document slated for the credenza, file cabinet or trash shortly after it is completed because it was not well thought out, was not realistic, or did not give any consideration to both internal and external factors affecting achievability of the plan.

So what is required to prepare a well-constructed business plan? In this case more information is better than less. It starts with gathering and reviewing historical records. Understanding what transpired and why, what was a normal event and one that might not be repeatable, looking at trends and productivity, and understanding the reasons behind the improvements and changes to the organization. You need a thorough review of the past in order to be in a position of planning and constructing a plan for the future.

Next, you need a SWOT (Strengths, Weakness, Opportunities, and Threats) analysis. This is a review of the strengths and weaknesses of your organization (internal factors) along with a review of the market opportunities and external threats to your success (external factors). This review is critical for preparing a realistic and achievable plan. Without knowing what you face and what skills are in place to address this, how can you prepare a detailed plan? The SWOT analysis gives you the necessary insight to support the preparation of a quality business plan.

Finally, you need to identify three to five goals for the New Year, and no more than that. Too many will dilute the effectiveness of your plan and increase the chances of not accomplishing anything. The three to five goals should be department, product or services specific. They need to match the direction the industry is going and your ability (skills) to achieve that goal. An example of this for an equipment dealer might be to improve the overall profitability of the service organization and increase the service gross profit from current 45% to 48% by improving parts management (specific and achievable with a detailed plan.)

An example of a goal that is probably not realistic or achievable would be to grow equipment revenue 10%. What's the difference?

In the first case, the goal indicated a weakness in performance - part management- that was affecting the gross profit of service, and by improving an area of weakness controlled by the business, they could improve the overall profit performance in service. This was well within their reach.

In the second case, you are looking to grow an area of your business that by all known industry projections is declining, and declining at significant rates. So unless there is a reason outside the norm that your efforts will gain significant equipment revenue, this goal is not realistic or achievable. In a declining market, you need to expand your market rate, i.e. market share, at a rate equal to the amount the market is declining in order for revenue to match the previous year without any impact in the average selling price. For example, if the market is expected to decline 10%, you need to increase market share 10%, and as long as the average unit selling price does not decline (which is not what the industry analysts are forecasting), revenue would be about equal to the previous year. So growing revenue 10% in a market declining 10% would mean you would need to grow market share 20%. Is it realistic to plan the organization around achieving such growth in today's tight economy and highly competitive industry? For most companies I would think not.

A well constructed and detail-focused business plan takes time. It involves a great deal of thought and understanding of the internal and external factors we face, it involves engaging all members of the organization in order to be effective, and it must be realistic. But it is critical to the success of any business today.

If your organization prepares an annual plan, don't shortchange the process. Invest time and resources in getting a well constructed plan in place. It will pay dividends for your organization and will provide a road map that you and your team can follow throughout the year. If your previous plans were ineffective, then review the plan to understand where the weaknesses exist in the preparation process following the important steps mentioned above.

If your organization does not prepare a plan, you should start now. We live in a highly competitive industry. Success cannot be left to chance; you need to plan and identify the direction your organization needs to take in order to combat the downward trends of the industry and survive. Start small, i.e. one or two goals, but start now. The longer you wait, the more unexpected challenges you will face that could impact the success of your business. If you need help, attend the BTA Business Planning Workshop. Information can be found at www.bta.org under the education tab.


Ed Carroll is a principal of Strategy Development, Inc. an advanced management consulting firm, engaged in sales leadership, managed print services, operational efficiency, service productivity and business planning. Clients include equipment manufacturers and resellers (large and small) focused on equipment and service in the document and imaging industry throughout North America. Ed can be reached at 703.722.2973 or carroll@strategydevelopment.org.