3 Surprising Strategies (Or Not)

At the end of March we emailed our quarterly survey to over 600 people in our database (see commentary on the November survey here).

We asked them 4 things.

To describe their strategy for this fiscal year; which actions they were taking to execute it; how they had gone about planning for the year; and what they did to evaluate progress at the end of the first quarter.

The first surprise – no one’s planning to retire.

Only about 5% of the respondents described their strategy as “planning for exit”.

There have been stories in the media for some time now about the number of companies which will change hands as baby boomers retire. Many articles talk about how far in advance business owners must begin to prepare, particularly if they intend to sell their company.

As a result we were surprised at the low number of owners planning for exit. (We’re even in the process of launching a new service to help owners get the highest price and the best terms possible when they sell.)

However, this may reflect other surveys, by e.g. the banks and CFIB, which found that only a relatively small percentage of baby boomer owners are actively preparing to bow out.

The second surprise – everyone’s staying home.

Just over 70% of companies said they were pursuing a growth/ expansion strategy. But entering new domestic or overseas markets ranked 8th in a list of 9 actions being taken to increase profits.

Once again we were surprised. This time by the relatively low number of respondents who said they would be entering new markets. The North American economies are not the ones which are expected to show the most growth in the next few years. This is a good time for Canadian companies to be expanding into export markets.

But the answers to this question could be influenced by the (small) size of some of the companies responding to our survey.

By the way most companies are using a combination of increased promotional activities, new strategic alliances and improved internal systems/processes. Many said they intended to increase their prices.

And the third surprise – someone’s not planning to follow through.

As you might expect, most large companies said they held a 1-2 day planning session with their management team/key individuals before the beginning of the financial year.

So did many smaller companies. But they appear not to have used the opportunity to develop action plans/budgets or specific targets for measuring performance.

Then we asked what techniques respondents used to assess their progress at the end of the first quarter. Many of the smaller companies which used planning at the start of the year now said that they used none of the quarterly follow up techniques.

There have been a number of research studies which have tried to determine why planning fails. One of reasons given for failure is the lack of follow through by management. It is easy to assume that the owners of smaller companies are likely to be more involved in day-to-day operations than owners who have management teams in place and so find it easier to overlook quarterly follow ups.

So, to sum up……..

There’s good news and bad news.

The bad news is that some of the companies in our database – even larger ones – appear to be overlooking a number of external and internal factors which are critical to success.

The good news is that it can all be fixed – if the owners are willing to try. We’re certainly willing to help.

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Tags: action plans, budgets, business, domestic market, export, Jim Stewart, overseas market, owners, Planning, ProfitPATH, strategy

Comments

  1. Mary Franklin says:

    I am not as familiar with the workings of large corporations, rather my experience is with smaller businesses – but not following up to measure results is not surprising to me at all. Many people consider following up, or checking in, an activity that they they don’t have time for.

    My view is, “how can you know if you are on track unless you do a check in periodically and take the temperature of the operation.”

    I’m afraid it is the norm and not the exception ignoring the follow through.

  2. Jim Stewart says:

    Mary, thanks for the comment. As a business owner myself I am all too aware of how strong the temptation can be to make excuses and not take time to review results. But experience, some of it bitter, has taught me to make the time. Otherwise, as you say, you really have no idea if you’re on track and you deprive yourself of the opportunity to make the adjustments that might be necessary. Jim

  3. Magdelina says:

    Great common sense here. Wish I’d toughht of that.

  4. Jim Stewart says:

    Magdelina, thank you for the compliment.

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