More Heat Less Chill

Although the weather’s changed a bit since my last post – Don’t Let The Summer Heat Cause A Winter Chill – we’re still in vacation season and it’s still hot.

But we’re also well into the third quarter of 2011 and heading for the annual business planning; budgeting; whatever you call it, process for 2012.

And I believe that process is the engine that drives your growth. So in the last post I talked about 2 things business owners should be thinking about now. Here are another 3……

1. The Opinion Trap.

The planning process has to be completed by a specific date. Often that’s set to enable Finance to use the output/numbers to produce projected financials for the upcoming year(s) while still completing their regular work. 

However vacations, short work weeks and long Holiday weekends and a more laid back, summer mind set can result in the focus being on doing the things that are urgent rather than the things that are important. 

So, even although the deadline is well known, the process is often started later than it need be. And that puts the value of the output at risk.

Why – because the logical thinking required to make the process effective declines in direct proportion to the increasing proximity of the deadline. It becomes more and more about getting it done on time and less and less about getting it done right.

When that happens the basis on which key assumptions are made is less likely to be well collected and considered data and more likely to be someone’s opinion. And by definition an opinion is a subjective belief, often the result of emotion.

2. Who’s Baby Is It Anyway?

The owner must take ownership of, and remain the champion of, the planning process. If the perception that anyone else is driving it is allowed to take hold, the motivation for doing it thoroughly will suffer.

If, for example, the accounting department are seen to be driving the process it will be seen only as a number crunching exercise. And people will treat it simply as something to be completed as quickly as possible and get off their desk.

The only way to get everyone involved, engaged and buying in is if the owner demonstrates the importance of the process by leading it personally.

3. Keep It Together.

I talked to an executive recently who was busy completing annual expense budgets. This at a time when many of the people who had the detailed knowledge required to complete the schedules thoroughly were on vacation.

They told me that budgeting had been separated from the creative, thinking part of the planning process so that the Finance department could meet their internal deadlines.

But I’ve also seen other variations of this in the past. A favourite with companies which have enjoyed a leadership position in their industry for some years, is to start by producing the numbers – revenue, bottom line etc. – and then develop action plans and programs to fit them.

That’s as bad as a company that completes the creative, thinking part of the process then becomes distracted by tactical issues, allowing a lengthy period of time to pass before completing the numbers. Valuable momentum is lost and the participants are left to wonder if anything is being done with their input.

4. Last Words.

It’s not enough just to have a planning process and to complete it.

Like any other engine, if you want to get maximum output from it the parts must work smoothly, without friction, and you must use a high energy, premium power source/fuel.

Otherwise it’s unlikely to carry you anywhere near to where you want to go.

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Tags: action plans, annual business planning process, assumption, business owner, champion, engaged, expense budget, finance, growth, Jim Stewart, Leadership, momentum, planning process, ProfitPATH, projected financials, tactical

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