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By Dennis R. Guse, Senior Vice President
Part II: What it IS!
As a continuation from our last edition of The Strategic Edge Newsletter, we will discuss one of our favorite topics, Strategic Planning. As you may recall, we dispelled the top 5 myths about what it is not. In this edition, we will share 5 truths about what Strategic Planning is.
Truth #1: A Formal Strategic Business Plan is a well thought-out plan that takes time, thorough consideration, and significant effort.
Some companies try to “do” Strategic Planning at a weekend retreat or in a few meetings. However, to sufficiently complete a Formal Strategic Business Plan, containing all of the necessary elements, more time and effort are needed. These elements need to be thoroughly thought-out so the right elements are in place to strategically position your business to outsmart the competition and win.
“If a business’s profit is not in the top 25% of their industry, by definition it is underperforming, and the reason is likely the lack of a Formal Strategic Business Plan.”
Strategic planning requires discussion about the various necessary elements followed by a period of thoughtful contemplation of strategic options before crafting the appropriate Formal Strategic Business Plan for your business. Like many things in life, little effort will produce little value, but sufficient effort will produce a valuable Formal Strategic Business Plan resulting in a thriving and profitably growing business with a valuable intangible asset.
Truth #2: The key element of a Formal Strategic Business Plan is the Strategic Engineering Blueprint™.
Successful business owners take the time to engineer a blueprint for how they want to build their business to the next level. Once a Strategic Engineering Blueprint™ is in place, it simplifies your decision-making and focuses your resources. Consider the analogy of a blueprint for a building. If the blueprint calls for steel, but a load of lumber is delivered to the construction site, a project manager or foreman quickly rejects the lumber because it is not part of the plan. So it is with a business. Once a Strategic Engineering Blueprint™ is in place, as a business owner you will know what it takes to build your business, and you will not settle for inferior options with which to build your business. Furthermore, a Strategic Engineering Blueprint™ will provide enduring and solid direction for your business well into the future. Finally, a Strategic Engineering Blueprint™ will provide greater profit and cash-flow for your business as it is growing and will increase the value if your business is sold. The Strategic Engineering Blueprint™ and other key elements of a Formal Strategic Business Plan are intangible assets that provide significant value and worth to your business.
“… a Strategic Engineering Blueprint™ will provide enduring and solid direction for the business well into the future.”
Truth #3: A Business Action Plan™ and a Formal Financial Forecast are key supporting elements of a Formal Strategic Business Plan
While a Strategic Engineering Blueprint™ will provide an enduring and solid picture of how to build your business, preparing a focused Business Action Plan™ and creating a Formal Financial Forecast will provide the solid foundation for your growth. Together, these key elements of your Strategic Plan provide valuable guidance in the construction of building a business that performs in the top 25% of your industry. A Business Action Plan™ provides measurable and actionable items that stimulate the effective building of your business. A Formal Financial Forecast assists in predicting profits, cash-flow and capital requirements to fund your business’s growth.
Truth #4: A Formal Strategic Business Plan is enduring, but it does need refreshing
A Formal Strategic Business Plan is enduring for the life of your business, because it is the blueprint. However, every three to five years, you should review your Strategic Engineering Blueprint™ to see if there are parts of it that need re-engineering, or if there are components that you might like to “add on” (just the same as you would to a building).
Truth #5: Your Formal Strategic Business Plan is something we can do this year
As we mentioned in the last edition of The Strategic Edge Newsletter, 50% of your profits are tied to strategic planning, therefore your business may be missing out on half of the profitability it could be generating. The sooner you get started, the sooner you will never again miss out on the power of a focused and well-developed Strategic Engineering Blueprint™. Make this year the year that you strategically position your business to outsmart the competition, become more profitable, increase cash-flow and win!
“...to sufficiently complete a Formal Strategic Business Plan, containing all of the necessary elements, more time and effort are needed.”
Dennis Guse is Senior Vice President of American Business Advisors®, the leading strategic and management consulting firm specializing in Building Cash Cows® and Improving Quality of Life® services for mid-size and small companies, family businesses, and their owners. Dennis has served in several strategic and financial advisory roles for Fortune 500 and Fortune 1000 size companies. As a select participant of the Leadership Excellence through Accelerated Development (LEAD) program at CH2M Hill, he was tasked with managing a special strategic mission project for the CEO. He was instrumental in establishing a Geographical Information Systems (GIS) technology department at The Schwan Food Company to improve decision-making and enhance efficient and effective use of resources. Dennis has held various leadership roles in non-profit organizations. He successfully helped found the Students in Free Enterprise (now Enactus) local chapter at Southwest Minnesota State University. He also served as president of the local business club. With a passion for serving, he delights in helping others learn, grow and realize their potential. He enjoys solving problems and is intrigued by learning new ideas and building relationships with individuals.
Areas of expertise
As a strategic, finance, and business coach he uses a Developmental Consulting℠ approach, the 14 Dynamics of Building a Cash Cow Model™, and ABA’s Dynamics of Sustained Profits and Growth System™ of services. Dennis serves as an advisor to companies regarding Building Cash Cows™, strategic planning, increasing profit/cash-flow, Improving Quality of Life™, and business financial management. Dennis also performs Execushare™ services as President and Chief Financial Officer for companies.
To talk with Dennis about how he can specifically help you take your business to the next level by using our Building Cash Cows® and Improving Quality of Life® services, please send him an email at email@example.com or call to schedule time with him 303-335-4218.
Thank you for your continued interest in American Business Advisors. We hope the information we provide to you is enlightening and helpful.
via Blogger 5 Truths About Strategic Planning
'There’s Gold in Them Hills'
Why do some companies seem to thrive in good times and bad while others don’t? Good strategic planning is the secret to maximizing profit and growth potential. According to Dr. Porter at Harvard University, 50% of company profits are tied to operational excellence and the other 50% are tied to strategy planning. Creating a formal strategic business plan will vastly improve sales, profits, cash flow, teamwork, and communications. But you may be thinking, Harvard graduates work for big companies, does it work for small and mid-sized companies? Most definitely, “There’s Gold in Them Hills”, but it takes good strategic planning to mine it. Following are some examples.
Company A was a highly respected subcontractor in the home building industry that held about a 40% market share in its niche along the Front Range. However, this $10 million company’s financial performance ranked in the bottom 25% of the industry. The owners requested our assistance in developing strategies to increase profits and cash flow, grow the business, establish a sound financial structure, establish formal business planning and develop an organizational structure that would be self-sustaining. An evaluation of their pricing, cost and margin structure, and financial structure was undertaken. After determining that their margins were too low, their capital too thin, and they were trying to grow too fast, strategies and tactics were identified to specifically address these issues. By putting these strategies and tactics into a strategic financial forecast the company could see how to “tweak” these strategies and tactics into a set of very specific goals and lay out action steps to get them into the top 25% of industry financial performance. This planning gave them less uncertainty, verified they were on a mission possible and focused their energy and efforts. It helped them determine the right revenue goal for the year and gave them a clear understanding of how to significantly improve their profits, cash flow, liquidity and debt-to-equity structure. Within three months, profits increased $40,000 to $60,000 per month and they ended the first year with an increase in profit and owners’ compensation of $748,000 over the previous year. At mid-year the company refinanced. By the end of the first year they had already reach their financial goal of being in the top 25% of the industry. But there is more.
In year two of Company A we continued the strategic planning process by developing a formal written strategic business plan to define and improve their completive position in the industry in order to protect their market share and grow the business. They rolled out the strategic plan in April of year two. But, in the middle of year two the bottom fell out of the home building industry. Company A’s revenues immediately fell by 50%. Competitors were downsizing left and right. Some went out of business and all the rest, except Company A, were drastically cutting cost. Company A had their formal strategic business plan to compete, they were focused, they were ready and they had confidence it would work so they continued to roll it out. Within six months Company A replaced all of the revenue volume it lost, pushing its market share up to about 65%. It finished year two with increase profits and owner’s compensation of about $577,000 over the base year. The owner and his wife gave $176,000 to charities and began taking two days a week off.
So what exactly is a Strategic Business Plan? Let’s start with what it is not. It is not a budget. It is not a weekend retreat where you set goals for the next year. It is not a management meeting where you set goals and action steps for the next year. Strategic planning is a comprehensive blueprint of strategies to build a business, including clearly defining what the business is you’re going to build, determining what you are trying to accomplish and selecting strategies to position the business to outwit the competition. It is about selecting key strategies and defining key objectives for functional and cross-functional components of the business. Strategic planning is the art of devising a framework of schemes that determine the nature and direction of a company for gaining their desired end result. In business, it also includes the process of engineering schemes that determine the nature and direction of your company for meeting the needs of your market and outwitting the competition in order to accomplish your Mission.
Following are more examples of the effectiveness of formal strategic planning.
In closing, let me emphasize that in bad times or good times, there is absolutely nothing you can do, no money you can spend, no cost you can save or no high payoff activity you can focus on for the growth and financial health of your business that will compare with developing a formal strategic business plan. None!
“There is gold in them hills…” do you want some of it? If you do, strongly consider the development a formal strategic business plan and go mine the gold. You will forever be glad you did!
The Strategic Edge is published by American Business Advisors, Inc. to provide business and personal improvement information and ideas. All material is presented to provide general and broad information only. The information found in this publication does not constitute business, tax, financial, or legal advice and should not be acted upon without seeking the counsel of professional advisor.
via Blogger Do This 1 Thing to Thrive in Tough Times
I suspect Iron Man is not good at everything. Perhaps, like us, his greatest weakness is himself! Fortunately, few of us have the same megalomaniac, narcissistic tendencies of a Tony Stark.
Simply put: No business owner can be all things to his firm. No one person is great at every aspect of building and running a business--business development, R&D, sales, finance and accounting, operations, HR and strategic planning. All owners either hire or outsource various aspects of the business to reflect the unique competency of their firm.
via Blogger Are You an Iron Man? Part 3
It is one thing to study war and another thing to live the warrior’s life.
—Telamon of Arcadia, mercenary of the fifth century B.C.E., as quoted in The War of Art, p. 61.
Felix Baumgartner’s historic Mach 1+, 119,846’ free fall to earth on Oct. 14, 2012.
By virtue of being a business owner, you have chosen to live the “warrior’s life.” Welcome to the club. We warriors can gain courage by gleaning lessons from the best practices of others who have been successful in their fields.
Let me share about a hidden prize of our “warrior’s life.” Many of the business owners we talk to are unaware such a prize exists--the prize of becoming a top 25% company in their industry. Why is it such a prize? Consider the benefits of building a top 25% company:
Does this sound too daunting? It does because most of us allow circumstances, fears and doubts distract us from focusing on the prize.
But we don’t have to be mired in the morass of these fears and doubts! Let’s gain courage to go after the prize by learning from the story of another warrior--Austrian adventurer Felix Baumgartner.
On Oct. 14, 2012, Baumgartner set several world records as he stepped out of a capsule that had ascended to 128,100 feet, suspended by helium balloons. While we might think of his success as his accomplishments that day, in fact he succeeded on the day he chose to start down the path.
Baumgartner’s success began when he chose to create a team to achieve these goals back in 2007. Consider a few of the things he and his team did:
Exiting his capsule is but an echo of that long-ago decision.
Here’s what happened on Oct. 14, 2012:
Here are a few of the fears that didn’t materialize:
If like Baumgartner you want to achieve your prize five years from today, what will your first step be? I suggest it begins with the decision to get there! Follow that up with surrounding yourself with the assistance of others who will help you with the right tools and the support necessary to accomplish your success. And just as importantly, train yourself to distinguish between what you can control and what you cannot control, then prepare yourself to take a leap of faith.
If you would like some ideas of what you need to do first to become that top 25% company in your industry, consider these potential areas you might commit to working on:
Write to let us know what that first step in journey is for you.
The post Are You Eager To Take The Warrior’s Leap Of Faith? was first published on American Business Advisors Inc.
via Blogger Are You Eager To Take The Warrior’s Leap Of Faith?
I’ve been pondering what constitutes a great relationship. Even tougher, how do you translate a nascent good relationship into an online experience?
Let’s reflect upon what works well for in-person relationships. Consider one model of cultivating relationships (with thanks to Martin Buber et al.).
Forming a great relationship covers at least three dimensions:
Most of us are moving so fast and are so “multi-tasked-out” that we’re frazzled ghosts of our authentic selves. We all long for authentic connection. But to do so, we must know ourselves authentically.
The best place to start is with Plato’s dictum: Know thyself. Or take Shakespeare: To thine own self be true. These quotations remind me of the best advice I received from my homiletics professor in seminary: when you prepare a sermon, preach to yourself!
As my 81-year-old mother recently reminded me, most of us are so busy that we don’t take the time to enjoy life in the moment!
Do you want to connect with your real self? Spend time with babies and the elderly. Infants are helpless bundles of need. They immediately elicit the best part of yourself. Being with people your senior is a powerful way to see yourself more clearly—so spend time with parents, grandparents, mentors! You’ll both benefit from that experience if you’re teachable. One of my mentors, Vernon Grounds, cultivated friendships with people as much as 40-50 years his junior.
Social media, like TVs in the 1940s and 1950s, is so new that it’s in the “black and white” era. It’s a bit kludgey and quaint in some ways. We have far to go to catch our online relational maturity up to what we experience in person in theatres or with 3-D flat screen TVs.
If people perceive you as part of their online “tribe” you will indeed become one of them. Growing up in Hawaii, we used to “talk story”—take time to share a meal and be together. Try to do the equivalent online with shared experience/shared groups/shared connections.
3. Liminal space between people:
Put people at ease wherever your space is. I jokingly tell people to come into my office when we meet at a table at one of the independent coffee shops. I frequent. Make the table you’re meeting at a safe, sacred space to connect.
Why not make others feel at home in your online spaces as well? Visit their websites/blogs/groups and contribute the authentic you. Try to exceed expectations in your posts—go beyond merely announcing your latest blog post, event or coupon.
It’s a fine line between following social mores and being a paper cut-out. Create multidirectional dialogue by retweeting key phrases. Really listen to and comment on what others say. Create as close to an in-person experience as possible—experiment with that powerful medium, video.
What tips can you add?
1. Ask yourself: when I’m online am I being selfish and self-promoting or authentic and serving?
The followingblog post What is the Liminal Dimension Between Real and Virtual Relationships? is available on American Business Advisors Inc.
via Blogger What is the Liminal Dimension Between Real and Virtual Relationships?
Find someplace quiet and turn on your imagination.
In a few short minutes you will finish this blog and walk outside. You have to cross a street. Imagine that street corner. Imagine the most dangerous street corner in your neighborhood. Now, imagine that you are alone waiting to cross the most dangerous street you know. What is the first thing you do? (more…)
The followingblog post Guest Blog: Perhaps the Most Important Story I’ve Ever Heard or Told Find more on: American Business Advisors in Denver
via Blogger Guest Blog: Perhaps the Most Important Story I’ve Ever Heard or Told
Are you uncomfortable with sales? Me, too! Especially because, in Myers-Briggs terms, I am a borderline Introvert/Extrovert. The “traditional” side of the sales paradigm has one ruling mantra (the Tolkienian “One Ring to Rule them All”): Always Be Closing.
via Blogger Liminal Dimensions: From the ABCs of Sale to the ABCs of Sail, Part 1 of 3