What Is Your Plan?

Do you have a business plan? You might be surprised just how many businesses do not. They may have had one in the past but chances are that the business owners have been so busy that they have not written down much of anything. So if you answered “no” quietly and privately to yourself, understand that you are not alone.

Frequently, a business plan is a necessary evil that rears its head only when the business owner is told that they need one because they are trying to get money through something like an SBA guaranteed bank loan or a private investor. The problem is that the business owner is not in the business of writing such documentation. So what does an owner do?

There is the Internet.

One can search and eventually -- maybe -- find a boiler plate business plan for a company kind of like the owner’s business. A little change here, a little change there and a plan is born. However, banks and investors have seen the boiler plates before and have the pesky habit of asking questions about financial projections, ratios, ROI, assumptions, and the interrelationships between the numbers and profitability. Think of it as part of their language.

There is software.

Plug in some numbers and fill in some blanks and out comes a document. However, in addition to the cost of the program, the time it consumes in learning how to use it and the fact that there is a business to run, what does one end up with? Once again, bankers and investors are going to ask their questions. They will at least be polite when they decline the request for money.

There is the hired gun.

Plenty of ghost writers out there will be more than happy to write a plan for you using boiler plates and software. Just look on Craig’s list under your area, services, and “sm bz ads.” Then type “business plans.” Ghost writers are neither bad nor good, as long as an owner knows that questions will be asked, such as “Did you write this plan yourself?”

There are professional business consultants.

At this point I need to explain that the preparation of a business plan is a process. You should also think of a business plan in similarly to the way one thinks of an owner’s manual. Additionally, I also need to point out that a business plan is a working document, subject to change as times and circumstance dictate. At this time, for example, our economy has entered into a recession which is dictating that businesses need to reevaluate their owner’s manuals to adapt to the circumstances.

The purpose of hiring a professional consultant is to facilitate the writing process, not to knock out a binder full of paper and a PowerPoint presentation. A consultant is going to insist on the participation of everyone involved in the decision making process from owners to managers throughout an organization. A consultant’s job is to help owners think through and understand the concepts and assumptions that underlie a business venture.

A consultant’s role in the production of a business plan also is to teach owners and managers the significance of the business numbers and how those numbers affect profitability of the company, not how to build a spreadsheet. Do not forget that the objective of a business plan is to have a metaphoric owner’s manual that accurately reflects what the business is about. This should be addressed not only to a company’s stakeholders, but to people outside of the company in language that they understand, such as told by Profit and Loss statements and Balance Sheets.

The knowledge an owner derives from the process of building a business plan is empowering. It also reduces the cost of borrowed or invested funds.

While the Tide Is Out

I do not know about you, but I am fed up with excuses and the fear those excuses are reinforcing. There are two biggies right now in the excuse department: the Recession and the Holidays. They are getting in the way of everything we think and contributing to a bigger lie – which is that no one is buying anything. Codswallop, I say. What if I replaced the word Recession with Low Tide and the word Holidays with New Moon? What big lie could that engender? After all, they are just words.

Granted the moon and the tides are related in that the periodic rise and fall of the sea level has to do with the gravitational pull of the moon. That relationship is not equal to the cause and effect of a holiday and an economic cycle. But making such a relationship is not my purpose. My purpose is to support two three-word ideas: Stop Saying It and Get Over It. Besides, there are a lot of things we can do while the tide is out and we do not need a lot of reflected light to do them. But let’s consider first things first.

Stop Saying It. Quit indulging in the blame game that the economy is somehow gypping everyone. It is not. There is just less money in circulation. It is nothing more than that. The gyp is the pernicious notion that economies are static, like water in a concrete pool. Granted such changes require some getting used to. At this time the paucity of cash in circulation has undermined some of our previously held, perhaps unfounded, political and market ideas. That is not my point. If you believe that something is bad, it probably will be. If you allow yourself to believe that something is good, it definitely can be. When prices drop, we call that a deal. Where is the gyp in opportunity?

Get Over It. All right, already, Merry Christmas, damn it! Besides, you know I mean well. It might be nice to have more cash or perhaps more credit, but other than consumption, what do cash and credit have to do with customs that were conceived and enjoyed in utter poverty? Now is the time to re-evaluate how we celebrate our hallowed days. While we are at it, we might as well start planning for next year in our homes and our businesses.

So what can we do while the tide is out without a lot of reflected light? We could scrape barnacles off the bottom of our boats. We could fix the dock. We could do some crabbing. The operating word here is We. In business, for example, we can readjust our business plans. We can rethink our pricing. We can reconsider our advertising and sales efforts. If people are not buying, it is because we are not making it easy for them to do so. When we do, they will. That is worth celebrating.

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This posting also appears on my other blog, The Premise Loft, which focuses on commentary and public opinion.

Stranger From Afar -- But How Far?

When I worked for the big dollar consulting companies, I began to believe that travel was a form of hazing. As a Project Director for one of those companies, I could be found in an airport at least three times a week. I picked up and delivered three rental cars. I drove an additional average 250 miles a week. I checked in and out of three or more hotels.

As a Senior Executive for another company, if they had no assignment for me on Saturday afternoon, I reported to the airport on Monday afternoon to call the office every fifteen minutes beginning at 5 pm, bags in hand. No assignment meant checking into a hotel near the airport and performing the same ritual the next afternoon. Of course, I thought the arrangement was better than the first since I only had to fly twice a week. Less was more better.

I said that travel was a form of hazing because it is in addition to working a ten-hour day. As a Project Director, I averaged 4 to 5 hours of sleep per night. As a Senior Executive I probably averaged 6 hours per night. Those are considerations for you, should you decide you, too, want to become a “road warrior.” These people are easy to recognize. They wear suits at the airport, schlep at least two wheeled suit cases in addition to a laptop, and fall asleep in the airplane as soon as it reaches cruising altitude.

What does it mean to a business owner? It means an additional expense to a consulting project – 12% to 15% on average. The expenses are round-trip air fare, rental car and gasoline, lodging, per diem and incidentals such as printer cartridges and project binders. Take it from one who has served up a healthy $15,000 invoice for two days with three people on the project -- you can do the math. As a radio engineer of my acquaintance once wryly said, “A consultant is a salesman that lives 500 miles out of town.”

None of what I am writing is to impugn the quality of the consulting performed by “road warriors” from out of town. In fact such experience is worth the hazing for the person who wants to choose consulting as a career. It is a better credential than holding MBA or CPA credentials alone. However, for small to medium sized business owners the cost does not necessarily assure the best quality. The consultant you get may be just the next person on the bench or at the airport being hazed.

The consulting business is about selling consulting hours, just as Coke’s and Pepsi’s business is about selling bottled and canned products. The product itself is another issue. I have often said of the consulting business that when times are good, our business is good. When times are tough, our business is better. To a large degree that has been true. But today, times are hard. Just ask Detroit, where GM cannot borrow money and sales are puckered.

A similar effect is occurring in business consulting because the industry is not immune from the impact of this recession. Sales are down for their prospective clients who, as a result, are becoming more reluctant to avail themselves of consulting at a time when they need it the most. Consequently, sales are down for the consulting business. It is truly a vicious cycle.

However, this recession provides small to medium sized business owners, especially family-owned business, an incredible opportunity to reorganize themselves so that they can reap the benefits that will be realized in our economic recovery. The question then is not if they should retain consulting help from a stranger from afar. The question is “How Far?” and the closer to home, the better.

Silence Is Not Golden

I recently read five basic questions in a consulting blog. It turns out that the questions themselves can be put together as follows:

The more you sit down with a client to have conversations, the easier your client can develop trust in you. The more trust that the client feels, the better the quality of the feedback you receive. The better the quality of the client’s feedback, the greater the value of your engagement. The greater the value that the client perceives, the greater the likelihood of positive change.

It is all about effective communication.

How you establish communication with your client in the first few minutes of your engagement’s opening conference determines how easy it will be to return the next day. Excel spreadsheets, Word bullet-pointed documents and PowerPoint presentations should be left in your computer bag in the trunk of your rental car for as long as possible, especially on the first day of an engagement.

It is necessary to jot down the occasional note but not at the expense of eye contact and observation. Bear in mind that clients are, despite what they say, like doctors’ patients -- rather afraid and somewhat intimidated. By asking more questions and making fewer assertions, you allow your client to enter a comfort zone. People like to talk about themselves, so stay out of the way and encourage them.

I have asked clients if they will exchange seats with me in the opening conference so I can “see what you see.” I ask about family, encouraging them to talk as much about themselves as possible. Sure, I am looking for “hidden agendas,” “deal killers,” “sacred cows” and other such influences on my client that might impede our progress, but I have a genuine interest in what makes my client interested.

Meet with your client early and often. It is important to understand that clients breathe their own ether: Without clear supporting evidence, clients convince themselves that specific business problems can be resolved with generic business solutions. This can also impede your progress, so it is important to establish your control.

How you conduct an engagement with your client also establishes your control. There are two important considerations that many consultants forget. The first is that you are an agent of change. The second is that every day you must earn the right to return.

Incidentally, you have noticed that I use the word “engagement” rather than “project.” They mean essentially the same thing, but the words evoke different contexts. Projects have deliverables and check points. Each engagement is a partnership, which is what we are creating when we enter the client’s office. Never lose sight of the fact that we are being engaged to partner with our client to implement change.

A recent client told me at the end of the first day, “I’m excited. I learned more from you today than I got out of two weeks with the consultants from YaddaYadda Company.” That moment made me proud to be a consultant. My point is that I practice what I am writing here. The partnership was established because I had left my computer in the trunk of my rental car and let my client do most of the talking. Silence is not golden but an effective working relationship is.

Stuck in Stupid?

As a business management consultant, I would describe a lot of what I see in business families are people "stuck in stupid." They are not stupid; they're just stuck in it. The primary reason they are stuck is their lack of flexibility, which inhibits change. Change, incidentally, is why people hire consultants in the first place.

I ask people "What do you do for a living?" Generally, they explain about some functionality or process they perform. I repeat the question until they to stop. "You make decisions," I say. Then I ask, “If someone is stuck in stupid, what kind of decision could they expect to make?”

Learning to ask questions is the first step out of the stickiness. For example, let’s say our Company is expanding its’ scope of work and over the next 6 months it wants to add 50% to its’ gross revenue. The questions are:

• Does the Company have the qualifications to expand? That should not be a problem if the company is currently performing in these areas.
• Does the Company have sufficient capital or credit to expand? A projection showing a Cash Flow would provide insight into what the cash requirements would be with the expansion.
• Does the company have the staffing required to make such a move? Are additional employees required, are they available, how much training will they require, and what are the costs?
• How much competition does the company have and will the expansion enhance or hurt the Company’s position in the community?

Another issue with being stuck is what I call “breathing your own ether.” By “ether” I mean the things that business owners say like “we’re doing just fine;” and “I don’t need to write it down. I’ve got it all in my head;” and “I’m an idea person.”

The best “ether” I heard recently came from a client who told me, with a straight face, that his spouse’s working in the company without pay or job description was “saving us a lot of money because I don’t have to hire someone.” Actually, the spouse does have a job description – Owner’s Spouse.

Let’s ask some more questions:

• Doesn’t such a situation have the net effect of putting all of their “eggs in one basket?”
• Is the spouse qualified to perform the duties of her functional position, e.g.: book keeper or sales manager?
• Have the owner and spouse established clear boundaries, e.g. at what point do their business and personal lives begin and end?

The fact is that few people ever want to admit that they do not know what they don’t know. They claim that they have been so busy working they haven’t been able to take the necessary time to make that discovery. Fortunately, there is “ether.”

Here are available choices.

• Keep doing what you are doing.
• Stop what you are doing and go back to school.
• Hire a competent business consultant to help you.

There are sub-sections of those three choices, but I am trying to keep this short and to the point. Part of the stickiness is not admitting that some outside advice might be helpful.

Ego saying “I can do this better” is what starts business ventures. Ego saying "I don’t need anyone telling me what to do” is the glue of being stuck in stupid.