I have a number of clients that I am working with that struggle with Planning. They express their challenges in different ways. But the most obvious one is that they have not thought about what I am used to calling "The Win". The Win is the state when things have achieved success. I ask some pretty simple questions like: - How many customers will that take?
- Is your target market large enough?
- What is your pricing strategy?
I find the answers to these questions to be lacking almost all the time. I know there is always a coaching saying to start with the end in mind, but the real notion is to figure out what the end means in absolute terms. I would have revenues of $1M is one thing. How many clients being charged what amount of money is the next level of detail. From there you can estimate what you would be able to sell for that amount of money. If you are making a 3-year plan you will rightly conclude that any plan you make will be wrong.
So a lot of people stop because it will be wrong. But the point of the details of the plan is not the actual result. It is the magnitude of the change in what you are doing from where you are today. I use our 2001 Business Plan from AFC as an example of this all the time. We knew that to sell the company we needed a majority of our revenue coming from Tier 1 customers. At the time, 80% of our revenue came from Tier 2 and Tier 3 customers. Now, there is an added unspoken thought that needs to get added. This is that the company is only valuable if the revenue and profits stay the same or grow and the customer mix changes. The company at that time had about $350M in revenue. That meant that we needed to grow our Tier 1 revenue from about $70M to about $150M or more than double our current number.
Stop and think about that. Were we going to be able to double the market share of our existing products or would we need to introduce new products to fill that gap? What kind of new products would we be in a good position to sell and what would our plan be? Should we invent these products or buy companies who have these products?
You can see how questions just spawn from these simple analyses. And that was a pretty simple starting point. When you are asked to start with the end in mind, remember to think about the question to get to action steps. The better your answers the more likely you are to achieve your vision!
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