Welcome to the second installment of our four-part series designed to help business owners like you elevate their companies. In the first part, we explored the importance of defining your vision. Now, let's dive into the crucial next step: crafting your blueprint for success.
What is Your Blueprint?
Now that you have articulated your Vision or your “why,” how do you turn it into a plan? Some have used the concept of building blueprints as a metaphor for the organization’s basic plan.
To start that plan, begin with the end in mind (Stephen Covey) and work out the details. Start with a rough plan at first and then begin to fill in the details. Just like the blueprints for a house, if your overall business blueprint doesn’t make sense on paper – it won’t work in the real world either. To make sure that your blueprint has the necessary structural strength to hold up, include these things:
- Cash flow & working capital management. Plan to make your Operations a source of funds, not a use of them, by establishing achievable targets. For example, if a company ran larger lot sizes to reduce costs, that might cause an issue lowering inventory turns and increasing obsolescence.
- Business risk management. Consider interest rates and credit availability. For your operating systems and processes, what can be done better internally? What external factors are changing? What macro-economic forces (e.g., the employment pool and commodity pricing) impact your business? Do you have concentrations with customers, markets, or vendors? Do you have a team that will lead you into the future?
- Growth and Value enhancement. What does your plan look like? Projections and forecasts can help you consider alternatives. Again, if it doesn’t work on paper, it isn’t going to work in real life. So have a growth plan for cash, personnel (how many and with what kind of training and experience), facilities, and equipment.
- Succession planning. This is essential, particularly for a family business. What does the company look like after an ownership change? Who will handle key functions – is it still family?
Without a blueprint, even “good news” can go bad. I worked with a $5MM business that landed a contract with the largest customer in the market. It represented $1MM in new business – GREAT NEWS!! But not if you can’t deliver the product on time and lose the customer! (Which is exactly what happened). A comprehensive blueprint would have shown that with current equipment and facilities, the company needed 120 days to prepare to achieve those sales levels. Or better yet, six months to install and implement an information system to handle the additional scheduling and logistics required.
As your company grows, these factors will change, so review your blueprint periodically for opportunities to improve it.
For more in this series, explore our sections on Vision, Blueprint, Scorecard, and Team.
