So You Want To Start a Business? A Note To 23-Year-Old Me Part 3

Continued from Part 2.

3. The importance of setting goals, creating projections, and conducting realistic planning.  Business is chaotic, every day will bring surprises and new challenges. There is absolutely no way you can anticipate everything you're going to have to deal with, but do as much as you can to project your thoughts forward in time to visualize what the future looks like. This ability to visualize helps you to "shape the action" and be prepared. (page 86) Even if you didn't foresee the specific situation, the planning process with have helped hone your ability to think logically and creatively through potential challenges, and this will help you navigate the unexpected. As explained in "The Seven Habits of Highly Successful People", the concept of "Begin with the end in mind" is a great way to start. Think about what you want your business to look like in the future at various milestones, and then use your planning process to fill in the gaps and answer the question, "how".  Set SMART goals for the organization as a whole, and then work with each group in your company to come up with specific goals for them that support the organizational objectives.

Planning should incorporate sales, marketing, delivery, cash flow, credit management, staffing, expenses, and training at a minimum. Your list will be unique to your business, and will grow along with your experience. These items are all interrelated, so your planning should be as detailed as possible. Think about seasonal variations like holidays, three-payroll months, and impact of the snowstorms and hurricanes you know are likely to occur. Understand that in a services business, some months are going to be impacted by vacation (your team as well as client decision makers) more than others. Develop a refined cash management projection that incorporates payroll, vendor payments, taxes, etc. as far as out as possible. Your projections won't be perfect, and at first it will be extremely difficult and time consuming. 

Capture the outputs of your planning, organize it, and write it down. Give everyone on the team a chance to review, comment, and  provide input, then finalize and publish it as your annual plan. Brief everyone in the organization, and rally them around hitting the goals. Show them how the goals are realistic, achievable, and how they snap in to the corporate vision. Let them know how progress with be measured and rewarded.

At the end of a month, review your projections for that month. Examine what was accurate, and what wasn't. Document it, discuss with your team, and incorporate into your next planning cycle. Over time, you and your leaders will get better at the projections and they will become surprisingly accurate. This will make you stronger and more competitive. You'll have an easier time dealing with the unexpected because you have reduced the areas of possible surprise.

There is a bias in business today towards, and a sense of near celebration around failure…popular business culture will tell you if you haven't had at least one failed business, you aren't a true entrepreneur. I reject this. As a business owner, people are counting on you for their wages that they use to support their families. Your vendors, clients, and partners have all put their faith in you. Failure shouldn't be "one of many possible outcomes", it should be the absolute last resort when all else has failed and there's nothing more that can be done. People will get hurt, and you should work every day with a passion, serious intensity, and sense of urgency that recognizes the very personal cost of failure. The truth of the matter is that by accepting the distinct risks of failure into your planning process, you will have a much better chance of avoiding it. The danger that kills many business is often the one they simply refused to acknowledge during their planning.


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