The 5 plans every business needs
In the corporate world, my least favorite thing was having to ask for time off. Nothing made me feel more like a teenage begging to go to the mall. In order to minimize my asking and maximize my use of public holidays, I would begin planning out how to use my leave for the following year around Q3 of the current year. The second the leave calendar opened up, all of my requests would go in immediately.
Some bosses operated on a “first come, first served” basis, and would approve it all immediately, only grumbling at the time it took to click the button multiple times. Others required detailed negotiations, but it was hard for them to think of a reason to say no that far out, so more often than not it was approved.
So instead of feeling constrictive, planning has always felt like freedom to me. And to be truly free in your business, to stay in your zone of genius, to maximize your time so that you can take more of it off and spend less time worrying about everything, you need to embrace planning rather than viewing it as a chore that needs to be done.
As a CEO, you need five types of plans: strategic, operational, financial, tactical and contingency.
The Strategic Plan
Your strategic plan documents your big CEO visions for the company and includes the vision statement, mission statement, and core values. It’s the plan with the longest time horizon, looking from two to ten years into the future.
As an entrepreneur, ten years into the future may seem daunting, but consider this plan the “Why” of the business, without considering the “How.” This is the north star designed to keep your business tracking in the right direction, instead of being the engine driving it there. This is your Miss World moment – allow yourself those “world peace” dreams.
The Operational Plan
An operational plan is the “What” and “When” of the planning spectrum. This uses a shorter time line, a year, where you examine what you want to achieve high level (What), and the time frame (When) in which you can achieve that mission.
The outcome of the operational plan is your business’s objectives for the year—what will be launched, sold, produced in Q1 of July, for example. In the corporate world, these would be the departmental plans based on the strategic visions, but in the flatter business structure and smaller teams of the entrepreneur space, this is more about what the business will achieve in the next year.
The Financial Plan
This is the plan most entrepreneurs dread. It tends to range from a complex analysis of market factors, customer plans and risk management, to a simple guess of “last-year-plus-a-bit”. And no matter how hard you try, you’re never really on plan. Sometimes you’re winning and sometimes you’re losing, and as such, it feels too much like a roller coaster, and thus feels safer just to avoid it.
In reality, the financial plan should work alongside your operational plan. The objectives inform the cost element of the financial plan, and the revenue goals of the financial plan should be incorporated when building out the objectives. If the operational plan is too ambitious, the cost plan will constrain it, and if the revenue plan is too high, the objectives required to meet it will show that unrealistic ambition.
The Tactical Plan
A tactical plan is simply an action plan and will, at first glance, seem a little like a to-do list, but it is, in fact, far more structured. Your tactical plan should be an even shorter time horizon than the operational plan; I recommend ninety days. The tactical plan is the “Which” and “Who” of the planning spectrum.
Which sub projects or deliverables make up the objectives set out in the operational plan, and which tasks make up those projects, and which will you tackle in the next ninety days? The second part is who is going to be assigned them, with a hard and fast rule of one task per owner.
The Contingency Plan
A contingency plan is the “What if” of the planning spectrum. This is the plan that looks at all the other plans and, based on risk and consequence, assigns a set of steps to be taken at the first sign of trouble.
Most entrepreneurs are on the high vibe spectrum and tend to prefer to focus on the positive outcomes than the risks facing their businesses, so this is often ignored. But imagine you're invited to fly to Necker Island for a one-on-one lunch with Richard Branson tomorrow, all expenses paid. That's an incredible opportunity that could still have a big impact on the running on your business, if you go incommunicado for a day or two.
Plans are tools not taskmasters
These five plans are like the steering committee for your business. They keep you on track when shiny objects try to lure you away. But if you understand them, review them and partner with them, you’ll discover they are as agile as you thought they were restrictive.
The information contained above is provided for information purposes only. The contents of this article are not intended to amount to advice and you should not rely on any of the contents of this article. Professional advice should be obtained before taking or refraining from taking any action as a result of the contents of this article. Diane Mayor disclaims all liability and responsibility arising from any reliance placed on any of the contents of this article.