So far in the series of articles entitled "The Wheel of Management"
we have dealt with the six spokes or processes which keep the wheels
of business
turning. We all know that those spokes will collapse if not attached
to the hub, so what in the process of management is the hub. The
answer to this question is demonstrated from experience.
Companies that have a formal planning process are generally
more successful than those that do not! Yes, planning is
what makes all of the processes of management more efficient,
and I sincerely believe that the investment in planning is
the most productive investment any business owner can make.
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So far in the series of articles entitled "The Wheel of Management"
we have dealt with the six spokes or processes which keep the wheels
of business
turning. We all know that those spokes will collapse if not attached
to the hub, so what in the process of management is the hub. The
answer to this question is demonstrated from experience. Companies
that have a formal planning process are generally more successful
than those that do not! Yes, planning is what makes all of the
processes of management more efficient,
and I sincerely believe that the investment in planning is the most
productive investment any business owner can make.
That is the truth! I tell my clients that they will get a five fold
return on any investment the make in planning. I have never had
anyone dispute that prediction. So what do we mean by planning. Let
me give you the simplest of examples. Working with a concrete
contractor in the Mid West, we interviewed their workers to find out
why different teams appeared to be more or less productive. The
insight came when one of the more productive team members told us
this, "I like to be organized, so as I am driving to work every day
I run through what I can expect. When I am working with supervisor
X, he tells us the night before what we are likely to do each day.
Because I know what is coming up for the day, I can prepare mentally
for it."
As I said, this is the simplest example, but it is mirrored in all
the planning functions. Preparing a budget, scheduling construction
work, devising market strategies, these are much more complicated
and comprehensive processes but they still breakdown to the same
thing. They help you be organized, to know what to expect, to
prepare mentally, physically, organizationally and financially for
the future. Being prepared means you can react more rationally and
more quickly, but most importantly, more accurately. We all make
wrong decisions sometimes, but if you have thought things through ahead of
time, you will make a lot less, and that puts you ahead of the
crowd.
So what kind of planning should we do. Here are some of the most
important:
Cash planning. More companies fail because of cash flow problems than
for any other reason. Cash planning tells you where
and when the money is coming from, to whom and when
it will be paid, and gives you advance warning of
problems on the horizon.
Budgeting. Apart from this being your road map for the future, a good
budget sure makes the banker a happier guy.
Personnel and succession planning. Knowing when you are likely to need
new staff or what you have to do in the event of the
loss or illness of key personnel will save time,
money and most importantly, angst.
Operational and Marketing planning. This is too big a subject for this
short article, but be assured, planning pays.
I know there will be a chorus out there saying, "What is the point in
planning, nothing ever stays the same?" My answer, "Precisely, that
is why we have a plan for that!"
The Author
After 25 years consulting to small and medium sized companies,
Mike Anderson, principal of Train Me To Be a CEO
realized that the most important part of his work was training the CEO,
and the reason he was such a good consultant was that he did that very
well.
Trained as an engineer, he became a CEO of
a midsize corporation at the age of 35. After a spell at Harvard
Business School he entered the world of consulting.
3. Ongoing mentorship. Begins with a minimum two
day one on one, but continues with monthly or quarterly follow up
sessions. (Smart and probably Best!) .
References
A New England Contractor
"Mike Anderson has been working diligently
with the upper management team at (our firm). Mike is extremely
knowledgeable and has an exceptional way of dealing with many different
personalities. He has worked very closely with the Sales Team to
impress upon them the importance of using a consistent method of
estimating. He was instrumental in restructuring our accounting
procedures."
