A couple of things have got me thinking about business plans recently.
Clearly a lot of business plans have been tested and have been brought into sharp relief during the pandemic.
But I was also prompted to think about the nature of long-term business planning after coming across a five-year business plan for a company I used to part-own during a big ‘staycation’ clearout.
The traditional thinking goes that we should be encouraged to produce longer-term business plans.
And of course, for regulated firms the business plan is a requirement of the FCA authorisation process.
Like most, I used to set business and personal goals based on the long term.
I set one, three and five-year goals and spent far too much time building spreadsheets and projections, virtually all of which turned out to be a complete waste of time.
While there was more accuracy short-term, any variances from the formula were merely multiplied out over the longer term to render five-year plans laughable.
I now refuse to set long-term business goals in any detail.
It’s not that long-term goals aren't important to keep in mind.They serve as guidelines that bring structure and direction to our professional lives - but that’s it.
The problem with long-term goals is two-fold.
First, most of us set them with unrealistic and overly optimistic outcomes.
Striving for something that’s so big, like a five-year goal, means it’s just too easy to become stressed that the short-term gains or misses aren't contributing to our objectives in the way we might have hoped.
The sheer amount of variables, both internal and external, that can impact progress can lead to short-term wins being overlooked.
Equally, any misses can lead to overcompensating, and putting undue stress on ourselves and our colleagues.
Second, it’s really hard to plan for the future.
We only need look at what financial planning practices are experiencing at the moment in terms of the staggering increases to both regulatory and professional indemnity costs.
Anyone who owns a regulated business has learned the hard way to plan for ever increasing costs. But the eye-watering increases being felt by the sector right now were probably written into very few longer-term business plans.
As for the current lockdown situation, we all seem to be coping as best we can, yet few business plans or business continuity plans will have had a section on the impact of a pandemic.
Crystal ball gazing
We should never forget that we can’t actually plan in detail for the future, because how things will play out is too unclear.
Unexpected events will occur, and they will force us to make decisions around whether to stick with our goals or re-evaluate them. In most cases, it may be advisable to reset based on the latest situation or data.
In the book, 'The origin and evolution of new businesses', Professor Amar V. Bhide demonstrates that 93 per cent of all successful companies abandoned their original goals because they turned out to be wrong for the company.
It is packed with examples of companies changing their plans based on shorter-term adjustments for the better.
There's a great section on how Slack, the popular communication system, actually started out as a moderately successful video game producer.
Based on a thorough examination of their progress and what needed to be done to achieve success, the company decided to change tack.
Few of us would completely refocus our whole reason to exist to drive greater success, but it is a great example to highlight my point.
Today, the furthest I look into the future with any detail is six months.
My five-year ‘plan’ is merely the distant summit, the overarching single company objective - its entire mission if you will.
In the short term I set weekly personal objectives. The rest of the team I work with do the same.
These contribute towards monthly, quarterly and year-end key results, all with the objective of driving the company in the direction it needs to be going in to achieve the entire mission. Each week becomes, in effect, a progress point.
We report our progress to each other via a simple 15-minute exercise and use software to help.
Weekly objectives allow us to accommodate any changes in line with internal and external factors.
It means every team member is accountable, and by achieving these bite-sized priorities they are contributing to our overall progress. Weekly progress points are short enough to reset or revise based on any new information; good or bad.
Breaking down big objectives into agreed micro-goals allows for prioritisation and getting important tasks done, which in turn contributes to the achievements of us all.
It’s about consistency as well as accountability.
It is now well accepted that small improvements add to up to big gains. The worlds of sports, academia and the military, as well as successful businesses more generally, all understand this.
Those who accept and deliver small gains know they can produce extraordinary results because they take the required actions to follow through on their goals.
I would humbly suggest that if you break your goals down into achievable progress points, you too can develop the ability to leave your five-year plan in a filing cabinet drawer.
This should enable you to more readily concentrate on a weekly plan of prioritised progress points, and benefit from the renewed sense of focus this will bring to your personal and business goals.