Business Action Planning is a simple four part process:
- Planning WHERE you want to go. (Goal setting).
- Deciding HOW you are going to get there (Strategies).
- Working out WHAT you need to do, WHEN you need to do it and, if you have a team – WHO is responsible for getting it done (Action or project planning).
- IMPLEMENT, REVIEW, RINSE AND REPEAT: Monitoring and measuring your progress and revising your strategies and action as needed.
In this guide I’ll walk you through each step in the SMART Business Action Planning Template in turn.
Part 1. Goal Setting
Planning WHERE you want to go
Trying to run a successful business without goals is like trying to drive a car without a destination. If you don’t know where you want to go, you won’t know which direction to take and which strategies to implement.
- Which marketing strategies should you implement?
- When should you hire staff members?
- When should you introduce a new product or service?
- Should you take up the opportunity to move into a new office or start a new joint venture?
Without clear goals and objectives for your business, you are driving around aimlessly.
Effective Business Goal setting involves three parts:
- Your Overall One Year Goals
- Your One Year Financial Targets
- Your Critical Number Goals
1.1 Your Overall One Year Business Goals
Your overall business goals are where you want your business to be and what you want it to look like by the end of the year. Think about the answers to these questions:
- If you were to sell your business at the end of the year, how would you describe it to a potential buyer?
- What will your business have provided for you and your family?
- What will you have achieved?
- What will your lifestyle be like?
- What difference will you have made for your clients, your community and the world?
1.2 Your one year financial targets
Once you’ve established your overall personal and business goals it’s time to review your financial targets. The number one goal of every business is to be profitable or to be moving towards profitability at an acceptable rate. Even if you run a not-for-profit organisation you need to generate more money that you spend or you will not be able to fund your cause or continue to improve your organisation so that you can make an even bigger difference in the future.
Setting your Financial Targets
When working out your financial targets, rather than starting with revenue, a better place to start is with how much you want/need to have left at the end of the month or year to pay yourself, to reinvest in the business and to realise your overall goals.
Paying YOU: How much money do you need/want your business to be able to pay you over the next 12 months? You can record this as either a monthly or yearly number (or both).
Growth: How much money do you want to have left at the end of the year to re-invest in the business?
Operating Costs: What are all of your ongoing business expenses? Remember to include all your regular day to day and yearly operating costs.
Cost Of Goods Sold (COGS). These are the expenses you incur because you have made a sale. Most products or services you sell will have associated COGS. These may include production and manufacturing costs, raw materials, shipping costs, even payment processing costs.
Marketing Costs: How much money do you need to spend on attracting new leads and customers, on building and maintaining relationships with alliance and referral partners and on building and maintaining relationships with your existing customers and clients?
Other stuff: Are there any once off purchases you will need to plan for this year? New equipment or machinery, a new website, new systems? When and how will you pay for them?
TOTAL Revenue: Finally you can calculate the MINIMUM amount of revenue you need to generate each month or over the year in order to:
- Cover your production/supply costs (COGS).
- Cover your standard operating expenses.
- Cover your marketing expenses and your once off (other stuff) expenses.
- Have money left over to pay yourself (something many small business owners never do).
1.3 Your Micro-Goals
Once you know your overall goals and your financial targets, the final part of goal setting process is working out your Micro-Goals. These are the goals you will need to meet in order to achieve your Financial Targets.
Think of it like this.
Suppose you work out that you need to generate revenue of $200,000 next year, an increase of $100,000.
Setting a goal of increasing revenue by $100,000 is not very helpful. It doesn’t give you any clues about how you might achieve it.
However if you know that your average sale is $1,000 then you know that you will need 100 more sales over the year.
If you also know that in order to make ONE sale you typically have to hold TWO sales meetings then you will have to have 200 more sales meetings
And finally if you know that to get each sales meeting you need ten new leads then you now know that you will need 2000 more leads over the course of the year.
So you could set a micro-goal of 2000 new leads a year or 167 new leads a month.
However if you focus all your attention on trying to get new leads that might seem like an overwhelming task and there might be a better way.
- Could you focus some of your attention on improving your sales conversion rate?
- Could you focus some of your attention on improving your lead conversion rate?
- Could you focus some of your attention on getting your existing customers to buy more frequently?
- Could you increase your average $ sale? Could you reduce your operating costs or your cost of goods sold?
It’s possible to realise a 60% increase in profits by:
- Increasing customer referrals by 10%
- Increasing the number of new leads by 10%
- Improving sales conversions by 10%
- Improving customer retention by 10%
- Increasing your average $ sale by 10%
- Reducing your costs by 10%
You’ll find a table showing how that works in the downloadable template and guide here.
By breaking your financial targets down into Critical Number Goals you can focus your attention on the best strategies to achieve your financial targets and therefore your overall goals for the year.
Here are some example Critical Number goals:
- Increase website traffic by 50%.
- Improve website sign up rates to 50% for all website visitors.
- Increase sales conversion rates from sales meetings to 80%
- Increase average dollar sale to $500 without increasing prices.
- Reduce overall costs by 15%.
Whatever goals you want to achieve you can then focus your attention on implementing strategies in the areas of your business most likely to achieve the desired results. You’ll find a number of strategies to help you achieve your Critical Numbers Goals in the next section.
Part 2: Strategic Planning
Working out the best way(s) to get there.
2.1 Strategy Brainstorming
Now that you know what it is you want to achieve (your goals) and which areas of your business you may need to focus on to help you get there it’s time to start identifying possible strategies.
This is a brainstorming activity so don’t let your thinking be limited.
Don’t worry about details or descriptions – just get down as many ideas as you can.
Make sure that you include:
- All of the things which you are already doing which are working well and you need to continue to do in order to achieve your goals and financial targets.
- Things you are currently doing which you need to do better or improve in order to meet your goals and financial targets.
- Any new ideas which may help you achieve your goals and financial targets.
Don’t worry if you have overlaps – often one strategy can help you achieve more than one goal.
Here are some ideas to help you get started.
Ideas to get more leads
- Improve your marketing strategies to attract more new potential clients.
- Improve your customer service strategies to generate more customer referrals.
- Improve your alliance partner strategies to get more partner referrals.
Ideas to get more repeat customers:
- Improve customer service and customer communication strategies.
- Increase your product/service offerings.
- Repackage your product/service offerings or present them in a different way.
Ideas to improve your sales conversion rates
- Improve your sales strategies
- Improve your customer service and alliance partner strategies to get more quality referrals which convert at a higher rate
Ideas to improve your average $ sale
- Increase your prices and focus on improving your customer service and communication strategies so your customers don’t mind.
- Add higher priced products and services.
- Add more products and services to your range. (Would you like fries with that?)
- Improve your sales strategies.
- Review you product and service packaging.
Ideas to reduce your cost of goods sold and overall operating costs:
- Review all of your supplier agreements.
- Review all of your systems and processes.
- Review all of your staffing and contracting arrangements.
- Review your terms of sale and your payment terms. Are your customers paying their invoices on time? Are you paying your suppliers faster than your customers are paying you?
2.2 Strategy Shortlisting
By now you should have a big list of things you may be able to do to achieve your goals. Some of them may be impossible, some impractical and some may not be a fit for your values, mission and purpose.
The purpose of strategy shortlisting is to narrow down your list of options from the strategy brainstorm in the previous section into a shortlist of key strategies which are most likely to help you realise your business goals and financial targets for the year.
Unless you have a team of staff or an extensive budget, you should probably not plan for more than 10, with no more than 2 or 3 in each 3 month period.
Here are some key factors to consider when creating your Strategic Action Plan shortlist.
- Eliminate all strategies which are not in line with your core values and your purpose and mission. Be ruthless – no matter how attractive a strategy might appear. If it’s not congruent with your core values or your core purpose and mission it will damage your brand.
- You can immediately eliminate all of the strategies which have a very low probability of achieving the desired goal. If they aren’t going to work then there is no point in spending time or money on them.
- Consider your personal and business strengths and weaknesses particularly in relation to time and money. Weigh up the relative costs of your time and the time required to implement each strategy. Could your time be better spent doing something with a potentially higher return on investment?
- Some strategies may assist with the achievement of multiple goals in which case you would probably give these a higher priority than those which only contribute to a single goal.
- Urgency: If an objective is particularly urgent then you may need to consider selecting a strategy with a short time frame even though this may use financial resources which will impact on your ability to implement other strategies.
- If you have only identified one way to achieve a specific objective and it has a high cost or risk then you may still need to consider it. In these circumstances we recommend that you seek input from mentors/coaches on alternative strategies to achieve the desired outcome.
- If you can’t see any practical way to achieve a desired goal – don’t give up. Seek the input of mentors, coaches or other business owners. Often a different perspective will reveal opportunities you haven’t considered.
- Make sure that you have at least one viable strategy for every goal.
- Some goals will require that you include multiple strategies in order to achieve your objectives. For example, if one of your goals is to open a new office then you may need to include strategies around the logistics of moving, staff selection, recruitment and training and identification of new suppliers.
- Some strategies will only require a short time to implement, other strategies may involve activity over an extended period of time, Make sure that you take any time constraints into consideration when selecting the most appropriate strategy.
- Some strategies, once implemented will need resourcing on an ongoing basis. Make sure that you take this into consideration when making your selection.
2.3 Applying SMART Principles
The final Part of the Strategy Selection Process is determining how you are going to monitor your progress and test and measure the effectiveness of each of your strategies so that so that you can adjust course as necessary.
This is where we need to apply S.M.A.R.T. principles.
What are SMART Principles?
You are probably already familiar with the concept of SMART goals:
- Results focused
Specific: Goals should be simplistically written and clearly define what you want to achieve.
Measurable: Goals should be measurable so that you have tangible evidence that you have accomplished the goal.
Achievable: Goals should be achievable; they should stretch you slightly so you feel challenged, but defined well enough so that you can achieve them. You must possess the appropriate knowledge, skills, and abilities needed to achieve the goal.
Results Focused: Goals should be clearly linked to a purpose or a WHY.
Time Based: Goals should be linked to a specific, practical timeframe.
SMART Strategies are what turn goals into results. “Vision + Plan + Action = Results”
Applying SMART Principles to your Strategic Action Plan
- Are your strategies specific?
- For a strategy for to be specific it needs to be clear exactly how you will know when it has been completed.
- Are your strategies results focused?
- Are your strategies linked directly to the achievement of your goal? If not why are you doing them? Every strategy you implement should be directly associated with either the achievement of a Business Goal or a Critical Numbers goal.
When you add a strategy to your Strategic Action Plan if you can’t link it to a goal then you need to ask yourself. “Why am I doing this?”
- Are your strategies measurable? For a strategy to be measurable there must be some way that you can test and measure the impact of the strategy on the associated goal. Often this will require ongoing measurement for some time after the strategy has been implemented. For example if you decide to implement a Facebook marketing strategy with the goal of generating new leads from Facebook then you will need to ensure that you can measure the number of leads you generate from the campaign.
- Are your strategies time specific?
- Have you put start and completion dates on each strategy to ensure that you are able to achieve your goals when you want to?
Some strategies will have both a start and a completion date. Other strategies will involve ongoing activity. If you include a strategy without a completion date make sure that you include a review date to test and measure the effectiveness of the strategy.
Are your strategies achievable?
- Strategies involve resources, actions and time frames. Are you being realistic? Do you have sufficient time and resources to complete all of the strategies you have selected within your determined time frames? You might want to come back and review this section AFTER you have completed the next step in the Business Planning Process
Part 3: Action Planning
Strategy Implementations Plans
Most strategies will have multiple action items which you need to keep track of and manage.
Strategy Implementation Plans are your project management tools or your “To Do” Lists. They help you keep track of all of the tasks and activities involved in implementing each strategy.
Typically you will need to have a Strategy Implementation Plan or To Do list for every Strategy you plan to implement.
Don’t try and do this for every strategy for the year… just select those strategies which you need to start working on over the next 3 months.
Then at the end of each three months you can repeat this step for the next 3 months.
A Strategy Implementation Plan needs to include the following elements:
- OBJECTIVE: The overall objective or goal of the strategy.
- TIMEFRAMES: The overall timeframes for the completed project or strategy.
- ACTION STEPS: All of the action steps involved in completing the strategy implementation.
- DEPENDENCIES: Are there any factors which will either prevent or delay any of the action steps? What needs to be done about them?
- WHO: Who is responsible for completing each action step.
- WHEN: When does each action step need to be completed by.
- MEASURES: How will you know when each action step has been completed? What are the deliverables?
You may choose to photocopy the template in the downloadable templae and guide for each strategy to manage your strategy implementation. However if you are managing complex strategies or if you prefer to manage your projects electronically then I recommend using a project management tool such as basecamp.com or a simple To Do List tool such as Todoist.com instead.
Part 4: Implement, Review, Rinse and Repeat.
How many times have you written a To Do list or project plan and then failed to implement it?
In the final part of the business planning process I’m going to walk you through a monthly, weekly and daily process to help to stay on track and ensure that you are staying on target to achieving your business goals.
You’ll find a template for this process on page 4 of the downloadable template and guide. I recommend using the template like a diary to record your progress through the year.
At the end of each month ask yourself these questions:
- 1. Did I achieve my financial targets and critical numbers this month?
- 2. Am I on track to achieving my targets and goals for the year?
- 3. Achievements: What am I proud of this month? What have I achieved? What challenges have I overcome?
Problems and Possibilities
- What (if any) problems, risks or challenges have I identified that could impact on my ability to meet or exceed my goals and that I need to take action to resolve?
- What (if any) new opportunities have I identified which will help me overcome risks and problems and/or meet or exceed my goals?
- What do I need to start, keep doing, do more of/better/differently to be on target to achieving my numbers and meeting my goals over the coming month? Refer back to your Strategic Action Plan and your Strategy Implementation Plans to make sure you don’t miss anything.
- Now break your plans down into weekly action plans and decide what you are going to do EACH WEEK over the next month in order to be on track to achieve you goals and financial targets for the next month.
At the end of each week ask yourself these questions
1. Did I achieve my goals for the week?
2. Am I on track to achieving my targets and goals for the month?
3. Achievements: What am I proud of this week? What have I achieved? What challenges have I overcome?
Problems and Possibilities
1. What (if any) problems, risks or challenges did I identify this week that could impact on my ability to meet or exceed my goals and that I still need to take action to resolve?
2. What (if any) new opportunities have I identified which will help me overcome risks and problems and/or meet or exceed my goals?
- What do I need to start, keep doing, do more of/better/differently to be on target to achieving my numbers and meeting my goals over the rest of the month? Refer back to your Strategic Action Plan and your Strategy Implementation Plans to make sure you don’t miss anything.
- Now break your plans down into daily action plans and decide what you are going to do EACH DAY over the next week in order to be on track to achieve you goals and financial targets for the week and the month.
- At the end of each day ask yourself these questions
- Did I achieve my goals for the day?
- Am I on track to achieving my targets and goals for the week?
- Achievements: What am I proud of today? What did I achieve? What challenges did I overcome?
- What (if any) problems, risks or challenges popped up today that could impact on my ability to meet or exceed my goals and that I need to take action to resolve? What do I need to do about it?
- What (if any) new opportunities popped up today which will help me overcome risks and problems and/or meet or exceed my goals? What do I need to do about it?
- What do I need to DO TOMORROW to be on target to meeting my goals for the week?