Chapter 8 – Coming Up With a Game Plan
The heart of the Great Game of Business is the annual game plan. By that, I mean a set of financial statements spelling out what you expect to do month by month for the entire year. Without a plan, people have nothing to which they can compare their performance, no means of recognizing problems, no targets they can use to organize, motivate, and challenge themselves. They won’t know what they have to do to support one another, or whether they are doing a good job, or how to evaluate the numbers they’re generating on a daily, weekly, and monthly basis.
Emotions will cloud the picture. Barriers will go up. As the leader, you won’t know whether to celebrate or sound the alarm. No matter what you do, people will second-guess you. As for that bonus program, don’t waste your time on it. Without an annual plan, how could you ever come up with objective, quantifiable goals to shoot for? For that matter, how would you ever know if you’d reached them?
The annual game plan will tell you that, and keep you posted on other important matters:
Is the company ahead of schedule?
Is the company behind schedule?
Is the company right on the money?
Who is carrying the load?
Who is falling behind?
You need more than a plan that is firmly rooted in reality. You also need one that people not only accept but agree to – without reservation. All the players must be ready to make the plan work. They have to wantit to work.
You can only get that sort of consensus by opening up the planning process and bringing the entire workforce in. … Otherwise, the plan will become a club, not a tool they can use in their work, and they’ll regard the goals as yours, not theirs – which defeats the purpose of having them.
REMEMBER, THE FIFTH HIGHER LAW IS: You Gotta Wanna
So how can this happen? … that encourages everybody to participate, that makes sure each person is consulted about the decisions affecting his or her job, and that produces consensus on the final results? How do you do all that without bring the company to a total standstill? … Most important, how do you make it fun?
Show people their stake in the process. … This is everybody’s big chance to say exactly how he or she thinks it ought to be set up. … First, decide what winning means. Ask people:
What do they think they can accomplish in the coming year?
How much can they increase sales and production?
Do they want to?
What concerns do they have about the company?
Are there problems that should be fixed?
Do they want more space?
Do they need new tools?
Do they want additional perks or benefits?
The planning process is a time to think about the future, to dream a little. It’s also a time to think about what dangers may lie ahead, so that you can figure out how to minimize them. … At the end of the process, you want to be able to tell people, “Here’s what we say we want, and here’s how we can get it, provided we all just do what we say we can do.”
There should be nothing boring about coming up with the annual game plan. Don’t make the mistake of approaching it as an arduous but necessary ordeal. … That doesn’t mean you have to invent a whole new way of planning. We use a process you can find in any textbook on budgeting. There are four phases based more on logic than anything else:
- Determine what your sales are likely to be in the coming year.
- Figure out what it’s going to cost to produce these sales and how much cash you can expect to generate as a result.
- Decide what you want to do with the cash.
- Choose your bonus goals for the year.
Simple stuff. What makes it all interesting, even exciting, is the drama that comes from having everybody involved.
Countdown to the New Year
Step one in planning: put together a schedule. Without a schedule, there’s a natural tendency to underestimate the time required, and you will probably let things slide. … So how do you develop a planning schedule? Work backward from new year. Figure out what you want to have when you finish, and how long it will take to produce it. Our annual game plan has eight documents:
- Income Statement
- Balance Sheet
- Cash-Flow Analysis
- Sales and marketing plan
- Capital plan
- Inventory plan
- Organization charts
- Compensation plan
You can undoubtedly get by with fewer – we did for years. Th essential documents are the Income Statement, the Balance Sheet, the sales and marketing plan, and the compensation plan (which includes the specifics of our Stop-Gooter bonus program for the year). … We give ourselves more than six months to produce the plan. … The first two months are relatively low-key, a period of preparation. May, we are thinking about the sales forecast. … The real excitement begins in October, when we present the sales plan to the entire company, and from then on the pace does not let up until the end of our fiscal year, January 31 – New Year’s Eve at SRC.