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Have a Documented Roadmap to Guide Your Small Business to Victory

Have a Plan to Guide your Small Business

Not having a plan is like driving down the street at night without headlights on!

Creating a measurable and achievable strategic plan is vital to the success of your small business.  A plan is your roadmap to your future, what you are going to be measured against and importantly, planning facilitates the process of getting the entire management team on the same page.  In that sense, your plan is a great communication tool and should be shared with all stakeholders including employees, your board of directors, outside investors, banks and even with customers and suppliers.  Accurately predicting your future inspires confidence with all of these stakeholders.

I believe there are three concepts at work when putting together a plan.  First, are the assumptions used to generate the financial aspect of your plan, second are the guiding principles of your organization that drive how the plan will come together and third that the plan is SMART: Specific, Measurable, Attainable, Relevant and Timely.  All of this planning will be more accurate and by definition more useful if you can gain the perspective of your outside advisors who have similar but not necessarily the same experience.

Financial Assumptions

As small business investors, we ask our management teams to develop five year strategic plans with the first two years reported by month and the last three reported by year.  It includes income statements and balance sheets and importantly the assumptions.  Let’s talk more about the first concept which are the assumptions.  Trust me when I tell you that you can get your strategic plan to tell you whatever you want it to tell you, but for it to be useful it needs to be grounded in reality.  If your plan shows that you are going to be in trouble then you will be clearer on what you need to do to fix it!  Entrepreneurs always say they want to be a $100 million company, but they do not always think through what actions or inputs are required to get them to that point.  For example, what if you know that by making 100 phone calls in a quarter you will generate $1 million in newly identified sales opportunities in your pipeline.  That means you need to make at least 8 phone calls a week.  Are you measuring how many calls are being made each week?  Do you have the right person or number of people to accomplish this goal?  You also have to calibrate your plan and do a sensitivity analysis to know what happens in different scenarios and protect yourself from the scenarios that can cause the most pain.  A good plan also helps you be predictive with your business.  If your WIP or work-in-process is two weeks long and you know what resources are being expended, cash being used, margin in the product or service being delivered, then you have a pretty good crystal ball in what happens to your business over the next two weeks.  This same principle would apply to a backlog, which is business that is sold but not yet started.  If your backlog extends out 6 months, and you know what resources are being expended, cash being used and margin in the product or service being delivered then you have a pretty good view of your business for the next 6 months.  This is vital to withstanding the inevitable bumps in the road because you can prepare!

Guiding Principles

In almost all plans there is too much focus on the numbers.  Any good plan needs to go beyond dollars and cents and focus on the second concept which are the principles that your business is going to live by.  This part of planning breaks your business down to its most fundamental level in terms of challenging why you exist and what actions are required to get you to where you want to go.  The non-financial aspects of your plan will drive your success more than putting numbers on paper.  This is where the Entrepreneurial Operating System (EOSTM) by Gino Wickman becomes critical in our planning process.  We ask our teams to start with core values.  These often become trite, warn, overused and abused.  However, I would like to point out that when sincerely created and engrained in a business’s culture, results are achieved.  In Built to Last, the author Jim Collins discovered that all of the great companies he studied had clear core values!  If it was good enough for those legendary companies then why should this not be a part of your plan?  Your Core Values should be a small set of timeless guiding principles.  Three to seven is the rule of thumb.  Less is more, easy to remember.  They will define your culture, who you are and what you stand for.  The next part is to define your core focus or your company’s sweet spot.  Many company’s fail because the people lose focus.  This should be your filter to help you avoid all the bright, shiny stuff that can cause you to drift from your sweet spot.  Believe it or not, the more focused you get the more opportunities you will see.  Included with this is defining who your ideal customer is and who truly appreciates what you do.  Without this you end up with a bloated pipeline and sales people spinning their wheels with opportunities with no chance of closing.  The 10 year target is what Verne Harnish, author of Mastering the Rockefeller Habits, would call your BHAG or Big Hairy Audacious Goal.  We strongly recommend having one because it automatically starts to realign the organization toward that target.  The exercise is really asking what we are working toward.  What do we want to do?  Very important questions to consider when developing your plan.  Finally, create an intermediate 3 year goal.  Test this plan to see if it is realistic.  Calibrate it as the connector between the 10 year and 1 year plans.  Describe what it looks like in terms of people, sales, resources, etc. What is most important about this exercise is that everyone in your organization gets on the same page!  Now we start bringing our plan down to the ground and focus on the one year and quarterly plans.  It is getting easier to think about as the timelines get closer.  Bringing your vision from a 10 year plan to a 3 year plan and then to a 1 year plan and finally into more digestible quarterly chunks will help you avoid getting overwhelmed by the 10 year vision.


The final concept is making sure that you run your plan through the “screen” of, is it SMART (Specific, Measurable, Attainable, Relevant and Timely)?  What this screen can do for you is answer the question of, given the availability of resources and time, is the plan well defined and can it be achieved reasonably within the agreed upon timeline?

Once completed, the plan needs to be revaluated annually and extended one year.  A plan is the roadmap that is vital to your success.


Posted by: Jeffrey Kadlic A co-founder and managing partner at Evolution, Jeffrey has spent the past 15 years as an investor and private equity professional with a true passion for working with dynamic small businesses. @kadlic

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