CategoryBusiness Advice Archives — Page 8 of 8 — C. Lynn Northrup, CPA, CPIM

Setting Goals and Objectives – Part Two

Objectives are statements of measureable results to be accomplished within the time frame of the next year. A standard of performance represents a level of achievement to be reached and then maintained on an ongoing basis.

Here are some guidelines for setting and writing your objectives:

• An objective should start with the word “to” followed by an action or accomplishment verb.
• An objective should specify a single measureable result to be accomplished.
• An objective should specify a target date or time span for completion.
• An objective should specify maximum cost factors.
• An objective should be as specific and quantitative (measurable and verifiable) as possible.
• An objective should specify only what and the when and not venture into the why and how.
• An objective should  be in direct support of, or comparable, with your strategy and long-range plans.
• An objective should be realistic and attainable, but still represent a significant challenge.

Preparing your Action Plans

Action plans are specific means by which you accomplish your objectives. Action plans serve three purposes:

1. Clearly identify what has to take place.
2. Test and validate your objective.
3. Serve as a communication vehicle for others who need to contribute to or who will be affected by what takes place.

Action plans basically incorporate the following five factors:

1. The specific steps or actions that will be required.
2. The people who will be held accountable for seeing that each step or action is completed.
3. The timetable for carrying out the steps or actions.
4. The resources that will be needed to be allocated in order to carry them out.
5. The feedback mechanisms that will be used to monitor progress within each action step.

A columnar chart can be developed to lay out a meaningful action plan. After stating the objective at the top of the chart, the following columns should be filled out:

1. Objective: The specific objective for which the action plan is being prepared.
2. Action Steps: The five to ten major actions or events required to achieve the objective.
3. Accountability: The specifif individuals who will be held accountable for seeing that each action step is carried out.
4. Schedule: The total time frame within the action step is to be carried out using actual start and completion dates.
5. Resources: The total estimated costs for completing the action steps. Resources should be broken into money and time.
6. Feedback mechanisms: The specific methods that are available (or need to be developed) for providing information needed to track progress within each action step.

Finally, here is a final checklist that should be used to evaluate your action plans to determine if any factors affecting your action plan have been overlooked:

• Strategic and/or tactical plan impact – Are there other portions of your plans that might be positively or negatively impacted by what you do?
• Financial Impact – What are the capital or short-term cash flow implications?
• Resource Availability – Do you have or can you get the necessary personnel, materials, information, and other resources to support your plan?
• Technology – Could changes in technology make your plan obsolete?
• Environmental Conditions – Have you considered climate, weather, natural resources that may have a positive or negative impact on your plan?
• Political – Can you shift your plans quickly in order to respond to major political shifts?
• Contractual – Are there customer or labor contracts that may require a different course of action?
• Contingency Plans – Have you provided for contingency or backup plans in case something unexpected happens?

After you develop your plans it is important to focus on monitoring the few vital factors within the plan that let you know whether or not you are on track and if modifications are necessary. You then need to ask what is likely to change and how to respond to any required changes. The key is continually check your progress and respond accordingly.

One thing with goals and objectives is that if they get written down, they are more likely to be accomplished. Make it a habit and I think you’ll start to see real progress and accomplishment.

When a Business Needs Help

These are tough times. The current economic environment is something most business owners and their advisors have never experienced. We are going to see conditions get even tougher. This is what we are facing:

• Lots of highly leverage businesses and individuals
• More competitive business situations
• Banks are reducing available capital
• A much slower economy

This is when strategic planning is invaluable.  We need to engage a longer term focus to ride out the storm. It is critical for businesses to identify the best growth markets and the competitive threats facing our business. Careful consideration must be to given to employing the proper resources and in the right amounts so we can maximize our return on invested capital.

The process of strategic planning and budgeting is when we identify where the business should be going and how it is going to get there. We need to abandon short-term approaches except to be sure we have the necessary cash and resources to survive. In the past, all too many businesses, advisors, and investors where looking for a quick return. It is now time to return to the basics of building shareholder value. This means taking a long-term oriented approach that encompasses all aspects of the business.

My advice to clients and advisors is to take a diagnostic oriented approach to identify problem areas. Look for the low hanging fruit as you assess operational strenghs and limitations. Focus on improvement opportunities both for the short-term and the long haul.

In this environment you need to be reactive to your current situation and focus on improving cash flow. However, while you do this it is critical to be aware of and recognize the long-term elements of value based management so you don’t cut off your nose to spite your face.

By taking a hard nosed diagnosed assessment of the business (yours or your client’s) you can avoid running out of borrowing capacity and possible bank defaults. Action taken now can stop significant deterioration of revenues through lost customers. Treat the economic situation and crisis on a proactive basis for potential opportunities.

Some business owners don’t want to use consultants but engaging someone who understands how to diagnositically analyze a business and implement corrective action can be worth its weight in gold. Business advisors who are skilled in strategic planning and budgeting can mean the difference between surviving or not making it in such turbulent times. It is a good time to take stock of your business and how you are going to move forward. My Building Business Value program offers a good blue print for doing the right things for the right reasons in a tough business climate.

Building Business Value

Building Business Value is a program designed to assist smaller and mid-size businesses grow and add value. It is a consulting program that points you in the right direction utilizing strategic, operational, and financial expertise together with effective support tools to keep you on course.

This is a program to help you get started and provide the assistance needed to reach the next level. It also provides the necessary direction and support if the business gets in trouble and helps you get back on track.

The program components include

• Strategic and operational assessment
• Benchmarking and performance measurement
• Strategic and business planning
• Help in managing the change process
• Assistance in managing and measuring performance to add value

The program is designed and tailored so that it is right for each client. The program is adjusted to fit the budget so businesses will understand what it will cost each month.

The BBV program requires an ongoing commitment. It will take at least 12  to 15 months or longer. Listen to my podcast on BBV which explains and discusses the concept in greated depth.