Relevance & Business Plans

Having enduring two years of bewilderment and blown confidence in things larger than ourselves at least two camps have emerged; those finding solutions in self-sufficiency and those yielding action to others “more competent”. Thankfully the sun rises and falls independent of the motives or efforts of any man or government.

The media offers facts wrapped in opinions backed by convincing commentary from countless analysts and talking heads. All claims are headlined - “V” Recovery, “W” Recovery, “Square Root” Recovery, hoard gold bullion! The backlash has started and people are beginning to “tune-out”. An old saying comes to mind – “To thine own self be true”. At the end of the day, there is little connection between Wall Street (except, maybe, in commodities) and the day-to-day matters of small businesses. Small Businesses (SBs) are the burden bearers of the developing recovery. With the agility to re-work their business plans SBs can make and implement tough decisions, leverage core competencies in new areas, re-think to diversify and pull levers to wring-out profits.

With uncertainty and lumbering inactivity abounding, opportunities are being seized by a few contrarians. Rather than wait for a return of “what was” or a “sure-thing”, consider the SB after-market auto parts manufacturer that viewed a reorganized Detroit, high unemployment and tightened consumer credit as signals that new car sales would decline. Reasoning that aging cars need repair this SB revamped for growth and injected fresh, focused and aggressive management talent. That company has gained market share and has diversified into related markets – e.g. commercial vehicle platforms. To those who try and are met with resistance, “The door of opportunity swings on hinges of opposition.” Push harder! Know what you know and act on it.

Relevant businesses have a role and a plan. They are players. Relevance rules markets. The capstone of any plan is a Vision (visualized outcome) to which an enterprise takes an ownership position with a Mission Statement that lends itself to a “Summary Phrase”. Your eyes rolled – not this again! Compare your statements to those of a humble not-for-profit.

Cite: Good Will Industries – you know - the stores that are like Salvation Army Thrift Shops right? Wrong! Their Vision: “Everyone in our community has the opportunity to achieve their fullest potential and to participate in a productive life.” Mission: “Provides training and career opportunities for people with barriers to employment.” Phrase: “Give a hand – not a hand-out”.
Good Will Industries has a focus, a role in society, clarity of purpose - relevance! Do your statements do that for your enterprise? Without these foundations you will forever find yourself, as Tommy Lasorda said, “ watching what happened or wondering what happened - rather than making it happen”.
"If you don't know where you are going, you will wind up somewhere else.” –Yogi Berra
“Outside In Thinking”- and what’s wrong with it. No company operates in a vacuum but Gary Harpst (Six Disciplines – Execution Revolution) points out that we fall into the trap of “Outside-In-Thinking” because (I paraphrase)“we’re flooded with information and become preoccupied with what everyone else is doing rather than focusing on what’s going on in our own shop – ‘marching to our own beat’ as it were. This focusing outward makes us good at being reactive but it flies in the face of “inside first” thinking.” Result: abandoning the plan and falling in with the “herd”. I’m reminded of the Serenity Prayer;

“God, grant me the serenity to accept the things I cannot change;the courage to change the things I can; and the wisdom to know the difference.”
“If your ship doesn’t come in – swim out to it.”- Jonathan Winters
Beyond “Business Plans 1.0”By now you’ve already diligently re-scrubbed your competitive market analysis, SWOT, sales & financial forecasts, lean initiatives, new product developments, product life cycles, vendor and customer supply chains - etcetera. It’s agreed that needed growth must come from new ideas and adaptations to bring profitable “top-line” revenues cascading into our income statements – and surely - bringing job growth. Caveat – productivity is adversarial to (not against) the labor cost component - - -

The conventional lineup of Business Plan “elements”, however, may not provoke enough sustained leadership thought and management team planning and execution in ways that deliver the desired “outside of the box” results. Maybe we can add a few variables …

“It’s a small world after all” & your Business Plan.Receiving news that spans the globe, we develop opinions on cultures, regimes and markets we’ll likely never visit – yet we don’t fancy ourselves macro-economists. So must you teach a course on GDP, Balance of Trade, the Yuan, Free Trade, Fair Trade, Protectionism, Trade Sanctions or what have you to export a product? Of course not. You need a product or service that customers will buy at a U.S dollar based price they will pay. A few “helpers” known as agents (not secret agents) facilitate the details. The details are still 1) finding customers, 2) shipping product and 3) you getting paid. Some small/medium companies derive a third or more of their revenues from exports.

Not so fast you say. There’s cost of freight, language barriers, strange paperwork, letters of credit and fees, fees, fees you say. I say if you don’t explore exports you’re denying yourself. There’s a learning curve - but it’s not rocket science. The U.S. Dollar is significantly weak and likely to stay that way for awhile. That’s a big advantage. If you’re a B-to-B the opportunities are even better in my opinion.

Revenue growth from Exports
2010 can be your year to start exporting – if you plan it. Forget about Asia and start with the Western Hemisphere and Europe. By all means ignore countries with ridiculous import tariffs or those that “fix” their currency to thwart imports. THINK LOCAL-ACT GLOBAL. Do what makes sense for your local business in the global market.

Explore. Pick a market, find an agent (many cover several countries) and connect with a freight forwarder. Ask your bank to get involved on the credit side. Identify your product harmonized tariff codes (easy to get). Get acquainted with 2.2046 (converts lbs. to kgs.) and figure out how much of your “stuff” can be “stuffed” into a 20 or 40 foot container. Ask questions. Take an order and ship product. Collect money. All else will follow.

Tip: To identify a prospective overseas sales agent, ask several prospective customers who they respect most amongst the sales reps that call on them. That’s how I’ve done it.

“Never be ashamed to admit you were wrong. You’re only saying that you’re wiser today than you were yesterday.” - Dave Gilpin
Enterprise Valuations & Exit Strategies
When we think of exit strategies we think of VCs and Private Equity Groups. I agree that great companies are not created to flip, but to build and make a difference. But, the time to value a business is not when someone knocks on your door with an offer to purchase. More importantly, periodic “Enterprise Valuations” to benchmark against business plan trajectory goals keep a business focused on value enhancing activities. Stage-gated hurdles built into the business plan (mini exit strategies) focus you on objective plateaus in your growth and anticipate developing market forces (e.g. emerging market opportunities as well as competitors). Most business owners have a distorted perception of the value of their business. Work periodic enterprise valuations into your business plan.

I plan more discussion on the topic of Relevance & Business Plans in the next blog posting. I am a successful CEO and Management Consultant ready for my next signature leadership role and this blog is a service to my network.

And so 2009 proceeds to its close! As always - I wish you all the best and with that a very Merry Christmas and a happy, healthy and prosperous New Year!

Bill