Business Concern
To ask that every performance be better than the last is to place tremendous pressure on the performer. The aspect of performance is at the heart of most endeavors. Intuitively, we know that performance is not a constant, but in a competitive situation, the goal is for it to improve over a set period of time. It is not enough to ask for consistent effort. When we watch athletic performers, we see that champions have more than just consistent effort; they improve through sound decisions about innovative techniques, effective training, better equipment, and better mental preparation. In...
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We have all been there. Rearranging the deck chairs on the Titanic. There was always an unspoken vision – never written but certainly desired. But things got in the way. The problem was that so many issues came up. There was never a quiet period when things could be thought out. There was never enough time to do it right. Then there was no time at all, and what we were doing was too little too late. How many business owners have you been aware of who have never derived full value out of their business? Some owners could not realize their business dreams because of a health issue or burning...
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Owners of small to medium sized businesses often find it hard to delegate management tasks. This is especially true of founders of the business. Here is a critical truth: to the extent you are engaged in management of the business, you are decreasing the value a buyer will pay for the business. A buyer wants a business that runs itself, not one that depends entirely on you and other owners. Full delegation of management responsibilities is not just a way to reduce your stress; it's part of Prior Diligence, a strategic move to unlock the maximum value of your business through a successful sale....
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Owners of small to medium sized businesses want to realize the maximum value for their business interests. There are many risks preventing realizing maximum value for a business interest – most can be avoided by the implementation of an owner agreement. Where an owner does not hold a controlling interest, there is the risk that the owner will not have control over the outcome of certain business transactions that may diminish or terminate the owner’s interest. There is an increased risk of misunderstandings and conflicts. Where there is no written owner agreement, there are no defined...
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I like to walk my dog, but the other day when the time came, I decided not to. The disappointing reason was that when I looked outside, I could see lightning and hear thunder. At the same time, I saw my neighbor outside walking his dog and looking very unconcerned. I later learned that during the storm lightning caused a fire in a house near ours. I did not regret my decision not to go outside, but I do not think my neighbor regretted his (he was unscathed by lightning, and his dog was able to go on schedule). We all have levels of awareness when we are more aware of foreseeable, adverse...
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One in four private sector U.S. businesses fail within their first year of operation. After five years, almost half (48%) have failed. After ten years, the failure rate is 65.3%. (According to data from the U.S. Bureau of Labor Statistics.) Generally, businesses fail when they run out of cash. Cash flow is a metric indicating how money is coming in and being spent in a business. Marketing decisions influence how much cash comes into the business. Operations and growth decisions control how the money is spent. Good decisions made about cash flow will prevent business failure. Small to medium...
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Where there is a small or medium sized business with more than one owner, there is an owner agreement. It may not be obvious – in most cases it is not written. But for any multi-owner business the owner agreement must be there for the business to function. To start a business there must be agreement about the business entity to use, the initial capital, the basic governance, and the operational functioning of the business. In various documents regarding these matters there will be writing documenting the decisions made by the owners, but most owners do not document the basic strategy that...
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As the owner of a small to medium size business, you may have felt the need to ask for help but not felt comfortable doing so. Owners of businesses are often skilled in the business they own and enjoy the respect of their family and friends. If their businesses are successful (profitable), it is usually based on their leadership and good fortune. But things change and sometimes the successful are faced with difficulties and even poor results. The humility it takes for an owner to recognize that business is a team effort and that the policy-making group of a business needs help is a principal...
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Among the common goals of members of a capitalistic economy is the creation of wealth. This is often a reason why people own businesses. For an individual, the concept of wealth creation is the escape from dependence on earning funds for current expenses to live a certain lifestyle to building up assets and resources that appreciate over time and are of a magnitude to sustain that lifestyle or a better lifestyle without the need to earn funds for current expenses. Creation of wealth is a reference to accomplishing financial independence through the creation of passive income from investments....
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Traditional planning is static. If there is a written plan, we see the plan formulated, documented in writing, presented at a meeting, and then put on the shelf to be consulted for next year’s retreat. This is the opposite of a forceful and changing dynamic plan. A dynamic plan can accomplish continuous improvement in business performance over time resulting in increased profitability. How does a static plan become dynamic? The answer is in the format of the plan. To be forceful a plan must be understood and implemented at all levels of the business – operational as well as management. The...
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To ask that every performance be better than the last is to place tremendous pressure on the performer. The aspect of performance is at the heart of most endeavors. Intuitively, we know that performance is not a constant, but in a competitive situation, the goal is for it to improve over a set period of time. It is not enough to ask for consistent effort. When we watch athletic performers, we see that champions have more than just consistent effort; they improve through sound decisions about innovative techniques, effective training, better equipment, and better mental preparation.
In business, performance is the execution of a plan, which is the narrative of the decisions of the business. The cycle is well known: set goals, describe action, set mileposts, take action, evaluate, and revise. Assuming the creation of a quality plan, the quality of performance will depend on the execution of the plan. But initial quality is not enough. Business competitiveness requires consistently high levels of performance with an overall improvement of performance over time. This means that taking action, no matter how excellent the plan or the one-time performance, is not enough. It is not enough to repeat a high-quality performance through consistent effort. To achieve a consistent improvement in performance, the decision-making process of the business documented by the revision of the plan, including the revision of the actions to implement the plan, must be continuous.
If a business creates a plan that is excellent and implements the plan with flawless execution, but performance does not consistently improve, the business will fail in a competitive environment. The part of the planning process that creates success in a competitive environment and that causes performance to consistently improve, is evaluation and revision.
How often do we see businesses taking months to create strategic planning, then finally implementing the plan, only to take months to evaluate and then revise the plan; in essence, taking the same time and resources required to create a new plan. No matter how good the plan, constantly recreating plans and implementing them will not accomplish consistently improving performance.
Consistently improving performance is accomplished through constant evaluation and revision of planning coterminous with experience. Experience and evaluation cause revision, and the revision to the plan should be written. How can evaluation result in coterminous revision of the plan?
The plan starts with the decisions of the policy-making group about strategy. The action plans are implemented by the executive officers. As the action plans are being executed, those charged with executing the action plans will change the plans to accomplish the task. The experience will be evaluated frequently by those from the policy-making group. At the highest level, the policy-making level where strategic planning is adopted, the planning does not have to be revised as much as at the operational level where action plans are being executed. It is at the operational level that the planning is frequently changed, but the changes are not documented. These informal changes are often what accomplishes the action plan, but frequently others in the business, especially those in the policy-making group, do not know about these changes. Frequently that is because those who change the plan are not sure they have the authority to change the plan but the changes are done to accomplish the task.
If the members of the policy-making group do not know about changes to the action plan, their evaluation and further planning will be flawed. Those taking action should be able and required to amend the action plans. In this way, changes are communicated up and down the hierarchy of management. Moreover, changes are occurring with experience, and revisions to the plan are written contemporaneously with the decision to change at the operational level. Those charged with the execution of action should be empowered and required to change the action planning. When this is in place, the plan becomes dynamic – an effective form of communication within the business.
Planning is the communication of the decision-making process of the business. The constant questioning of goals, selection of actions, identification of mileposts, and determining revisions should be a series of seamless, constant activity. It is this activity that will enable consistent improvement of performance over time. In business, we must do more than ask employees for increased effort to accomplish improvement of performance. We must establish a process to make good decisions that are documented in dynamic planning that is constantly evaluated and revised at all levels. That is the essence of championship business performance – continuous improvement in performance over time.