Operational Plan - The Secret To Captaining Your Ship Successfully

The majority of small businesses have no clear vision of where they’re going, or even why they exist. Don’t get me wrong, the business owner probably knows the reason they set the business up on Day 1, but that isn’t why the business exists. After all, it was probably 25 years ago.  That same reason for being, is a far reach, from any direction of where the business is heading.  Staff turn up for work, because they have to, rather than because they want to.  The business turns into a perpetual cycle of going to work though never really moving forward toward any target.  We win contracts because that’s what we do, but we don’t really know why, or what the purpose is behind it.  If we knew that reason, it would determine the choices we make in the business every day.


An operational plan sets a target and a pathway for the business.  It looks at what resources are already in place, and what else it needs, to reach key milestones in the business journey toward that end destination.


The first thing that needs be in place, is a vision of where you’re heading.  A fixed destination.  What does that look like?  Ideally the business owner will start this process by determining what their personal lifestyle looks like, say 5, 10, or even 25 years into the future.  When you have this personal life vision, we can then translate it into a vision for the business.  

For example, if your plan is to emigrate in 10 years time, you either need a global business with a presence in that location, or you need to sell the business.  Assuming of course that its not possible to work 100% remotely.  Now for both options, you’re going to have to reach some key milestones along the way, but to reach those milestones, you’re going to take some very specific actions.


So after you’ve got your business vision, for say 10 years from today, we’ll start and break that down into a vision for every period of time.  Think of this exercise, like cutting a birthday cake into 10 pieces.  Start by cutting it in half.  This will be what the vision looks like when you’ve reached that half way point.  You’ll probably find that, although it's the halfway point, you’ll probably be about 30% of the way there at this point.  That’s because everything needs that initial momentum to get going, but as you move along, all the pieces start coming together, and you make faster progress as you move forward.  It’s a bit like a snowball rolling down a mountain.


You’ll probably place that second half of the cake to one side now, wrap it up and freeze it until we’re into year 5.  It’s pointless planning years 6-10, because we might be ahead, or we might be behind schedule in year 5.  So we treat that second half of the cake, a bit like a review and adjust.


So now, we need to divide the first half into 3 pieces.  We’ll have the first piece for years 4 & 5.  The second piece will be years 2 & 3.  And the last piece will be year 1.  Now the idea is to clearly define for each piece, what your vision looks like.  In other words, how does it look at the end of year 1, at the end of year 3, and at the end of year 5.


Now take the small piece that represents year 1.  Break that down into 4 quarters.  This represents the 4 quarters of the year, in other words, January to March, April to June, July to September, and quarter 4, October to December.  Break your year 1 vision into these 4 quarters.  How does your bigger vision break down into these segments?  Each quarterly vision represents a specific milestone you need to achieve.


Now, there are very specific actions you need to complete, to reach each quarterly milestone.  Break these down into Months, weeks and days.  These will be main tasks, sub tasks, and supporting tasks.  


The next step is to identify who within your organisation, or from your external suppliers, can perform each task and help you reach that milestone.  Allocate responsibility to that individual, then follow up with them to make sure they’re on target.


Now looking back at the whole of the first half of that cake.  We’ve got the three pieces, representing years 1, 2-3, & 4-5.  Now it’s time to look at what resources are needed.  Who & what will you need at each step, to achieve each task?  This could be anything from a piece of equipment, to a large sum of money for investment.  The job now is to break these down, and consider routes to get these, so that we have them in time, and it won’t cause delay to completing each task, and achieving each milestone.  


This part is called the resource plan, and goes into detail about the resources we already have, and then what we’ll need at certain points on the horizon.


Last of all, we’re going to need a cash flow forecast, taking into consideration all of the above.  Coming back to the ship analogy, the cash flow forecast is like the food supplies order.  We know roughly how much food we’ll need at each point in the journey.  Imagine the ship stops in various ports around the world.  It needs to make sure it has enough supplies to get to the next port, but without taking too much because that would slow it down and be a waste.  


Likewise in our business, by developing an overall cash flow forecast, we can see how much supplies we need at each point in the journey.  We can monitor this on a shorter term basis, for example every month and every quarter, to ensure we’re always on target.  If we didn’t monitor and adjust, we might find that we’ve run short of supplies two weeks before we hit the next port.  Whereas by monitoring and adjusting, we can always request an emergency supply if we need it.


The most important point about the operational plan, is that it sets a clear destination for the business, and the business owners, but also for the staff.  Showing your staff where the end destination is, & why we make those choices every day, it can be enough in itself, to motivate and fire up your staff, because they now understand their purpose in the situation.  It lets you plot your route, as well as keep track of progress along the way.  If you find you’re off course, you can always take the necessary actions to move back on course again.


In the next post, we’re going to look at the final piece of the jigsaw, you’ll need to sell your business. ‘Marketing Analysis - Using history to predict the future’  Click here to read it now



We hope you’ve received some value from this article, and some information that you can use to move forward toward your vision.


If you’re confident that selling your business is the way to go, or perhaps you’re undecided, it’s important to consider the significant amount of effort and resource you’ll need to make it happen.  It’s a full time job. - The time investment alone is enough to put anyone off.  So imagine for just a minute, that you didn’t need to do all of this work.  What if this could be done over the next 3 - 5 years (by someone else).  Everything we’ve listed in this article, is what you’d need to do, if you were selling through a business broker, or direct to a buyer.


Unlike other private equity firms, our focus is on growing businesses at the smaller end of the market.  We’ve worked in, and grown our own businesses in the exact same fields you work today.  We’ve spent years coaching and supporting small businesses just like yours, developing their teams, and helping them to grow, but now, we’d like to help you.  


We have a solution for business owners that need to sell their business immediately, or for those who want to stick around for a few years.

If you’re considering the options to grow or sell over the next five years, read more about how we're helping others just like you. Click here to read about our unique approach to helping you get what you want with the YokeFormula™ for your business.

Click here to learn more about the YokeFormula™ for Property Service Companies

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Click here to learn more about the YokeFormula™ for Hospitality Companies

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