Rose Report: Issue 18
Looking Up in 2014: Building a Growth Plan for Your Firm
When a company is founded, its owners typically create a business plan, a formal statement of the organization’s goals and a roadmap for achieving them. But as the business begins to take off—and its executives get consumed with running day-to-day affairs—that plan often gets forgotten. In order to continue to grow and expand, executives should periodically set goals and create systematic growth plans for the future. As the Small Business Administration advises, “Maintaining your momentum means looking forward even as you focus on the present. Forecasting and planning are critical to continued success.”
With that in mind, how does an organization create an effective, useful growth plan? The first step is to set and understand the company’s goals. Examples include targets for revenue, number of clients, number of employees, or percent of market share. Each goal should be tied to a quantifiable benchmark so executives are able to see and track progress towards meeting it.
Depending on the organization’s maturity, a growth plan can stretch anywhere from three to five years in the future. Because mature organizations tend to be more stable and predictable, they can create longer-term growth plans.
Once an organization sets its goals, the question becomes, how does it attain them? The key is to create mini-milestones to ensure that the company is on track to accomplish its long-term goals. For example, a five-year growth plan should include annual goals within its timeline. Quarterly planning sessions help to ensure that annual plan objectives are being met.
Before the beginning of each year, the entire senior management team should convene to assess the company’s progress, tweak the plan, and set new goals for the future.
As with any forward-looking, long-term process, building and sticking to a growth plan takes discipline. In order to meet goals, executives need to be fastidious about monitoring metrics monthly—if a key metric, such as monthly gross margins, dips significantly that could be an early warning sign that the business is in jeopardy.
Annual planning sessions also give executives the chance to step back and look at the big picture. If an initiative is not working, it’s okay to accept failure and move onto something new. Each failure is a learning experience and acts as a building block for future initiatives.
Any organization with ambitious goals is going to have to experiment and take risks. Rose Financial Services CEO Ted Rose says that one of the biggest mistakes companies make is to wait for the perfect information or set of circumstances before embarking on a new project. “It’s more important to take an action than to take a perfect action,” says Rose. “Normally, you are going to get 80 to 90 percent of it right, which is much better than doing nothing. Even if you’re not 100 percent right, you are still making progress.”