The Game Plan ? The Difference Between Small Business Success And Failure

It is an American dream to own a business. But sadly, according to the U.S. Department of Commerce, only 1 in 5 businesses is still in business 5 years after it opens.

A business needs a great business plan, but it doesn't give management enough information to have a successful, profitable business. You dramatically increase your chance of success with a game plan. According to a PriceWaterhouseCoopers survey, over half of the fastest growing firms not only have business plans, but also have separate game plans to keep them focused on what must be done day to day.

A business plan gets you in the game. A game plan keeps you in the game. To use the sports analogy, it's easy to see how you are going to win the game in from the locker room. Most businesses don't have a working plan that takes into account what actually happens on the field once play starts.

A business plan is a sales brochure and a game plan is an instruction manual. You send a business plan to potential investors and others to excite them about the business. A business plan is about strategy. You create a business plan at a management meeting. A game plan is about tactics and is created by and for the people on the front lines. A game plan talks openly about the good, the bad, and the ugly in the business and is used by people in the business to make decisions every day. It talks about what to do in a crisis.

Here's an example of what I mean:

The CEO takes a look at his balance sheet and decides that his company has too much of its cash tied up in inventory, so he gets his managers together and creates a new corporate objective for the year - to reduce inventory by 25%. If they do that they will all be entitled to a bonus. The managers aren't stupid ? they know the only way to reduce inventory is to sell what they can and not replace it. So they put on a special promotion for their hottest selling items, they reduce the inventory of those to almost nothing, and they get their bonus. But what has really happened here. The CEO's company is now left with the inventory of the items that weren't selling, and they don't have adequate inventory of their best selling items. The CEO didn't really lead, the employees cared more about their bonuses than doing what was right for the company, and there wasn't a plan of action that was tied into a meaningful company objective.

A game plan focuses on these things: creating big goals that matter, giving individual employees responsibility to carry out their portion of those goals, creating a budget and a reward system that supports the goals, and tools to allow employees to measure their own progress.

Steps in the Game Plan Process

The game plan requires a series of steps, beginning with the CEO getting in touch with his or her desires for the business. Then, the management team must delve into what is real for the business today ? understanding the business model (how the company makes money), having a handle on what is happening in the market, and finally, knowing what is happening in the company culture. With all this background work done, the actual creation of the game plan begins. At best, it is a facilitated process of discussions matching what is real today with what is possible tomorrow, in the long run and in the short run.

A game plan only looks out a year at most, but within the context of a much longer period of time. The company might decide where they want to be in five years ? the game plan is just the next series of steps toward that longer-term goal. There is no point in setting objectives for which there aren't adequate resources, so objectives and budget are discussed in tandem. Another challenge of the game planning process is to define success for each objective and decide how it will be measured.

This is a time for healthy argument as sales wants more resources to increase revenue, product development wants more of the objectives to be toward R&D for the company's future, and the operations manager wants more staff to improve quality. This is also the time for managers to consider the implications for all the decisions. And it is the time for the CEO to create a connection between the objectives and each of the managers so that there is personal commitment to the success of the company. If managers are not committed, they will never be able to expect commitment from other employees.

Turning Objectives Into Actions

When the company objectives and budget are ironed out, about half the work is done. A second series of steps takes the objectives set at a corporate level, and creates specific action items for each employee that support the department and then company objectives. Just as the CEO and the managers hashed out the process of give and take between what is today and where they would like to be tomorrow, each manager must go through the same process with the departments' employees. Each employee must have a series of actions, but most importantly, each employee should know where they stand at any time they wish to check.

For instance, if the objectives for a customer service employee are to keep call length to an average of 2 minutes, have sales of an average of $50 per customer who calls, and to return all calls within 24 hours, then you want that employee to be able to find the measurements for those objectives as often as he or she wishes. The goal is for the employee to have access to just as much information about his or her performance as the manager. An employee who can assess his or her own progress real-time will correct performance deficiencies without a manager's insistence.

The Plan Isn't a Secret

The final piece is constant communication about the plan and the company's progress to the employees. The game plan is not only communicated initially, it must be kept alive throughout the year with meetings focused on measuring progress toward the goals. Successes should be celebrated frequently.

In my own company, we used something we called a Game Plan Circle to illustrate our plan each year. It was a six-foot circle with our vision in the middle that radiated out to cover company objectives, department and individual objectives. It served as a visual we could refer to in meetings to keep us on track.

The Bottom Line

Don't let your business become another failure statistic. A business plan is a great first step in starting or fundamentally changing a business. The next step is a game plan ? a translation of that business plan to each employee's actions every day.

About The Author

Jan B. King is the former President & CEO of Merritt Publishing, one of the 50 largest woman-owned and run businesses in Los Angeles and the author of Business Plans to Game Plans: A Practical System for Turning Strategies into Action (John Wiley & Sons, 2004). She has helped hundreds of small businesses turn their business plans into game plans with her book and her ebooks, The Do-It-Yourself Business Plan Workbook, and The Do-It-Yourself Game Plan Workbook. Visit her site at www.janbking.com for more information.

[email protected]

In The News:

More Job Growth at Small Companies  Wall Street Journal

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