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“If you don’t know where you are going you’ll end up some place else” as said by Yogi Berra and used in different variations in almost every business book or self help book. There can be truth in common sayings and any quote or wisdom about getting where you plan to be even if you have no plan is more than half true. It is 100% true. Every business will end up exactly where it plans to be. In the face of no plan a business will do fine during a good market and will be in trouble during bad market. To the extent that a business knows what its goal or destination is, it will be able to grow and survive during good and bad times. For many small and medium sized businesses the “goal” can often be one of survival with no long term hopes or expectations. This is unfortunate because I believe many businesses fail due to their lack of planning and goal setting. My own experience teaches me this as does twenty years of working with entrepreneurs and business owners that have found themselves in need of financial help.
I was reminded how important it is to know what the specific goal of a business is after a meeting with two entrepreneurs that are working through a challenge in their business. It has been said by Elon Musk that providing answers is easy and that asking the right questions is hard to do. When businesses find themselves in a tough spot the answers for what they should do are easy to list: close down, fight it out, do nothing, etc. However, if a business knows where it is going then tough spots have context and often times do not require answers or options because the business would have anticipated a plan “B” or “C” if the market or their circumstances change. Then it becomes a exercise in executing on plan “B” or “C” or sticking with Plan A if it included a change of action should the business find itself not meeting its goals.
There are only a few destinations that a business will end up at if they are run well:
- Going public
- Being sold to management or a third party
- Transitioned to other family members
The long term goal you have for your business will impact the decisions you make today and should guide the plans you make for next year and the year after. The decisions surrounding how your business will use its profits, how it will borrow money or how it will take on investment capital should all be based on getting the business closer to its goal. If you don’t have a goal for your business – get one.
It is quite common that many small and medium sized businesses are not working towards a specific goal. One major reason is because small and medium sized businesses are busy trying to handle the multitude of tasks involved in delivering products and services to customers and clients and have no time left over to spend on high level thinking and planning. Another reason is that small and medium sized businesses are very fluid and dynamic which can make tracking and measuring progress against a goal difficult to do but this shouldn’t be a reason for not doing it. The few hours you may be saving now by not setting a goal and then planning and tracking progress against that goal will result in an exponential amount of hours being spent trying to solve problems when times get tough.
Here is something to think about. If your business is currently profitable is it because you are great at running it or is it because the market is making it easy to be profitable? I can assure you if you have no goal and therefore no plan your business is profitable because the market is making it easy to do. Be careful because once the market changes your business will change as well. Conversely, if your business is upside down financially and you didn’t have a goal or a plan then the market is probably to blame for your current situation. The good news is that if you decide to set a goal and make a plan there is a high probability that you can turn your business around and be better off once profitability returns. This will happen because your ability to make decisions or take action will be within the context of reaching a goal and will result in specific problems being identified that can more easily be solved. For example, if your business has a goal to reach $25,000,000 in gross revenue how many customers will it need? How will it acquire those customers? What investments in time, resources and money will be required to achieve its goal? What strategies and tactics are needed to acquire the investments needed? Easy right?
Whether your business is experiencing success or failure make sure that it is doing so within the context of a goal. Why? Because every decision done in isolation from a goal is typically done defensively and generally doesn’t move a business forward because the business doesn’t know where its going. How much can a decision made in this context really do? A decision made within the context of a goal will result in the business moving itself forward to the next decision that gets it closer to its destination.
If you need some help working through the goal for your business, get in touch with us. At mlenow we are focused on increasing the profitability of your business which will increase its value and provide you with the opportunity to do more.
You should visit mlenow.ca because every business needs access needs access to money (at some point).