by Ken Ingram President
Did you know that the first known use of the word “PLAN” dates back to the late seventh century, and that a plan can be described as any list of steps with timing and resources used to achieve a specific objective?
Plan (or Planning) is a wonderful, powerful and deliberate word – yet it means much more. It is all about preparation, development, forecasting (projection) and staying on track. It is a tool not to measure success but to ensure success as wells as to give peace of mind. In fact eighty percent of all successes can be attributed to planning and the processes of goal setting.
I can be almost certain that most of you have followed at one time or another a recipe from a cookbook. Why do we do this? It is to learn by following a process set out by someone who knows how it is done and then adapt it to our tastes and make it our own by repeating the process. Planning is a similar process, consider it to be your recipe for success and if it does not come out as planned it can be tweaked until the desired result is obtained.
More than likely we won’t be able to see the exact circumstances of the future. No one can, but thinking ahead and coming up with a plan isn’t useless or a waste of time. A wise general was once asked why, if every battle plan falls apart immediately upon contact with the enemy, then why did he bother developing a plan? He replied: “Because it allows me to improvise with greater intelligence.”
What is it about “planning” that most people seem not to like and prefer not to think about? Benjamin Franklin once said “If you fail to plan, you are planning to fail!” If this is true and planning has a benefit that can enable each of us to become more successful you personally then why do we fail to plan?
Let’s look at two groups of planning: one is personal planning and the second is professional / business.
Personal planning includes household budgeting, family planning (when and how many), succession planning, funeral, vacation planning, retirement and the list goes on with respect to the multitude of things that are important to you.
Business planning is more complex because of the number of variables to be considered in the equation. Regardless of the plan you build, consideration must be given to short-term and long-term goals. Short-term is for the coming year based on immediate goals to be achieved and should be tied into a three-year and five-year plan based on economic projections. The projections should include internal trends and external trends that can act as a positive or negative catalyst. In today’s rapidly changing environment to forecast beyond the 5-year plan is ludicrous because there are too many variables that can change the focus and objective of your business. One of the biggest risks we fail to plan for that I have observed has to be the business transition plan.
Business owners who have spent twenty to thirty years building a solid, sustainable and profitable business fail to develop an exit or succession plan. Very few businesses have one and it will affect both people and the economy. Statistics show that only two out of five will be transitioned to a new owner. The rest will close and this is an unfortunate outcome. It takes two years to three years to transition a business so expect to start the exit plan early enough to be able to exit on your terms.
Getting back to the basics of one’s personal planning, too few of us plan beyond the scope of our next vacation. Do we budget according to our means – or just hope for the best? Do we believe we can sacrifice a few things to ensure that our long-term goals are achieved without going into financial debt? Not really. The infamous credit card or buy now pay later options lure us to indulge in our fantasies and the latest electronic toys.
To ensure you have disposable income, one must plan (budget). If you are either living with someone, married or live-alone – are you planning eventually to buy a condo, a home, or continue to sink your dollars in monthly rental fees – thus not acquiring equity. Have you thought of life insurance and how much you will need to cover your home, children, their education or your untimely demise? How much is too much insurance or too little? This requires careful planning. The list goes on and on depending on what you want and need out of life.
So if the average person does not adequately plan their future on all fronts, how can one assume that the average business comes up with the right plan to stay on track?
In Summary Planning means many things – but there must be quantifiable goals and objectives that take into account all the risks, obstacles and even solutions to keep the business on track so as not to get off track. Even if the one-year plan is a success, the profits derived from the plan should be reinvested and not heavily distributed with bonuses and dividends. The big problem is too often after a first success – the trend is to spend regardless of the plan, whether it is personal or for the business.
Remember that the plan should not be a static thing because the future is not static either. There are a myriad of possibilities, and your plan is not going to take all of them into account. The nice thing about having a plan is that it helps you make sure that at least your future is heading in the direction you hoped it would or it allows you to improvise intelligently. Do you have the audacity to be the master of your destiny?