A friend once told me, “I knew every plan I’ve ever done would be wrong. I just didn’t know whether it was going to be high or low.” If you know your plan will be wrong, why plan? A plan helps you to live in the future, and that’s been hard in 2020. As leaders of an organization, we all need a thoughtful plan to help us think through our objectives and enroll others in helping us get there. If I cannot communicate my plan, then it is almost impossible for others to help me achieve it.
I’m chairman of the board of a local nonprofit, the Men of Nehemiah. We are about ready to wrap up our 2021 planning, and like my friend, I expect our plan to be either high or low. I can guarantee you we will meet the planning assumptions for investment in capabilities and people; I’m not as sure the financials will turn out as planned. My role is not to manage the financials. We have good people to do that. My part is to lead the formation of the plan that describes how we will deliver services in line with our mission. That’s what will create the financials we want. As a leader you enlist your team in achieving the mission. This notion that the mission creates the plan that creates the financials should not be a novel concept.
For most of us, our workforce constitutes our highest cost and our greatest (for some companies, our only) return. I start with how I want to serve customers and improve service delivery and where my opportunities are. That leads me to where I need key people to make these things happen, and the teams they need to do work. I enable people to be productive with facilities, technology, processes, communications, and transportation. We form the operational plan and budget through this process.
Once I’ve determined this, I can address the back-office–accounting, IT, HR, marketing, tax, legal and administrative support. These are all important (otherwise, I wouldn’t invest a penny) but their assumptions for support are driven by the operational plan.
Lastly, because I am a CPA, I reconcile cash flow with the budget by bringing in things like PPP funds, debt retirement, and fixed asset purchases – and I do this by month. Now I am prepared to discuss the plan with my leadership team (e.g., what we are going to do for customers) and the budget assumptions (e.g., how much revenue that will create.) My team now knows what the financial implications are for achieving our objectives. What about all the uncertainty in 2021? I’ll address that next week.
As always, let me or one of the partners at BKM Sowan Horan know if we can assist you with planning for your growth and profitability.