We all love a good fantasy
You’ve all heard of fantasy football – the game where you put together your ideal side and play out a fictional scenario to see if you’re good enough to replace Gareth Southgate (spoiler – you’re not!).
It’s hugely popular and it makes people feel good.
So I thought we could come up with the business equivalent – Fantasy Business Plan. It’s a game where directors are invited to come up with aspirations for the company a year, 3 years or 5 years away. No real skill is needed, just a gut feel for what won’t get laughed out of the boardroom, and then simply engage the company (for real) on a wild goose chase.
It could have been a real success and made me millions, but then I realised it had already been invented – by about 90% of existing companies out there (you know who you are!).
Why do we do it?
It’s worth looking at the reasons this happens.
We have to face up to our human nature that:
- We like success and are intuitively drawn to it. Being realistic can be dull, and even Pooh Bear got exasperated with Eeyore from time to time.
- We believe that in “aiming for the stars we might hit the ceiling”. While such aspiration can be a good thing for your personal life, spending the entire budget on rocket engines when you just needed a ladder will get you fired.
- We’re lazy and would rather do our work off the back of a fag packet.
- We’re like lemmings and because “business people” make business plans, we should have one too.
What is the danger?
Well, this section is really short, but perhaps there should be alarm bells and yellow/black tape put around it.
Sunday school children around the world will know that if you build your house on sand, when the rain comes it will fall flat. And so it is with business plans. If they are not based on something tangible, you could commit essential resources to something that was never going to work. No company can afford to do that unless it has decided to write off large costs as an experiment (hands up for that anyone?).
But yet year after year, we make up numbers. “We turned over £5m this year, so next year we want £6m” WHY? HOW?
Beating your sales staff with a bigger stick will make them leave. Chaining your production team to their machines will have a similar effect (assuming they can pick locks).
Setting Goals Right
If we’re honest with ourselves, we can recognise this is not a particularly clever way forward. So how can we be realistic?
A well-defined business goal has a number of factors that influence it. The list below are things to consider. It’s not meant to be comprehensive but a good “starter for ten”:
- The current overall size of the market in our region. This can be VERY difficult to determine, although some sectors are a lot easier than others.
- Any external developments which are beyond our control that will influence the overall market. NB: this includes factors that might contract the market – and here we are definitely not into happy-fantasy-land but dystopian hell.
- Our current share of the market
- Any internal developments that we reasonably expect to improve our market share. Be careful here of applying service providers figures to a new system, eg “buy our product and see your market share grow by 20%.”
- Our current manning and productivity levels.
- Realistic manning/productivity improvements.
- Identified and qualified sub-contract sources and availability.
For further ideas, look back over previous years. What changed your figures? What changed them the most? These things will point you to sensitivities within both the company and the market that you can start to exploit.
So does your business plan have a little too much of the magic fairy dust of fantasy about it, and if so, what are you going to do?