The Plan That Changes Shape

Ask the owner what the plan is and you will get an answer. Ask again a month later and you will get a different one. Not because the business changed, but because in between she went to a conference, had a coffee with someone who had just raised money, read something about a competitor, and spoke to her accountant. Each conversation moved the plan a little, and by the end of the month the plan was whatever the last persuasive person had said.

This is what a business without a floor calls strategy, and I say that without mockery, because I have watched it happen in companies with strategy departments. A plan that lives in the owner's head is held in place by nothing but the owner's conviction, and conviction is exactly what a persuasive conversation changes. The consultant says the future is in a new market and the plan now includes the new market. The peer says she doubled by adding a cheaper tier and the plan now includes a cheaper tier. The team member says the real problem is the website and the plan now includes a new website. None of these people is wrong about their own business. None of them has seen your numbers.

The cost is not that any single change is bad. It is that the business never does any one thing for long enough to find out whether it works. The new market gets three months of half-attention before the next conversation moves the plan again. The cheaper tier is launched and never measured. The website is rebuilt and nobody checks whether enquiries went up. The year ends with a dozen things started, none finished, and a number that looks like last year's.

A plan written down, with numbers attached, behaves differently. The persuasive conversation still happens, but now it meets something. The owner can hold the suggestion up against the model and ask what it does to profit, cash and her own pay, by month. Most suggestions, held up against a model, turn out to be about someone else's business.

The response is to give the plan a shape that conversations cannot change, which means writing it down, attaching numbers to it, and deciding in advance how it gets altered.

The plan is the floor you have built over the last fortnight. Business model, financial model, operating plan. It says what the business sells, to whom, at what margin, what next year looks like month by month, and how it gets checked. That is the plan. It is on a few pages and it has a date on it. When someone suggests a change, the question is not whether the suggestion is interesting. It is what it does to the numbers on those pages.

Then decide how the plan changes. Not never, because a plan that cannot change is a different kind of mistake. But not in the car park after a conference either. The plan changes at the monthly review, with the numbers in front of you, when a variance or an opportunity has been seen for what it is. A suggestion made on the fifteenth is written down and waits for the review. Most suggestions, by the time the review arrives, have lost their urgency, and the ones that have not are the ones worth taking seriously.

Then protect the plan from yourself. The owner is the most persuasive person the owner talks to, and the three in the morning idea is as dangerous to a plan as any consultant. Write it down, let it wait, hold it up against the model in daylight. The businesses I have seen grow steadily did not have better ideas than the ones that did not. They had a plan that an idea had to earn its way into.

Tomorrow the house is complete: the funnel goes on last, and I want to show you why marketing and sales finally work when they come at the end rather than the beginning.

Continue reading: Then the Funnel →

The session: The Nine Fears, and the floor underneath your business. Wednesday 2 December, 5pm UK, free →

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The book: The Science of Getting Rich and How to Apply It →