1. INTRODUCTION
The purpose of this Operating Procedure is to establish the
concepts and guidelines for setting goals and future planning for YOUR COMPANY. This procedure will also serve as a catalyst
for senior management to develop an effective planning tool.and establishing
benchmarks and time frames for goal setting.
2. FUNCTION
Planning and goal setting are essential parts of every
business. A plan of action must be
established with definite goals and objectives so that the work effort and
resources are directed in a controlled and coordinated manner toward the
accomplishment of these goals and objectives.
Good business planning establishes goals and objectives to be
reached. The course of action
established by the company sets out the intended means of reaching that
objective. Good managers direct their
personnel and their business every day without losing sight of those goals and
objectives. They make decisions and
changes required to keep the business progressing toward present goals. Without good planning, a business tends to
run on historical experience or on a crisis management basis. Employees work in different directions due to
lack of common goals. This creates confusion,
inefficiency and, in effect, excessive costs and reduction of profits. Lack of business planning limits growth. Efforts
are based on day-by-day situations without any future planning for growth. Essentially, you are "flying
blind". Although businesses cannot
plan for all contingencies, planning will reduce risk and provide guidelines
for staying on course.
3. LONG RANGE PLAN
Statement of the Company's
Long Range Goals. The next
step is to establish the long-range goals.
Usually, they are done for a period of three years. Management must ask itself the following
questions: Where do we want to be in the
long range as we have defined it? What
profit levels do we reasonably expect to achieve? What resources do we need? When do we need these resources? If required, how will we finance the
plan? What are the capital requirements? What are our profit goals and profit
strategies?
Market Forces. Next,
through careful analysis, determine and categorize those market factors which
currently, and will in the future, generate demand for your company's services. This
is the beginning of market segmentation analysis and is useful because it may: Uncover
previously overlooked markets, Be helpful in deciding where to concentrate the
company's sales efforts, Identify specific target markets. After identifying the market segments, a
forecast of what these segments are going to do over the span of time covered
by the long-range plan should be done.
Using a "What if?" approach, determine the effects of
potential declines, increases, etc. and what the company must do to meet its goals
under the "What if?" conditions.
Market Potential. Review
the total market available in each segment, and determine what percentage you
can effectively service with your existing capacity and planned expansion. Plan the percentage of market increase for
each of the next three years. After
determining your market share objective for each of the years of the plan, you
must formulate plans for the personnel, facilities and financial requirements
to support the projected growth.
Questions to explore are: LABOR: Do we have the personnel available to support
the growth, or will we have to increase staff?
If we increase, from where will they come? Are our compensation programs competitive? TRAINING:
What will the training needs be?
How will we upgrade our staff to meet future customer requirements? FACILITIES:
Do we have the equipment and space to support the volume forecast? What
replacements will be required? What new
or expanded facilities will be required?
What new vehicles will be needed?
FINANCIAL: What are the
three-year cash requirements necessary to support the projected growth? Will major capital expenditures be
required? Will long-term borrowing be
required? Is it available? At what costs? How will cost of living factors affect our
costs? Do we have administrative
personnel and facilities to support the volume figures? Where do we acquire them? At what cost?
Competition. Knowing
your competition is as important as knowing your own company. You need to know your competitors’ strengths
and weaknesses, market share, geographic coverage, etc. A "Competitor's Library" is a
useful knowledge base. In it, maintain
such things as competitors' services offered, pricing structure, information and
presentation formats used in presenting their results, reputation, advertising,
materials, and bid results. Additional
information can be obtained through trade associations, Chambers of Commerce,
trade journals, Dunn and Bradstreet reports, and other compiled business
analyses. Below are some of the factors
to monitor: Market share, Cash resources,
Management, Markets into which they are moving, Quality of service, Service
capabilities, Pricing strategies, How they promote themselves (methods and
approaches)
Promotion and Advertising. While it
is, at times, hard to identify the immediate results from advertising and
promotion, it is a very important part of a good marketing plan. It is through
this that the company must convey its image and the superior quality of its
services. Whatever the approach, a
carefully constructed program that orchestrates itself with sales goals is the
desired result. Whenever possible,
approaches should be designed so that results can be measured. Some approaches are: Satisfied clients
(repeat business), Word of mouth, Recommendations and endorsements, Yellow
pages, Company logos and name on company vehicles, Direct mail pieces, Trade
shows and conferences, Promotional material and events, Continuous name
exposure in the markets you wish to compete in, Web page and e-commerce
Strategy and Tactics. Finally,
formalize your strategy and tactics. Strategy comprises the long-range
objectives to be achieved in the long-range plan. Tactics are measures taken to reach
short-term goals.
Goals and Objectives Worksheet. The Goals and Objectives Worksheet should be
used to document applicable goals and objectives. The form is only a guide and can, and should,
be expanded to become more specific based on what you wish to accomplish.
4. SHORT RANGE PLAN
Once the long-range plan is established, a more defined
course of action must be set for the short term. This can be accomplished through 30, 60, and
90-day objectives assigned to key personnel.
Objectives can be income or non-income oriented. The annual financial operating plan is geared
to the long-range plan. It is the first
year's action needed to direct the company toward the accomplishment of the
long-range plan. Since the financial
operating plan is for a relatively short period of time, it must be detailed so
that actual performance can be measured against its parameters and corrective
action taken where necessary.
5. SUMMARY
The above is a guideline for constructing goals and
objectives into a business plan. A well-developed,
three-year plan can take several months to complete. Planning and setting goals is the first
function of a company and its management.
Whether documented or not, there must be a purpose to be accomplished by
the business. To facilitate
communication of that purpose within the organization and to your bank or other
outside parties, that purpose should be specified in writing. The first goal of any company is to survive;
the second is to grow (profitably) while
maintaining solvency. The prime
objective is to make a profit. The
success and future of the company ultimately depends on its ability to be
profitable, both today and in the future.
The company’s ability to be profitable and remain profitable depends on
proper planning. For assistance or
questions please contact BTF.
Ken Roys, CEO BTF Management Consultants
866-385-1900 Office
713-983-7904 Fax
COMPLETED
BY:____________________________ DATE________________
1. How fast should your company grow?
State in terms of percent per year increase in revenue… … …__________%
2. What business do you perceive your company to be in at present?
Brief operational/industry definition:
3. What business, or operational mode, do you really want to be in?
Brief description:
4. Why do your present customers use YOUR COMPANY?
Primary Reason:
Secondary Reason:
5. Who are your main competitors?
List Names:
A. B.
C. D.
E. F.
6. What is your competition? (i.e In what ways is their service the same as yours?
In what ways is it different? e.g. price, etc.)
7. What are you doing right; that is, what are your major strengths?
______________________________________________________________________
8. What are you doing wrong; that is, what are your primary weaknesses? (Be honest – everybody has weaknesses)
9. What are your competitors doing right; that is, what are their major strengths?
10. The company’s Revenue Goals over the next three (3) years and the Strategy
(sources of those revenues) are:
2006 2007 2008
Revenue Goal: ______ ______ ______
Sources of
Increase:
Inflationary Dollars
Percent
of Increase
Customer Base Expansion
Percent
of increase
New Types of Business _____ _____ _____
Percent of Increase _____ _____ _____
Other Sources (SPECIFY)
_
_
Percent of Increase
10.
Personnel Strategy: Enter number of new employees to your work
force by
type
consistent with achieving your targeted goals:
2006
2007 2008
Stockholders (actively managing)…
Executives………………………
Managers …………………….
Supervisors…………………
Office / Sales Staff……………….………
TOTALS:……………..
11. Facilities and Equipment Strategy:
A. The Company’s present facilities (CIRCLE ONE) will will not be adequate to achieve your Goals.
B. The additional funds, for facilities, required from now to 2007 are (est.)
$ ____________
C. The Company’s present equipment (CIRCLE ONE) will will not be adequate to achieve Goals.
D. The additional funds, for equipment, needed from now to 2008 are (est.)
$_______________________
12. What NEW facilities (e. g. buildings) will be required; year, type and cost:
A. YEAR ONE: 2006
Type ____________________ ____Cost $ __________
B. YEAR TWO: 2007
Type _________________________ Cost
$___________
C. YEAR THREE: 2008
Type _____________________________________Cost $ __________
13. What IMPROVEMENT(S) to Facilities will be required (by year, type and cost):
A. YEAR ONE: 2006
Type Cost $
B. YEAR TWO: 2007
Type Cost $
C. YEAR THREE: 2008
Type Cost $
14. New EQUIPMENT requirements (by year, type and cost)
A. YEAR ONE: 2006
Type Cost $
B. YEAR TWO: 2007
Type Cost $
C. YEAR THREE: 2008
Type Cost $
15. Identify SOURCE(S) of FUNDS which will be used to finance the Company’s expansion based on percentage of total funds by source:
2006 2007 2008
Company's Profits
Bank Loans
Personal
Other Financing Sources
16. Profit Goals (projected Net Profit; before tax)
Dollars Per Cent
2006 $ %
2007 $ %
2008 $ %
16. Profit Strategy:
A. Based on your knowledge of the industry, what should your overall anticipated gross margin percentage be for the following:
Current Business Income ________%
Other Income Streams ________%
New Income ________%
B. Reorganize and establish management control of operations through
spreading your time allocation among the following tasks (total should be
100%):
17. EXPANSION Planning:
A. Identify New Ventures, Products, and/or New Services:
1.) Value:
$
2.) Value: $
3.) Value: $
4.) Value: $
5.) Value: $
6.) Value: $
Total Expansion Potential: $
B. List Equipment and/or Facilities required to support expansion:
Type Cost: $
Type Cost: $
Type Cost: $
Type Cost: $
Type Cost: $
C. Work Force additions directly attributable to expansion:
Number/Headcount Annual Cost
New Employees: $
Supervisors $
Managers $
D. Profit Considerations of Expansion:
1.) Anticipated Percentage Profit from Expansion… . %
2.) List by Venture and/or Service; if appropriate:
E. Difficulties / Prohibitions possible while expanding:
_____
19. Creative, unrestricted (unstructured) thoughts and concepts on business status: Growth, Impacts, Profits, where you want the business to be. . . where you want to be:
______________________________________________________________________
Completed By:
Date:
1. GOAL:
A. Action(s) Planned to achieve Result:
B. Time Span, or Target Date, of Goal achievement:
C. Quantification of Result desired (may be qualitative if objectively determinable):
D. Definitive Statement of Goal; summarizing above elements:
EXAMPLE: “To
increase accuracy of all inventory, conduct "Cycle Counting" within
the next three months through an accurate, systematic program.”
2. Describe your / the company’s present position, or status, relative to the stated Goal:
3. Define Obstacles to Goal achievement:
A. B.
C. D.
E. F.
4. Plan (Strategy and/or Tactics) to Overcome Obstacles (start with obstacle to final goal and work backwards):
5. Method to Monitor progress toward Goal (measurement):
6. Contingency Plan:
7. Decision criterion /criteria for implementation of Contingency Plan:
ANALYSIS (to be completed after defined Goal should have been attained):
Date: Quantified Achievement: