I love “To-Do” lists and prioritizing activities.
But then again, I'm a dork!
These are often missing in family farm businesses for a variety of reasons. Being too busy farming is often a common response. Project planning tends to be a day-to-day decision on which fire to put out first. A situation characterized by the question, “Is your business running you or are you running your business?”
Planning projects need to be prioritized to help determine which projects are “wants” and which are “needs”. Limited resources dictate this practice as a must as you can’t do everything you want. This also helps focus efforts by your team in a timely manner. Your wants may eventually become needs, and by having them prioritized, it puts things in the proper perspective for your key managers. This is extremely useful when planning for capital asset purchasing, replacing or selling. Needs vs. wants often get flushed out and reality also sets in that limited cash resources cannot purchase all the team’s “wants”.
Documenting your planning sessions becomes very useful when it comes times for detailed budget creation. The outcomes of your planning provide the basis for estimating your expenses in various areas of your business.
Just like anything else, you can make all the plans in the world, but if you don’t ACT on your plans, you seriously wasted your time. Assuming you have bought into the notion that long-term planning for your family business is important, don’t even think about spending time developing one if you are only going to put it in a binder and up on a shelf to collect dust. It happens way more often than it should.
Plans get shelved for a variety of reasons. A key reason is that the plan has no basis in reality. Implementing grand ideas too often disrupts existing operations or would strain existing resources. Sure, the ideas are great, but if no time or resources are allocated to the idea, how could it possibly see the day of light, let alone get fully implemented? It can’t.
The absolute worst thing that can happen is for you, or your management team, to move forward with a strategic, or long-term, initiative without connecting the finances of your business to the idea. Better to realize the resources are not there and go back to the drawing board than to move forward to only realize later that you were under-capitalized and now your once financially stable business is gulping for air trying to keep its head above water. Financial planning models need to be simulated before any major changes take place in your business.
Future articles will explore an example strategic planning model, or process, the integration of operational planning and strategic planning, why it’s easy to avoid long-term planning, establishing strategic issues for your business and exploring objectives in various areas of your family and business life.