Creating a strategic plan is an essential part of business.
It helps to set priorities, focus energy and get buy-in from the employees and other stakeholders towards common goals.
So why do so many accountants roll their eyes when it comes to strategic planning?
The truth is, most of them have done one (or several) strategic plans over the years. And some have even been involved in helping clients complete their own strategic plans.
Yet when they ask themselves if they are truly better off as a result, many would answer no.
“It’s a waste of time”.
“They don’t work”.
In order for a strategic plan to actually work, we need a process which includes the following:
- A plan that can be printed out on a single A4 page. This makes it super focused, super simple and easy to implement.
- Goals that are reverse-engineered with the end in mind. There’s no point in setting goals for the next 3 months if you don’t know what you want to achieve in the next 10 years.
So, let me share with you a strategic planning process that does work.
I’ve completed this with hundreds of practice owners and business owners over the years and it amazes me every single time the results that it can bring.
Step 1 – Take Stock Of Where You’re Currently At
The first step, before setting any goals, is to take a snapshot of where you’re currently at.
And the easiest way to do that is by completing a SWOTT analysis.
For each of the points below, you want to choose 5 things maximum. You might end up with a list of 10 or 20, but it’s important that from this you whittle it down to the top 5. This will help bring clarity and keep you focused.
Strengths – What are you good at? What makes you stand out from the competition?
Weaknesses – What aren’t you so good at? What needs to be improved or overhauled?
Opportunities – What opportunities are out there in the ether for your practice?
Threats – What has the potential to kill your business? (Note, if it doesn’t have the potential to kill your business, then it’s not a threat, it’s just a bump in the road)
Trends – What trends should you watch/keep an eye on over the next few years?
Once you completed the exercise above, you can move on to the next section where you set your goals.
Step 2: Start With The End In Mind
Before you start thinking about quarterly goals and annual goals, you need to understand the bigger picture that they contribute towards.
You need a Big Hairy Audacious Goal (BHAG).
A BHAG is a roughly 10-year goal which is audacious and questionable, but by no means impossible.
And the answer to the question, “what is our BHAG?” can be arrived at in one of two ways…
The first is when we pretend that we are typical, logical, analytical accountants. We start with “this is where I am now, and if I increase incrementally by 10% per year for the next 10 years, then in 10 years where I’ll end up is X…”
“If you limit your choices to what seems possible or reasonable, you disconnect yourself from what you truly want and all that is left is a compromise” – Robert Fritz
The second method is much more powerful, and the one that delivers incredible results.
If you and I were to sit around a table ten years from now, and you’re sat there with a huge, happy grin on your face because over the last 10 years you’ve had a magic wand in your hand and you’ve created this amazing business which is giving you an absolutely incredible lifestyle. Paint me a picture of what that looks like, but give this to me specifically in terms of:
- 10 years from now, in today’s terms, what is your turnover for that year?
- What is your net profit before partner’s drawings in that year?
- How many staff do you have in that year?
- How many hours per week on average do you work in that year?
- How many weeks of holidays have you taken in that year?
- What other incredible personal/lifestyle things are you doing in that year?
Keep in mind that the answers need to end up putting an excited, happy grin on your face when you think about it.
Also keep in mind the three zones where your answers could lie:
Zone 1: The Yawn Zone
Zone 2: The Butterfly Zone
Zone 3: The Dead Zone.
Zone 1: If your current turnover is £500,000 and you say to me, “Rudi, in 10 years I’d like that to be at £550,000”… this is the Yawn Zone.
Zone 2: The Butterfly Zone is the ‘on the edge’ zone. This is the answer you think of where your stomach churns a little and you go, “Ooh… not so sure, but wow — if we did that, that would be really exciting!!!”
Zone 3: Your current turnover is £500,000 and you say to me that in 10 years’ time you want to be turning over £30 million. Both you and I know that your entire system is in complete disbelief and that this goal is totally ridiculous for you.
The answer you arrive at for your BHAG needs to be in Zone 2, the Butterfly Zone.
It’s also worth noting that there is an interesting phenomenon that often happens with BHAGs…
On Day 1 when it is chosen, it is usually at the top end of the Butterfly Zone. And normally within a period of about 18 to 24 months, people start saying, “Well, it seemed almost impossible on Day 1, but now we are making really big strides towards that. A few of the things we mentioned in our BHAG on Day 1 have already been achieved and that goal doesn’t seem so far off anymore…”
Step 3 – Reverse Engineer Your Goals
The next step is to work backwards.
Trust the process.
Right underneath the BHAG we decide the five main focus areas that we need to focus our energy on during years 8, 9 and 10 in order for us to achieve our BHAG. Think of these as the final touches and tweaks you’ll need to make to your practice.
Then, in the next column we are working on a timeline of three years from now.
What do we want our turnover to be and our profits in year 3? What other milestones do we want to measure/achieve by year 3?
Below that, fill in the five main areas we need to focus on during the 12 months before the year-three point that will help us achieve our three-year goal.
The next column is one year from now. What do we want our turnover to be and our profits? Are there any other numbers we specifically want to target, e.g. debtors’ days/WIP days, etc?
Below that, fill in the five main areas we need to focus on during the next 12 months. These five things very well may be a copy-and-paste exercise of the previous five focus areas — but you’ll probably start finding that by this stage, you’ll want to put a bit more detail into them.
For example: before it may have been ‘retain effective marketing’. Now it may be ‘develop and implement a written-down Tactical Marketing Plan’.
Then we repeat the same with the last column which covers the next quarter — the next three months. What do you expect your turnover and profits to be for the next three months? Any specific financial targets, e.g. debtors’ days/WIP days? Any personal targets?
And in this case, we are limited to only three quarterly goals to work on your business.
These are linked to your annual goals, so review the five focus areas you’ve decided for the year and pick three of them (or elements of those) to set as your goals for the quarter.
Maximum three goals for the quarter — because less is more.
Some of the biggest mistakes I see that people make are:
- Choosing too many goals;
- Too vague;
- Too big for a three-month period.
Be very clear, and chunk it down so that whatever you decide it is, it can be completed within a period of three months.
Laser focus. Go small.
Keep Updating & Implementing
Now that you’ve got your complete reverse-engineered strategic plan, your bound to achieve your BHAG, right?
If only it was that easy.
Although the exercise itself is useful (in terms of giving you clarity and putting people on the same page), this becomes just another useless document unless it is updated and implemented regularly.
Each quarter, focus on completing your three quarterly goals and implementing what’s required. Then, at the end of the quarter, select your next three quarterly goals by looking at your annual goals.
At the end of each year, create a new set of annual goals based on your 3-year goals and your BHAG.
It doesn’t take a rocket scientist to figure out that if you stay with this process and keep implementing, before long you will be at the point where your BHAG becomes well within reach…
Rudi Jansen is the Head Coach at Accoa and the author of the Amazon best-selling book ‘The Highly Profitable Accountant’. He runs the UK’s leading coaching programme for accountancy practice owners helping them to increase their profits, work more efficiently and extract themselves from the day-to-day running of the practice. To read more of Rudi’s content, click here. To attend one of Rudi’s upcoming seminars, click here. To connect with Rudi on Linkedin, click here.