My uncle Wayne raced Indian motorcycles in the 1930s. One of his projects was refurbishing a 1936 Indian Scout, though his sons Wayne and Bart ultimately completed the project. To do so, they had to take inventory of the bike and plan the tasks of obtaining the parts and executing the labor. The end result purred. However, now built, where was the bike going to take them?
In my experience, small and medium-sized businesses approach their enterprises the same way Wayne and Bart approached their hobby. They look within their businesses and try to fix what’s wrong in order to get it running smoothly.
Many times, especially when investors are involved, business owners design a business plan. But a business plan is a management document, not a strategic document. In other words, a business plan projects investment, revenue, and expenses necessary to keep a business “purring.” But like the motorcycle, the business plan does not tell where a business will be going in ten to twenty years. It did not develop a vision?
Too often, the only goals new clients express are “What are my sales and do I have enough cash to make payroll?” Of course, as a CPA consulting firm, we certainly encourage business owners and officers to operate their businesses efficiently, however, most of them focus only on the step confronting them, and not the horizon beyond them. They do not strategize and set out an action plan to implement that strategy. Thus, they jump on the Indian bike and hope they have enough gas to get to the next gas station, wherever that may be.
Strategic plans for smaller businesses are not without risks. For example, we start with financial statement metrics that usually work as indicators of issues that we may focus in the strategic planning process. The company accounting records have to be correct, so we usually have to correct them. This could be costly. Secondly, a business owner may not take the strategic planning process seriously because it requires the owner to think strategically, not tactically. Lastly, once the plan is done, too many owners and management personnel refuse to keep up the process of implementing it.
We have seen that most small and medium-sized businesses run their “bike” down the road without any idea as to which street to take. Their only measure of success is usually to stay on (or in) the black and not run the bike into a ditch. Focusing on the horizon helps a company strive for success.
About the Author
Rick Norris earned a Bachelor of Science from U.C.L.A. in 1979. After receiving his Certified Public Accountant certificate in 1982, he earned a Juris Doctor from Southwestern University School of Law in 1985. He founded Rick E Norris, Accountancy Corporation in 1992. He has published articles in the California CPA Society magazine, among other periodicals, including the company bi-weekly newsletter. He sits on the California CPA Society Entertainment Industry Conference Planning Committee which is held annually in Beverly Hills, CA. He is also a board member of the L A Chapter of the Association for Strategic Planning. He speaks frequently at various events in the area of personal and business financial matters.