But planning is essential. Your investors and board of directors will demand that you set a course of action, execute, and course-correct along the way. Your business will benefit from planning and tracking, too.
Annual operating plans and budgets are your friends. In addition, if you implement the following 11 processes, you''ll improve the way you make decisions, effectively measure progress, drive accountability, and modulate finances. Your plans will be contingent on progress, not wishful thinking.
1. Create product development plans.
You need a clear understanding of what you're trying to build, what the customer needs, and the resources you need to build it. If requirements change as you learn things from your target customers, you need to account for that in the plan. Base the product on a significant customer problem that you're solving in a unique way, and describe it in sufficient detail that you can build it and sell the value to target customers.
2. Track product development milestones.
You'll need intermediate milestones to track your progress. I like meeting with project teams monthly to do review these. This is important for three reasons:
- Milestones help modulate spending and bring accountability.
- Your team can't fall prey to wishful thinking. It needs to stay grounded in reality.
- Your board and investors will want to track your progress against those milestones.
3. Implement project plans.
Project plans are always a good idea--not just for product development. Other examples include strategic partnerships, market penetration, raising capital, and financial metrics.
4. Set and track marketing milestones.
Once you have a product, you'll need to market and sell it. Your revenue forecast needs to be grounded in an understanding of your customer buying behavior, the sales cycle, and the overall market size and growth.
5. Implement a sales funnel process
You need three things:
- A game plan for your sales team.
- A way to have intelligent discussions about progress.
- A way to identify early warning signs that a sale is not progressing as required to meet your forecast.
A sales funnel that moves through the process of awareness, interest, decision, and action is key to this. Every company has different ways of measuring progress--and different timelines for the sales cycle--so this tool can drive better forecasting and opportunity handicapping.
6. Hold monthly revenue and expense plan reviews.
You'll need a half-day per month to dive deep into what's happening with the business and product development. If you don't do this, expenses can get out of control very quickly. You don't have unlimited cash and resources, so you need to know when to modulate your spending--whether it's applying the brake or stepping on the gas.
7. Create a budget action plan.
This is directly derived from the expense plan, and should be tied to product development and marketing milestones. Make sure you answer these questions:
- If you're behind on hiring, will you be behind on your product development or marketing goals?
- Should you use subcontract resources to keep the project on track?
- Are you ahead of plan and able to expand your business development and sales team?
8. Create and implement a staffing plan.
This is your headcount and hiring plan. I like to track this separately from dollar budgets, and control sign-off of any full-time hires.
Your people are your biggest asset. Only hire the right people that are critical for the execution of your business. Hire for cultural fit--not just roles, responsibilities, skills, and abilities.
9. Create an outsource and freelance budget plan.
If you use subcontractors to outsource some of your work, you should track headcount both on a man-hour basis and dollar basis. Many well-meaning managers use contractors in place of full-time hires as indefinite stopgaps. Some contract employees are mercenaries with no skin in the game that are paid hourly, sometimes at a very high rate--so you need to control and monitor this.
10. Implement feedback and control mechanisms
If you've planned well, headcount and budget will have a direct correlation to work output. You'll need a process for measuring progress and communication with the team: weekly staff meetings and monthly operations reviews.
11. Track early warning signs.
Run short weekly staff meetings--no more than two hours each. Track your team's progress. If you leave the meeting with action items, make sure they have owners and deadlines.
The annual operating plan provides a baseline to run the business, but you need to track your progress on an ongoing basis. Accomplishment of key milestones, or lack thereof, will allow you to modulate your cash burn to extend your runway, if necessary.
Alternatively, it can put more fuel on the fire to accelerate your growth. Without planning and ongoing monitoring, you're simply flying blind.