Keys to a Great Business Plan

At most companies, the words business plan drain the energy from the room. Preparing the annual financial plan is a painful ritual that eats up time and produces little. There’s usually fallout, too. When it’s time to create the plan, the senior team goes to some offsite retreat for a couple of days. Everyone else is left to do the work—and to roll their eyes about what “planning” really means.

Planning at open-book companies is a little different and a whole lot more productive. Open-book management (OBM) is a type of management coined in 1993 by John Case of Inc. magazine. Company information is shared with the employees to help them understand how the business works and is doing financially. According to Case, “a company performs best when its people see themselves as partners in the business rather than as hired hands.” 

There are three key points.

1. Employees are expected to contribute
If your company is small enough, shut down operations for a day and bring everyone to the planning session. If it’s a larger operation, ask for a representative from every unit to participate. In either case, get the people in each unit thinking and talking beforehand about what they want to see happen in 2024. Where are the biggest opportunities? How can the company boost sales, lower costs, better its relationships with customers? Asking employees for input treats them as partners in the business. It improves morale and boosts support for implementing the eventual plan.

It also generates good ideas.

2. Take customer input into consideration
We don’t mean that customers should plan your business for you. But a company that ignores customer input is missing a big opportunity to pull off a dynamite year.

The best companies, of course, get feedback from their customers regularly. The key is to get operational input from your customers as to what they really value, so you can act on it. What do your customers like and dislike about doing business with you? What would they like to see you offer? Whom do they see as your chief competitors? The answers provide great market intelligence for the planning process. As a bonus, these customer interviews tend to generate significant repeat and referral revenue.

3. People understand the financial aspects of the plan
Company owners often scoff at the idea of asking employees for input: “They’ll just want better benefits and a nicer break room.” Open-book companies teach their people the basics of the business’s economics, so employees come to understand the difference between a nice-to-have frill and a profitable investment. If one unit wants new equipment in 2024, they’ll be expected to put together a business plan to support their case.

Open-book companies also entrust individuals or small teams with ownership of lines on the income statement. And there’s nothing like accountability to make people think carefully about where we are today and where we want to be next year.

In The Art of War, Sun Tzu famously wrote that the difference between a successful plan and an unsuccessful one lay with two decisive factors. One was good information. The other was the morale and energy of the troops. It isn’t so different in business. Good data, coming from engaged employees and customers, makes all the difference. It even makes planning sort of fun.

Here’s to a prosperous and fruitful 2024!