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There are two very different reasons why effective long-range planning is critical for getting top dollar when you sell your company. First, top-notch planning helps you to manage your company better and involve your employees at a higher and more productive level. Second, and much less obvious, success in this area is very impressive to prospective buyers. Why?
Because successful long-range planning (defined as developing a plan, implementing it and achieving most or all of the long-range goals) is indicative of solid and sophisticated management – a highly valuable strategic asset for most acquiring companies. Here are 10 elements to developing a long-range plan that increases the likelihood of success manifolds:
- Involve your key people. For one thing, they will have ideas that are worth considering. Beyond that, it is axiomatic that the best way to overcome resistance to change is to ensure that those who will be implementing the changes help to determine what those changes will be. An effective planning group can comprise as few as three people, or as many as 15. The important thing is that no one who can have a major impact on how the plan is implemented is left out.
- Make sure that there is a solid consensus around the vision for the company; i.e. what will be the company’s identity in years to come.
- Develop a clear and easily communicated mission statement that expresses what the company does and for whom.
- Conduct a SWOT analysis; i.e. identify the company’s principal Strengths, Weaknesses, Opportunities and Threats.
- Develop long-range goals that are challenging, achievable and in line with the company’s vision, mission and values. These goals should be specifically designed to take advantage of strengths and opportunities, while addressing (or, at least, minimizing the negative effect of weaknesses and threats. In addition, ensure that each member of the planning group (and the rest of the staff, as well) can relate the achievement of the company’s vision and mission to a high level of performance in their specific area(s) of responsibility.
- Identify outside factors over which you have no control and little, if any, influence.
- Short term objectives. Determine what you need to achieve within one year in order to give yourself a leg up in achieving your long-range goals. But, be cautious with your scheduling. The biggest mistake most owner-managers make is front loading implementation far too much. If you are going to make a mistake, especially if this your first planning experience, make it on the low side of delivery. You can always add short-term objectives later, but if you fail to achieve your objectives, it can severely damage morale.
- Attach task assignments, with individual responsibilities and deadlines, to each short-term objective.
- Attach action items to each task assignment.
- Organize follow-up sessions no more often than monthly and no less often than quarterly. This step is, in reality, as important as all the rest, because it is all that stands between you and a dusty planning document that fails to impact the future of your company. Make sure that you are utterly ruthless in comparing actual performance with plan. There is no reason to be unpleasant. Most long-range plans fall behind in the early stages, usually because of excessive front loading. The critical element is that everyone agrees on the relationship between plan and actual performance, and how to get back on track and timeline with any projects that are lagging
Oh, and one final thing… Good luck!
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This article has been contributed by Steven D. Popell. Steve has been a general management consultant since 1970. Steve is a Certified Management Consultant, business valuation expert, and inventor of ExiTrak®– a process designed to assist the privately-held company owner/manager to build an attractive strategic acquisition candidate