Equip your communication vehicle with a GPS

We all know the frustration of highway driving.  If not a fender bender resulting from an unsignalled lane change, there is construction or other roadblocks slowing traffic and keeping us from reaching our destination on schedule. All we can do is wait for the obstacle to clear and try to make up the lost time.

When that roadblock is more serious such as a jack-knifed trailer or a truck that has spilled its load, it may be necessary to make a detour. But in addition to prolonging the journey, detours can waste time, consume extra gas, and result in undue wear and tear on our vehicles and our nerves. At times like these, a GPS is invaluable.

When planning ahead for the eventual sale or transition of your business, a diversified business plan is your GPS. It is a key component of the business wheel of your Communication Vehicle^TM and intended to ensure alignment between your family/business philosophy and your business strategy.

Developing a diversified business plan also serves to connect and groom future leaders. In addition to being a communication document, it serves as a leadership example for prospective successors or potential external buyers.

The Communication Vehicle^TM

The diversified business plan

Simply put, your diversified business plan will help you determine where you are now and how you can get to where you want to go. It provides up-to-date information about the speed at which you are travelling and how long your journey should take. Furthermore, it can show you an alternate route when an obstacle ahead forces you to take a detour. As you journey along the family business highway, you will no doubt face frequent roadblocks, including: 

• The danger of a collision that results from a failure to communicate and requires you to signal your intentions
• Economic conditions that change rapidly and require you to constantly monitor your industry and marketplace to avoid being broad-sided 
• A potential bridge out up ahead that requires you to look out for new opportunities

To operate efficiently, you must be diligent about keeping your engine tuned and your wheels aligned. Statistics show that owners of most small to medium-sized businesses use instinct as opposed to a formal plan when running their operations. While that may work fine in strong or steady economies, managing a business during turbulent markets or an impending business transition requires greater discipline and risk management.

Begin by checking your current strategic position

While a formal plan does not have to be complicated, it should start with a realistic exploration of your current strategic position. Investing the time to check your current strategic position can alert you to take either a very defensive or somewhat conservative stance to mitigate risk, or indicate when conditions are favourable to more competitive or aggressive.

For example, you might be thinking of adding a new product line but, from an analysis of your current strategic position, discover that there are significant threats if the form of the current marketplace. Or you could uncover an opportunity to pursue a new strategic direction that was not evident before determining where your business is today.

To conduct a strategic positioning exercise, examine the current strength of your business in these thirteen key areas:

• Philosophy
• Vision
• Products and services
• Sales and marketing strategies
• Internal structure
• Systems and processes
• Social capital
• Intellectual capital
• Physical assets
• Industry or marketplace
• Current business environment
• Competition
• Customers and markets

Not understanding the true strategic position of your business can lead to poor strategy development or missed opportunities. In addition to being a forerunner in any diversified business plan, you should administer a strategic positioning exercise at least once per year to ensure that you are still headed in the right direction. If you ever need to make a detour because of a new opportunity or considerable roadblock, this exercise can help you find your way to an alternative highway.