Welcome to another edition of the Atlanta Small Business Show. Having a strategy for your business not only helps to define your goals but can also help clear up any disputes between managers with different opinions. This is according to a Forbes article written by George Deeb, Managing Partner at Red Rocket Ventures, start up expert, and author. George joins the show today, to discuss the importance of building a strategic plan for your business.
Since starting at Red Rocket in 2010, Deeb has advised or mentored over 750 B2C and B2B businesses. He has a large network of contacts in the startup, digital, and venture capital communities and specializes in business planning, growth strategy, corporate development, fundraising, sales, and marketing.
Transcription:
Jim Fitzpatrick:
George, thanks so much for joining us once again, here on the show. Really appreciate it.
George Deeb:
Jim. It’s great to be back.
Jim Fitzpatrick:
Sure. So what is a strategic plan? That’s… It sounds like something everyone should have, but I’m suspecting not everyone does.
George Deeb:
Well that’s for sure. I mean, it’s your north star. It’s the playbook for which the company’s going to be operating for the next couple years and you really have to have a good handle on where is the business heading in building the stepping stones that are going to be required to bridge where you are today to where you want to be a few years from now. So that’s… It’s really your blueprint.
Jim Fitzpatrick:
Sure, sure. So for the people that are listening, where do you start something like this? Is it market research or… How do you start a plan?
George Deeb:
Yeah, for me, that’s where it always starts. You got to understand what your industry dynamics are, how large is your industry, how fast is it growing? Who are the competitors in your industry? What are you up against? How well funded are they? And are they going to be throwing bazooka fire your way, or kind of throwing pebbles your way in terms of the level of competition you’re up against.
Jim Fitzpatrick:
Sure. Is there anything specific that you’re looking for at this point?
George Deeb:
Yeah. For me, you want to make sure that your industry is large enough and growing, right? You don’t want to be in a small market that’s on the downturn that you’re not going to have a long term successful blueprint.
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
Right? So you want to make sure there’s enough volume there to be had that you can build a reasonable size business that will get to your growth targets.
Jim Fitzpatrick:
Sure, sure.
George Deeb:
And you want to make sure that from a competitive standpoint, that there aren’t too many entrenched competitors that kind of have a strangle hold on the market, right? You want to make sure there’s a white space opportunity for you to actually be able to survive and thrive.
Jim Fitzpatrick:
Sure, sure. A friend of mine took your advice and went out and to take a look at the landscape and to see what’s out there and the way of competition and such and he came back and said, “You know, I’m kind of demoralized because there’s a lot out there, there’s a lot of players in this space” and it’s one of those things I felt bad for him because I said, “Wow, you spent a lot of time planning this and wanting to do this and now all of a sudden you got intimidated because there’s some other people in the space” and you said, “Oh, maybe it’s too crowded already.” How do you know? Like what’s a fair—
George Deeb:
Yeah. I think the answer to that question is you want to make sure one, you want to know what you’re up against, right? If there’s tons of competitors and they’re working with an old generation technology or solution, then it’s right for your market, right? You’re going to disrupt this market. Everyone’s going to naturally gravitate to you because you’ve got the best mouse trap.
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
Right? But if all you’re bringing to the market is a me too story and all you’re doing is bringing exactly the same thing everybody else is bringing. You have no chance.
Jim Fitzpatrick:
That’s right. That’s right. What about on the reverse side, if somebody goes in and does the research and finds there’s nobody that does anything even remotely close to this, or maybe it’s tucked inside of another company’s offering and they don’t really feature that. What say you on that? If somebody does and takes a look at the landscape and nobody’s doing this, should that-
George Deeb:
Yeah, I mean-
Jim Fitzpatrick:
… be a concern?
George Deeb:
… well, there’s two thoughts to that. Well, if nobody’s doing it, that’s an opportunity. You’re doing something different and next generational and that’s an exciting part of that story.
Jim Fitzpatrick:
Sure.
George Deeb:
The opposite to that is if it’s too new, if it’s too next generational, the customers won’t understand it. They won’t have budget for it. They won’t digest it and you’ll never sell any of it.
Jim Fitzpatrick:
Yeah.
George Deeb:
Right? So if you’re something on the “bleeding edge”, you want to make sure that you’ve got a good communication story in line to help educate them on why they need this and how this is going to help their business.
Jim Fitzpatrick:
So what comes next after you’ve done the analysis? What’s the next thing you want to do?
George Deeb:
Once you’ve done your research-
Jim Fitzpatrick:
A research rabbit.
George Deeb:
… the next thing is, that’s kind of an external look. Right now, you need to do an internal look on your own business and that’s what’s called a SWOT Analysis, which is the acronym for your Strengths, your Weaknesses, your Opportunities, and your Threats and you want to make sure you got a clear understanding on kind of what’s going on in your business so you can do a critical assessment of where you are versus where the industry is and where the opportunities may lie.
Jim Fitzpatrick:
That’s right. That’s right. And why this? Why is this important?
George Deeb:
Well, I think the key thing is from a strengths perspective, you want to lean into your strengths, right? You want to, you kind of doubled down on those and kind of take those to market with an exclamation point and if you’ve got weaknesses, especially up against your competitors, you want to resolve those. You want to make those weaknesses go away, build those into your product development schedules or whatever you need to do there and you want to prioritize your opportunities. You can’t do it all, right? You’re going to have hundreds of potential opportunities you discuss as a team, but it’s only those what three or four are the ones that are going to bubble up to the top that we’re actually going to put a blueprint against.
Jim Fitzpatrick:
Sure, sure. Talk to me about what you’re looking for in a company’s mission and vision statement, a, what’s the importance of that and then b, what do you want in that?
George Deeb:
Yeah, for sure. The mission statement and the vision statement are the guiding words, those snippets, those buzzwords that any employee within the organization should know that this is what we’re marching towards and there’s a distinction between the two.
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
The mission statement is largely speaking to the why your business is in existence. Why are you even operating as a company? What are you trying to accomplish as a corporate mission statement right?
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
The vision statement is speaking to the what. You know, what is your business specifically do? What are your products? What are your services? What are your goals? What is it that you’re trying to accomplish?
Jim Fitzpatrick:
Sure.
George Deeb:
And when you’re writing that vision statement, you want to make sure that it’s SMART and what SMART means is, that’s an acronym for… The S is for Specific, M is for Measurable. A is for Attainable. R is for Relevant and T is for Time based, right? You want to make sure that you got each of those concepts nailed down in your vision statement so when you actually communicate that vision statement, people know that it’s been “smartized” and it’s something that is actually manageable towards and can be actually delivered.
Jim Fitzpatrick:
Okay. That’s great. Now you got SWOT and SMART so far, so this is good, we’re showing it all on the screen. I love these and people can remember them easier. So what comes next? You mentioned goals and should businesses start setting goals at this point?
George Deeb:
Yeah, for sure. Once you’ve done your research on the market and your research on yourself, now you set your business goals and you’re trying to figure out okay, what are those high level goals? There could be high levels strategies, could be high level product development needs, could be what key resources does the business need to accomplish that we want to invest in? What cultural needs are you struggling with and what cultural goals do you have?
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
What financial targets are you shooting for?
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
So you want to lay out those kind of five big goals that the business is shooting for in the next 12 months and make sure you document those so everybody knows what they’re shooting for.
Jim Fitzpatrick:
Sure. This is an area that I think many entrepreneurs have a difficult time with because there’s no historical data to say, “Well, I’m going to set up a goal, but I don’t know…” You know, “Where do I start?” “I don’t know how successful I’m going to be in my first year of operation or what the need’s going to be” or “How I’m going to be able to fill it” or “If the staff’s going to be able to keep up”, or “If we get any business at all.” And in fact, many owners and entrepreneurs that I talk to have avoided this one area. What’s your advice to them? Should they put it off until maybe the second year? Or should they not drop the first dollar until they do have some outlined goals?
George Deeb:
To me you can’t build a business without a blueprint right? So the plan doesn’t need to be perfect. It doesn’t need to be a hundred percent. You’re going to miss it. You can have a lot of mistakes along the way. That’s okay.
Jim Fitzpatrick:
Sure.
George Deeb:
But at least you’ve thought about it.
Jim Fitzpatrick:
Right.
George Deeb:
You’ve put some energy into thinking about the plan to make sure you got a reasonable chance and where they say, “I don’t know if I’m going to hit my revenue target or not” and “I don’t know what to put down.” Well, you’re never going to hit your revenue target unless you know what your sales and marketing plan is going to be required to get to that revenue target.
Jim Fitzpatrick:
That’s right.
George Deeb:
So it’s kind of an important exercise you need to do upfront.
Jim Fitzpatrick:
Speaking of the company goals, do you want… Are you looking for something that’s specific to each department or just for an overall goal? I hope my company does $200,000 versus I hope it does 50,000 in this department and 150 in this one.
George Deeb:
Yeah. I think the business goals are high level, right?
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
Those… All departments should be marching towards those same five key business goals that the business is shooting for.
Jim Fitzpatrick:
Sure.
George Deeb:
However, each department needs to build up the specific objectives and initiatives that their department needs to launch in order for the business goal to be a success, right?
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
So if the business goal is to improve the culture of the company, well, then there needs to be an HR department goal on, okay, what specific tactics are we going to do to help improve our culture?
Jim Fitzpatrick:
Right.
George Deeb:
Maybe we launch a new 401k plan, or we launch a new vacation structure, let people work from home or whatever it is and those are the objectives that that department needs to implement to help make the high level business full of success.
Jim Fitzpatrick:
Gotcha. Gotcha. So what is the last step? Is it budgeting or, and if so, what’s that look like?
George Deeb:
Yeah. You nailed it. That once you’ve laid out the goals and you’re understanding what you’re trying to build, then you build all the numbers around it, right? So what does the revenue forecast look like? What are the expenses look like? Is the business going to be profitable or not profitable? And you got to build your staffing plan, your capital expenditure plan, whatever the financial numbers are to see what has come out of your planning process.
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
And sometimes everything works great, and you’ve got the budgets and you’ve got the money to do what you want to do and sometimes you don’t.
Jim Fitzpatrick:
Yeah.
George Deeb:
So you got to be careful and kind of iterate accordingly.
Jim Fitzpatrick:
Sure, sure. So talk to us, how do you stay on plan once the strategic plan is finished?
George Deeb:
Yeah. I mean, each department needs to set some KPIs, key performance indicators that will help them understand whether they’re running on plan or not plan. Each department should figure out what those indicators are and then they should measure them on a ongoing basis, maybe once a month, they’re checking in on those KPIs and make sure that they’re where they need to be versus goal.
George Deeb:
So for example, let’s say the sales department needs to get to a certain revenue target. Well, that’s one of the KPIs. What’s our revenues per month? And if our revenues per month needs to be a 100,000, but I only delivered 70,000 well, we’re running behind. Why are we running behind? What are we going to do close the gap for that extra 30,000 or more-
Jim Fitzpatrick:
Okay.
George Deeb:
… importantly, next month’s budget is a 100,000 as well, now I need to shoot for 130,000 to close the gap and catch up. What actions do we need to take to kind of close that gap? So each department should set their own KPIs that will ensure that the business hits the targets that are required.
Jim Fitzpatrick:
That’s right. And like many goals, both personal as well as business and many individuals will tell you this, they’re afraid to put them down on paper, because of the sense of failure that they say, “Well, we’re right out of the box, we’re going to do a $100,000 or 50,000”, whatever their number is to make the metrics work and we didn’t, we missed it by 50%. We missed it by 70%, whatever the case might be, they feel so demoralized and they think the team is going to feel demoralized when in reality, that’s just the opposite. The team wants to see that you have got an outline of where we are headed even though we might not hit it in the first month, the second month, the first quarter, the second quarter, or even the first couple of years, it doesn’t mean you shouldn’t have the goals written down and shared with all of the department heads, right?
George Deeb:
Yeah. A hundred percent agree with everything you just said. I couldn’t have said it any better myself. You want to make sure it’s documented and it’s okay if you miss, but the better you forecast the business, the better you build your business plan, the more thought you put into it, the less you’ll miss the plan.
Jim Fitzpatrick:
That’s right.
George Deeb:
Right? That’s why this whole strategic planning process is so important because if you do it right, your misses will be minor, they won’t be major.
Jim Fitzpatrick:
That’s right. Is it okay to change the plan once you’ve jumped in and said, “Oh wait, wait a minute. We forecast that a $100,000 in sales in the first month.” Let’s say, but from what we just found out and what we just went through and what the reality is of the marketplace or what our capabilities are in delivering, is it okay to tweak the plan or is your advice to say, nope, stay on the plan and try to catch up? What say you on that?
George Deeb:
Yeah, I think it varies based on why you’re missing your plan-
Jim Fitzpatrick:
Mm-hmm.
George Deeb:
… right? If you’ve been in the market and you’re out there selling and nobody’s buying your product, there’s a problem right? Stop the press. But let’s rethink this thing and make sure we’ve actually got—
Jim Fitzpatrick:
Don’t spend another dollar ’til you fix this.
George Deeb:
Right, but if the reason you’re missing plan is, I don’t know, something short term in nature, it was a, there was a hiccup in the stock market and it-
Jim Fitzpatrick:
Sure.
George Deeb:
… spooked a bunch of people, but the markets have now corrected and we’re back to normal, get back to the plan.
Jim Fitzpatrick:
Sure.
George Deeb:
Then keep focus on the plan.
Jim Fitzpatrick:
Sure. What if gas prices are $5 a gallon? And I don’t know, inflation is like 8.5%. What do you do then?
George Deeb:
Yeah. It’s crazy what we’re having to deal with today, but you can’t control what you can’t control.
Jim Fitzpatrick:
Right.
George Deeb:
Right? So the markets are what they are.
Jim Fitzpatrick:
Right.
George Deeb:
You need to be nimble enough to know. I always equivocate starting a business like you’re in a whitewater rafting trip, right? The river is taking you-
Jim Fitzpatrick:
Right.
George Deeb:
… in a certain direction from north to south, but it’s a winding river.
Jim Fitzpatrick:
That’s right.
George Deeb:
And you don’t know where the rapids are and you might go off course a little bit.
Jim Fitzpatrick:
That’s right.
George Deeb:
And you got to be able to navigate and you’re going to get wet and you get splashed in the face every so often, but you got to dry off and keep going, right? So it’s part of the adventure.
Jim Fitzpatrick:
That’s right. And as an entrepreneur, you might find out that you were on the Niagara Falls river, whatever… I’ve been on that one a few times where you just go right over, but you survived it, right? You go, “Oh, you know, it wasn’t as bad as I thought.” So George Deeb, it is always a pleasure having you in. Our subscribers and viewers get so much out of your visits here because you’re somebody that’s been there and you’ve seen so many different businesses operate so your perspective is invaluable and we appreciate it very much. George Deeb, managing partner, Red Rocket Ventures and author, I might add, a contributor to Forbes Magazine so that’s pretty strong right there. So I’m impressed, because-
Jim Fitzpatrick:
… I’m a big fan of Forbes and I love your content. So thanks so much.
George Deeb:
Awesome. Great seeing you again.
Jim Fitzpatrick:
You too. Thank you.
The Atlanta Small Business Network, from start-up to success, we are your go-to resource for small business news, expert advice, information, and event coverage.
While you’re here, don’t forget to subscribe to our email newsletter for all the latest business news know-how from Atlanta Small Business Network.
