237: What Goes in a Strategic Plan
Michele 00:00
Hello, my name is Michele, and you're listening to Profit is a Choice. With me today is Kelcee Sparks and once again, we're going to be doing question-and-answer time focused on strategic planning. I invite you to listen in and to also send your questions to us at team@ScarletThreadConsulting.com. Let us answer your questions about your strategic plan.
Every day, empowered entrepreneurs are taking ownership of their company financial health and enjoying the rewards of reduced stress and more creativity. With my background as a financial software developer, owner of multiple businesses, and the interior design, industry, educator, and speaker, I coach women in the interior design industry to increase their profits, regain ownership of their bottom line, and to have fun again in their business. Welcome to Profit is a Choice.
Hey, Kelcee, welcome to the podcast again.
Kelcee 01:07
Hey, Michele, thanks for having me back.
Michele 01:08
You're welcome. We are continuing our series with questions that are coming in and I think this week or at this podcast time, we're going to be focusing kind of on the questions that have come in that are probably more strategy related. I know we're trying to group these together. I don't think we need a big introduction now that we're doing Q&A to get through some of this, so why don't you start with the first question that you've pulled out?
Kelcee 01:38
Perfect. One of the most common questions that you receive about strategy in your question inbox, is how far forward should I be planning? How much into the future? What timeframe should I cover? And who should be involved in creating this plan? Is it me as the business owner? Is it my team members, too? Is it my husband? Is it a business partner? Who all should be involved in the process?
Michele 02:04
That's a lot of questions all in one. Okay. Here's how I would start by answering that, First, I would say, if you have never built a strategy or a plan before, I tend to like to look at six months and a year, just to get the mechanics worked out how I want to plan, how I see things happening, it might even be a quarter instead of six months. I like to look at things in smaller pieces and batches, so that I can have a quicker turnaround, to see about my planning technique, if you will. After that, then I like one-year, three-year, five-year. Ten-year or twenty-years, you can plan that way if you want to if you really think that way. The way that we look at this type of visioning or longer planning is that the further out on the horizon it is the more nebulous it is the more gray the more hazy or fuzzy. So, a 20-year plan while we may have it is going to be a broad stroke, a very broad stroke. The closer it gets to us, the tinier the detail.
If you've ever looked at a landscape painting, where somebody's like painting the ocean, or that I like to use that one a lot, and you can kind of see the horizon, which is way out there with the sun behind it, or something where you can tell that that fine line where the sky and perhaps the ocean are separated? That's fuzzy because it's so far out. Yet, when you're looking closer at the picture, you can see all the tiny details of maybe a seashell, or the sand, or the grains, or whatever it is the waves right up beside you. That's because anything that we're close to, we see more clearly than things that are far off like that. If we can just hold that image for a minute, and then think about planning, anything that is really close to us, we can see more clearly anything that's further out takes longer. So, if you're new to planning altogether, I would say plan close up so that you can start to kind of work that strategic planning muscle plan a quarter and see how that worked out. Plan the next quarter and then plan a quarter after that. When that works out plan for a year. Sometimes if we jump so far out, and we think oh my gosh, I must have a one-year and a three-year plan and we've never kind of worked the muscle with planning shorter term then we can be disconnected from the activity. And when we're disconnected from that activity, dissociation is an activity, but it's not mine, we don't own it the same way and we're not as in tune with what we're trying to accomplish. Does that make sense to you if you've never done it before I really like a quarter at a time until you can understand what you're doing and then I'd like at least a year. If you're an old hat, you've been doing it forever, I like 1-3-5 years.
Now, with regard to who should be involved, I will say whoever it matters to. What I mean by that is, as the business owner, we're always to be involved in that process, but we don't know all the details of everything, especially the larger our companies grow, the bigger they get, the wider they get, we need to have input from other people. As my company grows, I ask my husband, what is our life going to look like, and then that informs me what I'm going to have my business look like for my strategy. I asked you as my operations director, what does this look like? I might talk to the people on my marketing team and what does this look like? I'm getting input from other people as I build the strategy and they sometimes have a whole lot more detail than I have about it. I'm pulling that information in. Sometimes it can be a family input, and sometimes quite often is input from like, I would say, the department heads, if you will, within a company.
Kelcee 06:07
That makes a lot of sense. So first, think big First, think what the family picture is what we want that to look like, and then start talking to the people who are going to help you implement whatever that big vision is, is that what you're saying?
Michele 06:19
Yes, and you know, sometimes I walk into a year knowing there are a few big things that are on my calendar that need to be done. Sometimes I walk into the year, and I don't have those big things for that year. Like, for example, I knew last year, in 2022, that I needed to build a website for Metrique, and I knew I needed a brand for Metrique, and I knew we were going to launch Metrique. I didn't know all the details of everything. But I knew that is really big pieces that I started then breaking down into quarters, when do things need to get done, and what needs to be done before something else. This year, I came into 2023 thinking I may or may not rework some of my Scarlet Thread website. Well, it was on the list as a consideration, but not as an absolute must-do this year. And as we've gotten halfway through the year, I've realized there are some areas I need to tweak, but I'm not necessarily ready to throw the whole thing out and start over again, that might be on my 2024 plan. The thing about a strategic plan is you want to plan it so that it's detailed enough to be a path to move you closer to where you want to get but not so tightly that you can't move and that you can't adjust or be fluid with the needs of your company at that time.
Kelcee 07:37
Perfect. I've found the people and I understand now how often my timeframe should be to build the strategic plan out. One of those pieces that people often get kind of stumped on is their competitive advantage. A lot of people will come to you, and they'll say, Michele, I do things like everybody else. I don't know what makes me different or what makes me special. I've watched you several times have these conversations with design firm owners and home interior business owners and help them see that in themselves. What would you want the listeners to know about that process of figuring out what that could be for them?
Michele 08:20
I remember years ago thinking everything I do is like what everybody else does. I don't get it. I can't sew a line any straighter, or I design what other everybody else designs or a lot of other people do. What's so interesting about our competitive advantage is that I think it's kind of where a couple of things intersect. I think it's where our why-mission-vision-values intersect with our abilities. So sometimes what I want to do, and when I'm able to do it and the way I independently see something makes me different. For example, I love financials, I love numbers, I love the power of numbers, and I love how we can take our financials and tie them to any aspect of our company. And so, my competitive advantage is going to be that I get that. I love the financials, I study the financials, and I work to continually look at different ways to implement strategies to take the numbers and make them work for a business. Right. As I'm working through that process, it's part of what I love, it's order. It is sense-making to me, it just works. Other coaches just say in this industry, for example, they might love sales, they might love organization, and there are other pieces and parts of the business that they really love. I've said this 1000 times, and I'll say it again, if somebody needs sales out the wazoo, they're struggling, and they don't have one sale to their name, I'm not a sales coach, that's not my jam, but I can help you build these things. But that's not what I love. But if you have sales, and you need to work on profitability, and you need to work on numbers, and you need to see how it flows through, then I can help you do that.
When we're thinking about our own competitive advantage, just thinking about what is it that you love so much, that it almost doesn't feel like work. And I think that's why sometimes it's hard to see our own competitive advantage because it is so natural and so normal. Remember, mission-vision-values-why, it's so driven by part of who we are, and what we want to do. Then what we need to do is look at how do we take our excellence, and then turn it into something that people want or turn it into just the messaging that they want to hear so that they can recognize it. Yeah, I would assume that everybody communicates. But did you know that there are a lot of people that don't communicate with other people? I get told all the time, you are one of the fastest communicators, you email quickly, you text quickly, you respond quickly, and you don't leave me hanging even if it's a, I can't answer this, I'll get back to you. I consider that a competitive advantage.
A lot of other coaches don't respond as quickly, and it just means they have a different competitive advantage. So sometimes it's finding something that we do that we love to do that we specialize in, that we niche down in, or that we just have a focus on, and then just sharing that with somebody else. But don't overlook the small things like you communicate kindly, you make people feel heard, those can be competitive advantages in the noisiness of the world today. I feel like when I podcast with you, I talk with my hands a whole lot more. In my solos all by myself, I'm just so much more serious. And I feel that when I talk to you that I'm over here, with my hands going everywhere. I'm making myself laugh by watching.
Kelcee 12:20
I love that. To add on to that I am excited to ask you this piece of this competitive advantage question because it's becoming more and more popular. Can my competitive advantage be the same as someone else's?
Michele 12:40
Yes, I think it can. Because here's what's so interesting, even if my competitive advantage is sales and marketing, and your competitive advantage is sales and marketing, we each are bringing our own unique personality, flair, and communication style, into that space. Just like we could have 10 designers whose competitive advantage is they do things quickly, they are kitchen and bath experts, or whatever. They still bring their own methodology, and their own process, there's still layers to that. I'm in my mid-to-late 50s, and I can tell you that I've met people in my life, that I immediately upon meeting them thought, Oh, my goodness, I find you attractive in the way that you present yourself or in the way that you speak or in your intelligence, there is something about you that is attracting me to want to know more about you, to talk to you more, to befriend you. There are women I meet sometimes that I think I could sit down and have a cup of coffee with, and I bet you we could talk for hours like I just feel this natural affinity towards them. There are other people that I meet, and I know that we all do this, so you know, I'm not strange in this, and I think you're nice, you are kind, but I wouldn't go out of my way to try to craft space for one-to-one long-term meetings. I just wouldn't do it. Every one of us feels that with other people so even if I did the exact same thing that somebody else did, even if we did it in the same way, even if we built the process together and then separated, we still have different personalities and different ways of making it our own the minute we're separated. So that when people come to us, they're going to see the difference. There's enough work for everybody there really is. I don't think it's bad or wrong to have the same competitive advantage, but I'll say this, the more that you focus on what you do really, really well, the more you will continue to differentiate from somebody.
Kelcee 15:08
I love that because I hear all the time from designers who come in and say, well, I do the same thing that she does, or I do things like everybody else. So, hearing you say that and understanding that next level of competitive advantage, I think it's very helpful.
Michele 15:30
You know, it's so interesting in my Elite coaching group, we meet once a month with a Small Group Mastermind, and even though many of them have very similar models. The more we're in there talking, they say I do the same thing you do, it may be the same thing you do, or it could be three out of five things, but there are two things that we do very differently, or, oh, wow, we do the same here, but my process is very different over here, and oh, I share that information, but you share it here and I share it later in the process. So again, the basic elements are the same, but the way that it is put together is very different and honestly, they attract different types of clients. I've got some designers, they're like, oh, my gosh, I love like the lawyers and the accountants and the engineers. And I'm going to tell you love all of you, lawyers, accountants, and engineers, but that is a grouping that a lot of designers think I don't want to work with them because a lot of them can be very exacting, and very precise and very like to a 16th of an inch or something like that. They're just very, very, very detail oriented and then there are some designers that can do the exact same thing, but that's not the personality that you attract, and that comes to them. So, we're a lot of alike and we're a lot different at the same time.
Kelcee 16:55
Yes, I love that. I love those things that we don't always think about, that can set us apart. I think that once you look a little bit deeper behind what you do, I think that's where you start finding your competitive advantage. Like you were just saying.
Michele 17:09
I'll say that sometimes it's how we even define things. It’s let me define these things for you early on. Let me explain these things to you versus not telling you. Sometimes it's just how deep we go with information and explanations. I can remember when I was running a drapery workroom, and we were all at a WCAA meeting and we were laughing that we'd all gotten the same call from this one person who called every one of us, they just must have pulled out like the WCAA list. They just went down the list to call us all to get pricing over certain things and we were all like what are they choosing us on? What are they making a selection on? And one of the women asked the other like the homeowner who was calling, how are you making your decision? She said, oh, I was just calling to see who would call me back. We were like, okay, all right, we see. I mean, again, it sounds silly, but quick communication is often a differentiator.
Kelcee 18:20
I love that. We're working on our competitive advantage, putting that in our strategic plan. The next thing people always think once they've gotten their competitive advantage written out and figured out is marketing. So obviously, marketing is going to be a piece of this strategic plan and something that often stops designers in their tracks when it comes to this part of the strategic plan is how can I forecast improvement if I don't have a clear marketing strategy created that I know is going to work?
Michele 18:54
Well, this is where we kind of have to create a marketing plan and strategy then. Here are some big ideas that I like in a strategic plan. Again, this is to help us move forward and make decisions, not necessarily going to the bank to try to get funding. But I like an overview of the company, mission-vision-values-why. If somebody were to pick up the plan, they know kind of the heartbeat of the company, then I really like where we just talked about within one year, what are the financial goals? What are the financial plans? How much money needs to come in? How much goes out, what are the products and services that we're offering? So, if my plan includes that I'm going to sell widget A for this amount of money and then I'm going to service widget B, how many widget A's and widget B's am I going to sell this year and service this year, and what is that income. Then I have to look at how do I market or advertise or network to make that happen. So, part of your strategic plan is looking backward to say what have we done in the past, what was the return on that investment? That's why keeping up with all of your marketing and spending is so important. What was the return on that investment? Is that worth what I'm spending on it? Can I do that again this year? And if so, what can I anticipate? We'll then also look at the operational side of the house. Here's the financials I need, and here's how I market to get them in, and operationally, here's how I manage the people, and the processes and the money and the whole thing so that at the end of the year, we got what we were expecting.
I don't think that it's possible to create a detailed plan without some idea of how to market. Now, like I've said that it's not the piece of the puzzle that I love the most, but I have done enough work over all of these years to know that we have to say, where are our people hanging out? How do we go to the spaces where they're hanging out? Has it shifted from year to year? Here's a prime example, Kelcee, in 2020, many of us, me included, had some marketing and advertising and networking dollars, put into a bucket so that we could go to events and conventions and forums and network opportunities and then COVID happened in 2020. We couldn't go to those things. We had money sitting in a budget if we budget, and we could talk about that another time, but if we budget, we would have those dollars sitting in that marketing category to be spent and if we're not going to be able to go to those places to meet people that we would have met to come in to buy from us, we need to look at other places. In the absence of, let's say, face-to-face marketing, and advertising, where do we go find these people digitally, electronically, online, social media, or whatever? It's really just knowing where your people are messaging them there. I've been on Pinterest for a while, it did not do a darn thing for me as a coach, it just didn't. I tried three different strategies, all the different ways, and finally thought, I don't know anybody that thinks let me go get my coaching advice on Pinterest like it doesn't even make sense, so that's not where they are. Instead, I have a lot of people that I meet with and talk to and build relationships with on LinkedIn. So, I took the money and the time and moved it from Pinterest, and moved it to LinkedIn because that's where there are the extreme professionals in all kinds of industries. They're all hanging out on their Instagram and LinkedIn. I think it's about knowing where your people are, but watching for changes as your people move, and then showing up there. But marketing can't be separated from financials, they go together.
Kelcee 22:52
I think that makes a lot of sense and I want you to keep going on the things you're talking about a second ago. You were talking about different measurements that were important from a marketing perspective. That's another question that people ask often about strategic planning is, what do I measure? How do I know what to measure? How many things should I be measuring? How can you speak to that?
Michele 23:14
Yes, for me in a strategic plan, I don't want to over-measure it too granularly because it can stop you. I prefer in a strategic plan to have high-level key performance indicators, that these are the things that I'm going to measure to see if I got there. In Financials, I might be looking at, what's the revenue coming in? What was my gross profit that will automatically tell me my cost of goods? What was my net income? That will automatically help me figure out expenses. So what are my profitability numbers? There are so many other financial indicators and metrics that we can watch. That's why we do Metrique and there are so many that we can do, but we just want a few high-level ones in the strategic plan, in my opinion. In the marketing area, I like the same thing. How many new clients do we need to be able to reach the revenue goal that we've set? Maybe we would have a marketing goal of X percent of ROI on any marketing investment. If I spent $1,000, I expect to generate $3,000 worth of revenue over a set time period, so that we can start to see if the marketing avenue is the right one, I look at that. I do think we need to have more in the marketing department of our company or whoever is doing that.
More granular metrics on what is the lifetime value of our client and what is the ROI and how many leads are we closing or what's converting into a call or what's the average sale price per job, all of those details. Now, let me say this. If part of our strategic plan is to, increase the average sale by X percent, then what we would need to do is say last year, the average sale was $100,000 and this coming year, if we want to go up X percentage, then we can say we want our average sale to be $150,000. Then we're measuring towards that as a percentage. If we have some big percentages, or big numbers or metrics that we're trying to look at, because it's actually moving the business forward, versus just keeping it the same, then I think those are the types of things we put in there. Again, we can have different metrics, every quarter that we're watching and looking at internally, that will lead us to the top number or the top metric that we can put in the strategic plan. But if in doubt, put it in there, it's for us anyway. There's no right or wrong. There is no big right or wrong. If it's something that you want to measure and you want in front of you, and you want it in the plan, so you measure it and everybody else measures it, your company, put it in there. If you would rather create a secondary document with all of your measurements and run it that way, it's your company, do it that way. The bigger thing is that we're looking and that we are analyzing and that we are making a decision about where we're taking the company, instead of letting it drag us. That's really what we're trying to do.
Kelcee 26:34
So now that we've come up with our competitive advantage, we kind of know what's in our plan. We've thought about our KPIs in different areas. How often do we look at it again? Do we look at it every month? Is it quarterly? Is it every six months?
Michele 26:48
Once every 10 years. I'm just kidding. That's what it feels like, that's what I hear sometimes, I did that eight years ago. I'm like bring it in, bring it in. I have so much more fun on the podcast when you're sitting across from me too! If I sat and laughed at myself, people would probably tune me out. I like it once a quarter. Especially if you're taking that strategic plan and you're breaking it up into quarterly pieces, then at least once a quarter, I just want to review what I said I would do last quarter, look at what I'm doing this quarter, make sure that it fits to plan. So, it's not a big in-depth thing. If you don't look at it quarterly, then I suggest at least at the half-month mark or half a year. I've got a couple of different podcasts out there about doing that mid-year review and then changing the plan. What if things are not there? It gives you a chance to look at it and strategize. I look at mine every quarter, but what's so interesting is sometimes I'll say here's where I want to be by the end of the year. Then I will say, alright, if I were to chunk this into quarters, what do I think I'd like to get done first quarter, second quarter, third quarter, and fourth quarter. And I have been known to take things that I thought that I was going to do in second quarter move them to third and take something in third and move it up a second. Because as we were going through the year, and as it got closer, and I knew more, it made sense to reorder. I think the more that we are looking out and then we're chunking it at least quarterly, it allows us to see if we're working to the plan. That's my that's the ideal for me. More than that kind of feels like it's overwhelming, but when I do quarterly planning, it's easy as I said I was going to do that or nope, I’m not going to do that, I'm going to switch that to the third switch this to second.
Kelcee 28:43
What if you're like me, and I couldn't possibly look at my strategic plan every three months without diving deep into it. I heard you just say you're looking at a high level, but ever since I created one, I look at it and I make adjustments to the future based on things that have happened. For all those business owners listening like me who want that strategic plan to be really, really accurate every time you look at it. How can you speak to that? What can you tell us about that review process?
Michele 29:17
That's okay, too. If I know something every three months that makes that plan more robust or more real, I'm going to add it and update it. What I'm saying though, is that I don't sit and rethink my entire business from scratch every quarter. I definitely think deeply about it. I care about it. I'm looking at it. I'm trying to plan chunks of time out. But let me back up here and say this too. It doesn't mean that there aren't times where we are in business, we hit the wall and we think I need to start from scratch. I've got a podcast out there about our business being building blocks and sometimes we can take it apart and put it back together again, I know you've seen us do that in Inner Circle and in Elite where I work with clients a lot and they say, I love what I do, but I don't like the way that I currently have it set up. And we go, alright, let's identify the parts, take it apart and put it back together in a different way. There is still the ability to do that. Most of us wouldn't do that every single quarter, though. We might do it and then manage to it. I think that if we could at least once a quarter, if you think that you need a deeper dive, I would say how much is that. A day or is it a half a day? Or is it two hours or an hour? Identify how much time you'd like to set apart for that and then go ahead and just put it on your calendar as deep dive into strategic plan for Q3. Now when it comes up, you have blocked off that time. And you can even go ahead and but in your task management system, I use Asana, you could have a project on your strategic plan called ‘deep dive’ every quarter with the things that we do. The more we set up a plan for success, the more likely we are to succeed. Without a plan at all, the more likely we are to fail. If we can create a success plan, what is the success plan look like for you to review your strategy? Is it once a quarter, half a day? Heads down? Go somewhere else? What does it look like? If it is once every six months where you spend a full day, then that's what it looks like. It's really about knowing you, your business needs, where you are and then making a plan for that. Does that help you? Does that answer your question?
Kelcee 31:43
That was very helpful. So here is the final part of this. I feel like we've walked through a lot of high-level pieces as the strategic plan. Something that is asked often by design firm owners is about hiring. Can you speak a little bit about how hiring can be or shouldn't be or how that might be related to a strategic plan?
Michele 32:08
Yes, that's really good. Under processes or under marketing or financials, we should always be looking at our employee plan. How many people do we have on staff? How much is payroll since that's going to come into play with expenses and with work that's able to get done. We may have an idea that in Q3 that we're going to have this department in the company or this department in the company, and we need to staff these up. It's always great to have an idea of who's going to be on the team at any given time. Especially if we're looking a year out, we most of us know. Do we have plans? That doesn’t mean things won't change, but do we have plans to hire, then if so we can start looking at what quarter do we want to hire, you can back that up a quarter and make sure that you have a job description, that you have an onboarding plan, that you have an educational plan or whatever it is that you need. Space, we were seeing that a lot I need to hire, but I don't have space. Well, unless we can make space, then we need to go find space so that we can hire. So having a hiring plan again, doesn't stand alone. It impacts financials, it impacts marketing, and it impacts operations and procedures. One of my clients one time did something that I just really loved, and we all have started implementing it. And that is constantly looking at as the owner of your firm, what does your job description look like? Year to year, because it changes every year based on how the business grows, and on the new people that you've brought into your firm. She mentioned doing that years ago, and it's just it's been an amazing tool to stop and say, what is my job description? How is it different this year from last year? And the information that's different, it either got delegated or it's not getting done anymore, or we've automated it somewhere. So, what happened to all those tasks that fell off my job description? It either fell onto somebody else's, or it's not getting done. Then looking at it and going, what do I want my next job description to be? And what's the difference between that one and the one that I currently have? I think the employee plan is a really important piece. Organizational structure, the whole thing and anything that you know that you want to look at to get you to the next place needs to be in that plan.
Kelcee 34:40
Perfect. I think we've covered the high-level questions that people ask about the strategic plan. I do want to open it up knowing that you're very open to answering others that may come up from the podcast, so can you tell us how the listeners might be able to get in touch with you.
Michele 35:01
You are free to send an email to team@ScarletThreadConsulting.com and we will answer those for you. The other thing I want to mention, Kelcee, is this podcast is in August and September is a really fun time. For me, it's one of my most favorite times. And that is where I bring all of my clients together for a two-day workshop here in the Atlanta area. We focus on their strategic plans for one, three and five years, along with their financial plans, making sure that these things are all in alignment. Last year's was interesting, in that we focused not only on Strategy, and Financial, but we had a lot of organizational conversations. Last year, the people that I coach also brought their operational support team members and their financial team members, and we broke off into groups and really talked about how they can help support the owner of the company. We're getting ready to do that again in about six weeks from the time this airs. I really want to encourage anybody who is interested in coaching, or you've thought about coaching, and you're thinking, oh, my gosh, I really want to be poised and ready for 2024, now is the time to do that. I would love to jump on a quick call with you and entertain an opportunity to see if joining us and coming and starting by just getting your feet wet, actually getting wet all the way up to probably your knees or your waist building a strategic plan. I hear a lot of people say over the years, I keep telling myself I need to do this work. I keep telling myself, I need to build the business, instead of just focusing on some of the design pieces, and I don't know why I waited so long to do it. I just want to encourage them to reach out and call. Let's have a conversation and if it's not right for you, I'll tell you, but we are six weeks away from you having an opportunity to have a plan to run your business and live with in a way that makes it so much more ease filled than disease filled, and we would love to support you. Team@scarletthreadconsulting.com no matter what is the best way to get in touch with us.
Kelcee 37:28
Thank you for all of your wonderful feedback.
Michele 37:31
You are welcome. Do you happen to know what our topic is for the next Q&A?
Kelcee 37:38
Process is next.
Michele 37:40
Process is next. I'll be ready when you come with the questions, and we'll get them answered. As always, Kelcee, thank you and I want to encourage anybody out there listening make sure that you are choosing to be profitable by being intentional because profit doesn't happen by accident. Profit is a Choice is proud to be part of the designnetwork.org where you can discover more design media reaching creative listeners. Thanks for listening and stay creative and business minded.