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Date: 2005.04.29
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BUSINESS
PLANS to
game plans
A Practical
System for
Turning Strategies
into Action
rev ised edit ion




JAN B. KING




JOHN WILEY & SONS, INC.
BUSINESS
PLANS to
game plans
A Practical
System for
Turning Strategies
into Action
rev ised edit ion




JAN B. KING




JOHN WILEY & SONS, INC.
To my wonderful son Kraig Rand King, my joy and inspiration.




Copyright © 2004 by Jan B. King. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means, electronic, mechanical, photocopying,
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978-750-8400, fax 978-750-4470, or on the web at www.copyright.com. Requests to the
Publisher for permission should be addressed to the Permissions Department,
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fax 201-748-6008, e-mail: permcoordinator@wiley.com.
Limit of Liability/Disclaimer of Warranty: While the publisher and author have used
their best efforts in preparing this book, they make no representations or warranties
with respect to the accuracy or completeness of the contents of this book and
specifically disclaim any implied warranties of merchantability or fitness for a
particular purpose. No warranty may be created or extended by sales representatives
or written sales materials. The advice and strategies contained herein may not be
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ISBN 0-471-46616-6
Printed in the United States of America.
10 9 8 7 6 5 4 3 2 1
PREFACE



A ccording to the U.S. Department of Commerce, only one in five busi-
nesses remains open five years after its inception. The common de-
nominator in these failures is entrepreneurs who underestimate the
amount of time and money it will take to make the business succeed. On
the surface, this seems to suggest that businesses fail from a lack of re-
sources. In fact, the actual cause is the failure to plan the right resources
to make the business succeed, grow, and thrive. In this book, I provide
you with the strategies and tools you need to learn how to do things
right and how to do the right things.

During the nine years I was CEO of Merritt Publishing, we faced a wider
variety of challenges than I could have imagined, and I draw upon my
experiences throughout the book. I needed wisdom and luck, but also ac-
curate data and definitive analyses to make good decisions for the com-
pany. Because I couldn™t find the diagnostic tools I needed to chart the
best course for my company, I created them as I went along. I was able to
double my company™s revenues and improve profitability by an even
greater factor during my tenure.

The tools in this book will help you lead your company from your busi-
ness plan to your game plan. The worksheets and exercises provide you
with the kind of critical data you need to run your business successfully.
They™ll help you find the answers you need to:

• Shift the corporate culture so employees are more accountable for
their job performance.

• Better measure those areas that drive your business.

• Create an infrastructure that supports growth.

• Know what you need to grow your company: more capital, more
people, or new products.

iii
iv Preface


• Determine if sales are as profitable as they could be.

• Develop and launch new products while minimizing your risk.

I wrote this book to help other owners and managers learn what I learned
but in a much shorter time. Each chapter starts with a discussion of rele-
vant concepts and issues, including case studies. The case studies make
the point that all of these disciplines, whether marketing or finance, are
interrelated. In other words, in times of great opportunity and growth as
well as in times of business downturns and consolidation, solutions to
problems come from all segments of your business working together.
Therefore, I argue that all employees should see the results of all areas of
your business, not just those that directly relate to them. This discussion
is followed by a series of progressive exercises and worksheets, with di-
rections on how to use them entitled “Making It Happen,” and questions
to be asked about your data once you collect it, entitled “Reality Check,”
to help you discover your strengths and weaknesses.

These worksheets are intended to be used; please copy them freely. Dis-
tribute them to as many employees as you think useful. You may want to
visit our web site at janbking.com to find electronic copies of the work-
sheets and enter your own data on your computer. Whatever medium
you use, the object of these worksheets remains the same: to help you de-
velop your business plan and your game plan and finally to help you
take control of your business”and to make it an enduring success.

It takes more than data to run a successful business, and this book will
also help you develop simple ways to determine whether your business is
flourishing or failing”while there is still time to make mid-course cor-
rections. Another crucial ingredient for success that I™ll stress through-
out is developing the ability to inspire key staff to commit to the
business™s success. In part, this comes from communicating your vision
at every opportunity to your employees, suppliers, and your network of
business associates. You also will do well to listen to those employees
who work directly with customers. They™re in the best position to convey
what your customers want from the business.

Involving your employees fully in the business can have profound re-
sults. I™ll come back to this throughout the book. It™s hard for me to imag-
ine this now, but before I became CEO, I felt no direct connection to the
financial well-being of the company I worked for. My bonus aside, it
didn™t occur to me to ask about the financial statements, and anyway, my
v
Preface



job description said nothing about “making” money. Nor would I have
been interested enough to ask what our financial statements meant had
I seen them.

One of the things I learned when I took over the reins was that every em-
ployee must understand the financial implications of each decision.
Gradually, as I involved my employees more and more in the company™s
finances, I found that in effect management needed to become more flex-
ible and self-directed as well.

If you choose the path of including your employees in the management of
the company, you will be doing something for which little precedent ex-
ists. You will find little information in the management literature to sup-
port you or guide you in the difficulties you will encounter. Despite a
host of experts who talk about empowerment, few practical models exist.

Empowerment should mean imparting the wisdom and sharing the tools
with which to do a job successfully. In doing so, you may be giving em-
ployees more responsibility than they want. Before you decide whether to
involve your employees more fully, you™ll have to ask questions such as:

• By giving more decision-making responsibility to employees are
you avoiding your responsibility for managing the company”
and isn™t that your job, not theirs?

• Are you passing the buck to your employees for decision
making? This is something like the fundamental problem with
democracy”are less capable, informed, and trained people mak-
ing decisions?

• Is decision making too decentralized? Do you end up with “deci-
sions by committee?”

• Are you making peoples™ lives more complicated and more diffi-
cult? Are you creating chaos instead of clarity?

The answers aren™t simple but struggling with these issues and allowing
employees to struggle with their own problems was the only course of ac-
tion I was satisfied with. In my case, involving my employees with the
governance of the company enabled us to create an environment with
minimal rules, much open communication and sharing of information,
and high-quality thinking. We celebrated our successes as a group and
jointly took responsibility for our defeats. I am proud to have enabled
vi Preface


this organization to reach its potential, and throughout the book, I™ll in-
troduce ways to involve your employees in every decision.

Running a business is one of the most challenging, potentially rewarding
jobs in the world. Devote yourself to doing it well and use this book as a
resource to chart your course.

Finally, I want to acknowledge some of the many people whose help and
support were invaluable in the writing of this book. My gratitude to the
editors at John Wiley & Sons for their advice and counsel. Thanks to all
the business owners, managers, and consultants who agreed to be inter-
viewed for the case studies in this book. Thanks to TEC (The Executive
Committee) an organization of CEOs whose members, facilitators, and
resource speakers have consistently challenged my thinking about busi-
ness and made me focus on my own business. Thanks to the clients and
staff of the Small Business Development Centers. You are all an inspira-
tion, showing what can be done with scarce resources but a determina-
tion to succeed. And personal thanks to Jim Walsh, Walt Sutton, Harriet
Glicklich, and Andy Lipkis for being models of how to live rich, full, and
profoundly meaningful lives.

JAN B. KING
CONTENTS

PART I
CREATE YOUR VISION

1 MOVING FROM VISION TO ACTION 3
Inventing Your Company 4
Living the Vision 9
An Ongoing Process 9
Tools for Moving from Vision to Action 10
Creating Your Vision 10
Crafting a Mission Statement 13
Analyzing Your Strengths, Weaknesses,
Opportunities, and Threats 17
Defining Corporate Goals 21
Action Plans: Turning Vision into Action 23
Visually Representing Your Plan 25


PART II
SET HIGH STANDARDS

2 CREATING A BUDGET EVERYONE CAN USE
AND UNDERSTAND 31
The Budget Sets Priorities 32
Know When to Stop 33
Plan for Debt 34
Follow the Money 35
Control Expenses 36
Plan for Cash 37
Budget for the Big Items 39
Plan for Profits 39
Set Financial Controls 39
Revenue Forecasts 41
Profits Determine Survival 42


vii
viii Contents


Tools for Creating a Budget Everyone Can Use 43
Revenue Budget 43
Average Selling Price per Product 44
Unit Sales by Product 47
Dollar Sales Projections by Product 50
Dollar Sales Projections by Month 53
Expense Budgeting 55
The Budget Notebook 56
Payroll Projections 62
Income Statement Projections 65
Balance Sheet Projections 68
Break-Even Analysis 71

3 UNDERSTANDING THE NUMBERS 75
Flying Blind 76
Traditional Financial Statements 77
Cash Flow Is Critical 78
Following What Matters 82
Sharing Financial Information with Employees 83
Tools for Understanding the Numbers 84
Year-at-a-Glance Income Statement 86
Year-at-a-Glance Balance Sheet 90
Year-at-a-Glance Financial Analysis 93
Budget Variance Report 97
Same Month Last Year Variance Report 101
Analysis of Cash Position 104
Key Financial Indicators 107
Financial Report to Employees 110

PART III
BUILD LONG-TERM GROWTH

4 MASTERING THE ART OF THE SALE 115
Sales and Profitability 115
Customer Focus 116
Who Are Your Customers? 117
Quality Sales 119
The Right Person for the Job 119
Customer Service Professionals 120
Sales Management 121
Communicating Sales Data to Employees 122
Tools for Mastering the Art of the Sale 123
Dollar Sales Month-to-Month 125
ix
Contents



Product Sales by Customer 128
Top-Selling Products 131
Sales by Salesperson 133
Customer Service Key Indicators 135
Customer Service Survey 138
Sales Report to Employees 141

5 ACHIEVING QUALITY AND QUANTITY 145
Setting the Right Standards 145
Adding New Value 151
What Your Inventory Tells You 152
Supplier Concerns 154
Tools for Achieving Quality and Quantity 154
Unit Output by Product 156
Units Shipped 158
Average Days to Ship 160
Returns Analysis 162
Backlog of Orders 165
Inventory Control Report 167
Business Partner (Supplier) Survey 169

6 GROWING PROFITABLY WITH MARKETING
AND PRODUCT DEVELOPMENT 173
Research Your Market 176
Customer Marketing Data 176
Marketing Activities 178
Product Development 180
Sources of Innovation 181
Assessing Costs and Risks 182
Minimizing Risk 183
Marketing Goals 184
Tools for Marketing and Product Development 185
Assessment of Competition 187
Product Sales by Marketing Method 190
Product Development Checklist 193


PART IV
LEAD WITH COURAGE

7 DRIVING EMPLOYEES TO PEAK PERFORMANCE 199
Set the Standards for Your Employees 200
Invest in People 200
x Contents



Effective Communication 203
Compensate Fairly and Well 206
Make Time to Manage 207
Human Resource Administration 209
Avoiding Lawsuits 210
Tools for Managing and Motivating Employees 211
Performance Reviews 213
Team Feedback 219
Management Skills Feedback 222
Employee Ranking System 225
Human Resource Key Indicators 228


8 LEADING YOUR BUSINESS FOR
MAXIMUM RESULTS 231
Personal Characteristics of CEOs 232
Facing the Toughest Questions 235
Look to the Long Term”the Very Long Term 235
Find the Important Details and Focus on Them 236
Leading during Times of Growth 237
Managing Slumps 238
You Can™t Do It Alone 239
Getting Outside Help 240
Hiring Quality Consulting Help 241
Boards of Directors and Advisors 251
Starting Over: The Annual Game-Planning Process 253
Tools for Leading Your Business 253
Employee Opinion Survey 255

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