The Balanced Business Framework® ~ Two-Year Plan
Updated: Sep 16
Business needs to be nimble in today’s fast fashion, fast news, fast culture. The classic 5-year Strategic Plan, now 10 years past its prime (HBR, 2014) is today more of an anchor for growth than engine.
At SLC, we use the Balanced Business Framework®. A relevant approach to guiding businesses through modern business cycles, with their modern economic and labor realities. Short, sweet, and to the point. Most of all, its been highly effective for our clients because using a 2-year time-frame forces a hyper-attention and priority on a series of achievable, short term goals. Shorter time-frames support realistic goal setting and frequent wins, while pushing consistency to complete the tasks needed to reach the destination.
Effective planning needs guidance from effective strategies to be both successful and sustainable. We achieve this by grounding the foundation of the framework through collaboration between three strategies, always working together for support, always asking ourselves if one strategy is being unreasonably prioritized over the others.
The 3C’s
Customers: The business development strategy
Capacity: The people strategy
Cashflow: The financial strategy
By connecting the three strategies together with balance in mind, we've created an interconnected set of goals with realistic expectations. We will have the foundation to assign tasks to the right people and develop workable timelines that let us measure success along the way.
Now that we understand this approach works by limiting the instances of magical thinking that manifest unachievable goals, let's talk about how we move through the process.
The Framework
To make a plan, we first need a destination.
To identify the target to aim for, we start with the questions, “What is the ideal state of the business in the next two years? What would success look like for the Mothership, the Ownership, the Employees?"
Now we need to find the path to travel by. Understand the difference between what we are today and what we want to be tomorrow. “What are the gaps between our current state and the goal (or target?) What’s missing? What’s perfect already? What’s Extra?
As with every journey, it's a methodical series of steps. What are the needed tasks to close the gap? Who needs to complete them? Who is going to be accountable? What's reasonable to expect within the time-frame we have?
Also with every journey, we need to know how much food to take (our financial reserves,) and we need to establish the right deadlines to make sure we don’t run out along the way. From our annual goals, we can reverse-engineer our quarterly, monthly, or even weekly. When we realistically set our goals, we can best-estimate our needed working capital.
The goals are the foundation for driving the “3C’s™,” the first of which is always Customers. When we understand our Customer strategy, we can understand the Capacity the Mothership will need to deliver our products/services with the quality and consistency our Customers will expect. When we understand the Capacity we need to meet our customers' needs, we can create the right Cashflow (financial) strategy to support that Capacity. Together the 3C's lay the proper groundwork to ask the right questions about:
the type of customers that best drive our goals and the pace that we can add them
the inventory, people, and processes that we need to properly deliver what we sell them
the time-frames we can promise to deliver while still maintaining quality and consistency
the amount of money we'll need to generate, borrow, or spend to make this all happen
Customer Strategy
Customer strategy for the following two years begins by addressing:
Product: What products or services should we continue or begin to offer that our customers want to solve their challenges? What are other considerations or modifications needed to reach our goals? What do we offer that is least relevant or or least financially supportive to the goals where resources can be better utilized?
Message: Does our messaging about our products or services still resonate with the number or type of customers we want, at the volume we n
eed, to reach the goals?
Geography: Does our geography allow us to capture the number of customers needed to support the strategies to reach the goals within the next 2 years?
The Capacity Strategy
Capacity strategy for the following two years begins by addressing:
Systems: Can we consistently provide the products we are promising to deliver? Are our systems robust enough to be consistent to preserve the quality in their delivery?
People: Do we have enough of, or even the right, people to serve the number of customers we want at the level and quality of services to be offered?
Time: Can we consistently provide our products or services within the time-frames expected by our customers? Is it reasonable to expect that the required level of work can be completed by our team within the time they have?
The Cashflow Strategy
Cashflow strategy for the following two years begins by addressing:
Price: What is the amount of money customers will pay for our products or services, and within the time-frames we need to continue to support making or providing them (Days Sales Outstanding, or DSO)?
Gross Profit: Can the prices we charge be profitable enough to support the needs of the Mothership, as well as the Employees?
Net Income: Is the money left over after running (and growing) the Mothership enough to support the needs of the Ownership?
What Drives an Effective Framework Process
The emotion generated by a song is not governed by the ability to read notes from a sheet of music. It comes from the understanding of how a note should be heard in relation to the all the notes around it. Should the note be louder? Softer? Maybe a little behind the beat?
In other words, the quality of a song can only be as good as the quality of the musicians bringing it to life.
Business planning is no different. The quality of the strategies can only be as good as the quality of the people driving the process. The quality of the questions being asked. The quality of the information be supplied by the team. The quality of collaboration. The quality of the diplomacy needed to bring everyone involved to consensus at the beginning, during and, as important, after.
Perhaps the most important consideration for the success of this framework, before you begin is, "who will it bring it to life?"
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