By Rick Braa, CHAE
Q: The business landscape is changing rapidly and I’m struggling to keep up. I have a little time to figure out how to move forward but eventually we’ll be in jeopardy of having to make some difficult choices.
A: Years pass faster than anticipated. Whether a restaurant is holiday-driven or weather-driven, there never seems to be enough time to plan and execute goals to drive a business forward. Regardless, strategic planning is perhaps the most important activity any company can execute.
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While the approach to planning may be debated, there is one tell-tale sign of a strategically driven company: the amount of cash accumulated to weather a storm. Excellent cash flow and reserves are a result of a great strategy and leadership. Cash-poor companies likely make decisions out of necessity that can degrade culture, facilities, the guest experience and talent. To get to where you need to be in the future, consider the following:
Set aside time to study business needs and direction. According to the Harvard Business Review, in a survey of 10,000 senior leaders, 97 percent said that being strategic was the leadership behavior most important to their organization’s success, and then 96 percent said they lacked the time for strategic thinking.
The hospitality industry is under sweeping change with intense labor shortages and intrusive government requirements, disruptors like third-party delivery and great technology that seems to change on a daily basis. These and other pressures are shifting traditional restaurant models.
Take the time needed to prepare for a good strategic planning session and determine several areas in which to shift the business. Simply staying the course in today’s business environment will leave a business in the Stone Age within just five years.
Clarify the vision. Your vision may be clear in your head and you may think others know what it is, but if it’s not on paper, it’s unlikely to be achieved. All visions should include what the business stands for, why it exists (purpose and values), and an articulation of what the business aspires to become.
The vision should be out of reach, yet achievable with an incredible amount of effort. A clear vision can only come from the leader of the organization. Input from others can be valuable, but only the leader can provide vision. This is not a consensus-building activity, but rather the leader’s vision of a preferred future state of the business that will drive it forward into the next generation.
Build a strong hedgehog strategy. This concept was widely popularized by Jim Collins in the book “Good to Great.” It revolves around three questions: What are you deeply passionate about? At what can you be the best in the world? And what drives your economic engine?
Answering these questions with brutal honesty will produce a series of intersecting circles. This activity is best completed with the leadership team. By going through this exercise, a team can understand the sum of its parts rather than various non-intersecting silos.
Set a long-range, three- to five-year strategy. The foundation of a clearly defining vision and a solid hedgehog will provide the ability to list out three to five strategic planks. Center these planks around employees, guests, facilities, market position and profitability.
Build a one-year plan. After completing the strategic planks, turn attention to what can be accomplished in the next 12 months. This will produce a series of plans, one for each area. For example, sales and marketing, technology, employee engagement, guest loyalty, service model, facilities, menus, financials and capex. Out of the one-year plan will come four quarterly plans to ensure delivery of the annual plan.
When considering what will drive your business forward the farthest, having a war chest of cash provides the cushion and ability to make truly strategic decisions rather than what the business can afford out of projected cash flow. Taking the time to think, then plan, will result in a strategic company able to weather any storm and thrive during turbulence.
For more information on improving profitability and driving sales, contact AMP Services at email@example.com. Rick Braa is the co-founder of AMP Services, an accounting and consulting firm specializing in helping companies grow profitability.