Why you need a business plan!!!

Q:In last week’s column, you gave advice about starting a business, and you kept preaching about writing a business plan. I own a business, I don’t have a plan, and I’m doing just fine. What’s the big deal?


A: How do you know your business is doing “fine” if you do not have a business plan? This is like a runner stating that he is “fast” when asked his running pace. Quality and success cannot be measured without having benchmarks and goals. A business plan provides both, allowing you to compare your outcomes to your goals. Without a plan, it is all too easy to keep moving the bar for yourself.

In the words of Alan Lakein, “Failing to plan is planning to fail.” Business owners may neglect planning for a variety of reasons. They may dislike making decisions, or they may worry about how the plan will reflect their success. An owner may feel anxious about documenting (and making “official”) job descriptions, lines of authority, budgets, and marketing plans. An entrepreneur may dread such control measures, feeling that a business plan is just like having a boss! If you build a house without a plan, however, you may find yourself living in what looks like a child’s play fort. Every stage is based on a sudden inspiration, and your new home becomes “curiosity run wild.” A quality architect begins with his or her final product in mind. To build a secure business, you must plan. According to the Small Business Center at Bradley University, 70 to 80 percent of new businesses fail in their first year, and of those that continue past a year, only half survive to five years. Similarly, statistics from Dun & Bradstreet reflect that only 37 percent of businesses with fewer than 20 employees will survive four years, and only 9 percent will survive ten years. In light of such daunting statistics, it seems foolish to take unnecessary risks – like failing to plan.

You may still be thinking, “I can’t make a plan, because things change too quickly.” Although constant change is inevitable in any business, a good plan can be your key to dealing with change. As a sailor, I view a business plan as similar to a centerboard on a small sailboat. Thanks to its centerboard, the boat can continue moving forward, as the winds shift direction; without its centerboard, the boat would flail around and eventually crash. A good plan keeps you consistently moving forward – sometimes slowly, sometimes quickly, but without crashing!

While writing your business plan, you may feel frustrated. After all, you will be writing your goals, without taking immediate action to reach them. You must understand where you are and where you are going, before going anywhere. Writing a plan can be exhausting, too. I guarantee, however, your listless feelings will disappear, as your business transforms from “doing just fine” to “doing very well.”

I hope my response to your question is sufficient and gives you an understanding of why I believe a business plan is critical. Below are some questions to consider while developing your plan:

• Why do I want to start my own business?
• Have I found the right business for me?
• Who are my customers?
• What do these customers need that the market is not currently providing?
• How will I reach them?
• What will it take to reach them?
• How much will it cost to provide for their unmet needs?
• How much are they willing to pay to meet these need?
• Can I make money at this business?

Leadership At the Top

Q: I lead a small company, and I manage it very tightly. In meetings, I find I am the only one offering ideas, while others do not contribute. Although my ideas have really worked to grow the company, I feel I am doing it alone. What should I do?

A: If you think you are talking too much, so does everybody else.

Growing up with movies like “Patton” and watching world leaders on the news every night has led to the illusion that leadership means repeatedly giving your opinions. The old school of “command and control” management has been around for decades, passed from one generation to the next. Some leaders may lack self-esteem, and the notion of controlling others may seem an attractive alternative to being controlled.

Remember: If you are not asking questions, you are making assumptions.

Mike, a former CEO and Chairman of a Fortune 100 company, would lead a meeting by first asking a question. He would then listen to the answers from each person present. Mike did not believe it was his job to give his opinion, but to listen to and observe the problem solving of others. He would monitor the room for how people were contributing and, if he noticed someone was not speaking much, he would be overly encouraging and supportive toward that person. This was true even when the employee’s comments were not on track with Mike’s agenda. Mike found that, by providing heavy doses of support over a course of five or six meetings, he could usually draw the employee out to be a fully functioning part of the team. Mike was clear that, if the employee continued to be withdrawn, it was likely he or she would have to move on.

When he encountered an employee who was talking too much in meetings, Mike applied a different strategy. Careful to avoid belittling the person in front of others, Mike would make a sharp comment or a non-verbal gesture that emphasized his desire to hear from everybody.

As a coach, I have been intrigued by Mike’s technique of asking a single question. I have witnessed other leaders use similar techniques, but found them to be somewhat limiting. A team often needs leadership, rather than just consensus. Mike demonstrated that his technique still provided leadership. If certain employee comments began guiding the discussion away from the company’s visions, goals, objectives, and values, Mike would simply ask, “How does this help us meet our goal?” or, “Is this in alignment with our vision?” He had a motto, which he taught to everyone, including me: “E3: Earnings, Earnings, Earnings.”

Mike tells the story of an analyst who asked him about his goals for the company. Mike’s answer was simply, “Earnings.” When asked if he had other goals, Mike said, “Oh, yes. Our second goal is earnings, and our third goal is earnings.” There was no need to ask about additional goals!

As a true leader, Mike ensured understanding. He had a clear message and a clear focus. Printed on company shirts, hats, and posters, E3 became the symbol for driving the corporation forward. When an employee’s comments were not aligned with E3, Mike set the employee back on course and made it clear to others that this was not acceptable.

Mike understands the value of asking questions and doing what all great leaders do – LISTENING. If you want to see change in your company, follow Mike’s example: Ask the question, then be silent and listen. The books on leadership speak much about courage. It takes courage to trust your team. It takes courage to believe your employees will deliver ideas and execute them successfully. Facing the fear of giving up control is what I call “Leadership at the top.” You may be surprised how much your people know and want to contribute.

Establish Accountability

Q: I have four people reporting to me, and I feel like none of them are accountable. What can I do to make them more accountable?


A: Establishing accountability is a common challenge for entrepreneurs and managers. I suggest using a process I learned from a good friend, Henry Chidgy, who once ran several railroad and diamond companies. Henry emphasized the use of monthly performance reviews -- yes, monthly! These reviews, however, need not and should not be complex; they work best when kept extremely simple. Maximum accountability is the main goal.

Here’s how the process works. First, each employee is responsible to bring you all information for his or her review; you should not provide anything. The day before meeting, the employee brings you a list of five or six key objectives, detailing his or her progress on each. During the review on the following day, you simply assess the data and discuss how performance compares with objectives. Depending on the employee, this can be a short 30 minutes process, or as long as 2 hours. (Tip: When an employee comes into your office, he or he should always bring a pen and paper and be required to take detailed minutes of the meeting. Immediately afterward, the employee needs to make a photocopy to go in your file. The reason for this is two-fold: first, the notes allow you to verify the individual’s understanding of the review; second, the notes increase consistency from one review to the next.)

There are three key questions to ask during the meeting:
1) How well did you meet the objectives we mutually agreed on?
2) Choose one of the following:
a) If you are ahead, how did you get ahead?
b) If you are behind, how did you get behind?
c) If you are on target, is there anything I need to know?
i) If yes, discuss further
ii) If no, extol the virtues of coming in one target.
3) If you are not meeting your objectives, what is the root cause?
The third question should trigger a discussion, in which you remain objective. If you can accept the employee’s explanation of the “root cause,” you allow it to be the actual root cause. If you cannot accept this explanation, you become the employee’s coach, helping him or her better understand the situation. Refrain from providing solutions; the employee needs to do this. If you tell rather than ask, you will not have accountable employees. Be patient – having employees solve their own problems is the key to building the accountability you want!


Once the employee develops a solution, I suggest coaching him or her through the following steps:
1) Establish an action plan.
2) Establish a deadline for implementing the action plan.
3) Schedule another meeting immediately after the deadline.
With difficult employees, you may need to increase the pressure, particularly if they consistently fail to meet goals. Pressure can be increased, simply by increasing the frequency of reviews. The process can occur every two weeks, every week, or even daily, if needed. It is unlikely that daily review will continue long term, as an employee at this stage is usually on the way out!
The key is to remain “on board” with the employee, instead of playing “the heavy.” Let the progress reports do the hard work. An added benefit of the reports is that no goal will be overlooked for long, without action being taken. Even if you feel like a micromanager, remember you merely coaching, not giving answers.
Some may ask, “If I manage like this, how will I ever get my own work done?” If this describes you, you need to re-examine your role as a leader. This is what leaders do. You must make time to enforce accountability, so that the team can achieve a common vision. If your employees are not accountable, you will be doing other people’s work for the rest of your career! Remember: If you practice this management style consistently, most of your employees will require very little time. Who knows. They may even become your apostles of accountability, replicating your style throughout the organization!

The Annoyance Factor

Question: Have you written on the "annoyance factor” yet? In my eighteen years running business affairs at three different studios, we always talked badly about the "leader" who could only ask questions and never come to a decision. I agree with your premise about Ask, Don't Tell, but not taken to the extreme. Do you? Do you really? No, I mean do you really? See what I mean?

Answer: I like that, “annoyance factor.” I have been accused of it more than once from my former direct report. She became annoyed when she believed I was leading her somewhere that I wanted her to go. As an “Ask, Don’t Tell” leader, if you receive a lemon face (all forehead lines bunching and lips puckering) or a particularly loud sigh, it could be because you are making employees fish for a specific answer you have in mind. If you do know exactly what you want, don’t play games. This is when you should tell, not ask.

One key to avoiding the “annoyance factor” is to ask yourself, “Am I the decision maker here?” when employees confront you with a problem. If you are the appropriate decision-maker, you need to pitch your questions so that your direct reports will provide you the information you need. If not, you need to ask non-leading questions that will assist your direct reports with making their own decisions. If you are unsure about who will make the ultimate decision, you will often ask the wrong questions and annoy (or confuse) your employees.

If you are the decision-maker, your first questions likely will revolve around establishing the problem. It is a mistake to try to solve problems before fully understanding their complexity. Then, after brainstorming potential solutions, rank the best options, determine who will be responsible for implementing the plan, assign a timeline and communication plan, and build in a feedback loop to ensure that all aspects were done correctly.

Sometimes employees will encourage you to make a decision when, in fact, they are simply shirking their responsibility. No matter how much they slump their shoulders and give hangdog looks, you must not make their decisions for them. If you do, be prepared to make more and more decisions for them in the future. Pretty soon, you might as well assume their job title.

How can you help your employees make decisions on their own? What sort of questions should you ask? How do you provide wisdom without telling your employees how to accomplish the objective? First, be clear. Here’s what you might say: “I really would like to help you with this issue, but I won’t provide you with an answer because this is your decision to make and I trust you to make the call.” Then ask your employee questions that you would ask yourself if you were in his/her position. You might start by asking the employee to define the problem in more specific detail. Have your employee jot down his/her own answers. Explain that you will not be doing anything with this information. The decision is still the employee’s to make.

If you are not the decision-maker, remember that you are the teacher, not the learner. If you position yourself as the learner, you will subtly suggest to the employee that you intend to come to an independent decision about the problem at hand (even if you never reveal your decision to the employee). By positioning yourself as the teacher, you will impart a valuable message to your direct reports—trust. You trust them to fully establish the problem and make their own problem-solving decisions. And you have helped define boundaries—your role vs. their role. Your employees will leave your office inspired to make good decisions.

Sometimes leaders can use questions to shirk their own responsibilities. A venture capitalist shared with me a story recently about how the senior partners at [his or her?] company were providing assignments to junior associates without any explanation or resources. When the junior associates went to the seniors for help, they would engage in “annoyance factor” questioning. The junior associates would ask for direction and the senior partner would say, “How do you think it should be done?” Inwardly the junior associates were saying, “If I knew that, I wouldn’t have come to ask you!”

Sometimes leaders behave irresponsibly because they are intent on re-enacting what happened to them as junior associates. If I had to suffer, why should it be any different for my employees? Instead, a true leader would ask, “Why did this system work so poorly when I was a junior associate?” and “How can we improve the performance and morale of our junior employees?” Leaders seek to uproot dysfunctional systems, not perpetuate them.

To avoid the “annoyance factor,” determine who is the appropriate decision-maker for the problem at hand. If the decision is your employees’ to make, let them make it. Ask non-leading questions. Be sure your employees have a clear objective and access to enough information and resources to complete their work. And convey your trust in them to make good decisions.

Independence Day

We have more individual choices than ever. We can choose from sixteen movies at a megaplex, eight different kinds of orange juice (low acid, some pulp, not from concentrate, etc.), and countless shoe brands and styles. Is it any surprise that we want to be free to make choices in our jobs as well?

If you grew up with only four TV channels to choose from, you might believe the command-style leadership is still viable. You might believe in shared values and needs, the way we did in the ‘60’s. Unfortunately, centralized leadership doesn’t work with this new generation. They want to work their way, not your way. They know what motivates them, how they best achieve results and obtain information, and they want to receive full credit for their efforts. If you try to steamroll their independence, you will wind up with flattened cartoon characters, not productive employees.

As a leader today, you must decentralize the power and authority. With leadership opportunities, your employees will find personal meaning in the work they do. And they will do it well, provided you meet their needs. Your challenge—accommodating leaders on all levels of the organization—is daunting, maybe even terrifying. How do you align each employee’s needs with the needs of the organization? With so many leaders, so much independence, will chaos be far behind?

Not necessarily. Not if you build in some safeguards. It’s important to understand that total independence is often desired, but not always healthy. Individualism can lead to a sense of helplessness, and this helplessness can lead to depression. Despite fiercely independent childhood heroes like Superman, Batman, and Wonder Woman, we want and need to be part of something greater than ourselves. We want the support of a community.

We want to feel like the work we do has meaning not only to ourselves, but to others. Chances are, this meaning has already been established—in the form of your organization’s founding mission, vision, goals, and values. These pillars were originally set by the founder and then enhanced through time by the organization’s leadership teams. As a leader, you can bring this meaning to your employees by frequently asking how their needs and goals match the organization’s. In doing so, you give them the respect they want and need, as well as communicate a sense of belonging to a larger community.

Do you believe in your organization’s mission, vision, goals, and values? If so, you will be able to impart this sense of togetherness to your charges. If not, you will be herding cats.

Authentic leadership requires allowing everyone to lead at times, but to instill one cohesive purpose, so that these leaders will work together and move in one overarching direction. For each and every project, ask yourself, “How does this contribute to our organization’s mission, vision, goals, and values?” Ask the same of your direct reports. And have them ask the same of their direct reports.

Ego vs. Altruism

Why is it important to lead with questions? Why this strategy over others?

Organizations are made up of people. Like you, every employee has his/her own goals, aspirations, concerns, experiences, and dreams. And each of us has an ego. The ego allows us to believe that we are capable of performing many tasks successfully. In all likelihood, your ego is what propelled you to a leadership position. Your great effort and desire to succeed led to major accomplishments and accolades.

Here comes the paradox. Egos can vault you into a leadership position, but as a leader, you must set your ego aside. Your ego can prevent you from being an effective and truly great leader.

Before you became a leader, you likely operated as an individual contributor. You used your creativity and resourcefulness to meet objectives—a reduction of resources, an increase in quality, or an increase in revenue. If you asked questions, they were about how you could accomplish a specific task. In general, however, your ego discouraged you from asking questions and disliked having to follow orders. Egos want to accomplish and achieve. And, egos crave recognition from others.

Every time you accomplished a task and met the objective, your career moved forward and your standing in the organization or community grew. With each accomplishment, your ego grew, too. You asked fewer questions and provided more answers. After all, with your success, others came to you as an oracle of information—perhaps even your boss or your boss’s boss. You were in control.

As a leader, you must relinquish control. You must shrink your ego and concentrate on altruism. Your career advancement is no longer task-oriented. Leadership is about allowing others the chance to achieve and flourish. You advance as a leader only when you place your employees’ egos above your own. The heads of many organizations are not able to do this. Their companies may still succeed based upon their drive for individual success, but they are not true leaders. For one thing, their employees will not be inspired to reach their full potential because they know they will not receive full credit for their efforts.

General Jack Chain is a true leader. When he was in the Pentagon, serving as a staff officer, his ten-year-old daughter asked him, “What do you do?” He thought for a minute and said, “I answer questions.” Later, when he was made a commander, he reminded his daughter of their earlier conversation. She asked him how his new role would be different. His response: “Now I ask the questions.”

As a leader, why should you lead with questions? Because questions confer power and control to your employees. It allows their egos a chance to shine. And you, they, and the organization will all be better served.

When is my curiosity a detriment to the organization?

When you log onto the Internet, do you stay focused on your search exclusively, or do you occasionally follow strings of curiosity? We often go where our curiosity takes us, which is human nature and usually fun. Problems arise, however, when our curiosity takes someone else for a ride.

If you are conversing with a subordinate about their work, be sure to frame your questions. Explain why you are asking the question (you want to gather information to make a decision yourself or you want to learn about how this person is making a particular decision, for example), so that your subordinates do not make presumptions about what they should or should not be doing. If you fail to frame your questions, even if the setting is informal, your subordinates might assume that you want them to set a new course using your questions as a guide. They might, for instance, take a simple clarification question (“Why are you using the hand-carved ornaments?”) as an indication that they should have made a different decision (factory-made ornaments).

It is okay to be curious. In fact, it is probably a trait that helped transform you into a leader. But be sure to let your subordinates know when you are just being curious, so they can better assess how to proceed with their work.

John Urban of Pioneer Hi-Bread International wanders around the company at least one day each month. He might walk into someone’s cube, look at his or her nameplate, and ask, “So, Peter, any new surprises in accounting lately?” Whether there happened to be any new surprises or not, John always shared with the employee the reason for his question before leaving. He found if he did not communicate the “why,” the employee was likely to wonder about the reason for the CEO’s visit. Was there an accounting surprise that I should have found? I best go look closer at what I have done just to make sure.

The old adage “a small turn from the captain of the ship will turn major wheels down below” holds true. Know clearly what you want to accomplish with your questions and frame your questions so your subordinates know the “why.” If you are not clear, you might wind up with unintended consequences—like factory-made ornaments or a shift in accounting practices.

Increase Team Member Accountability

Dear Coach,
I own and run a company, but my leadership skills are sometimes lacking. My Senior Team refers to me as “Mr. Softy,” because I fail to discipline those who breach company policies. I am having particular difficulty with my VP of Sales. While he does bring in new accounts, he consistently enters them incorrectly and causes all sorts of problems for production staff. My team keeps telling me to “let him have it,” but I am not sure what to say. How do I make him accountable without simply firing or threatening to fire him?

Congratulations! You are already demonstrating great leadership wisdom by seeking solutions aside from threatening job loss. The accountability you want would never develop from firing or threatening to fire, anyway. Exceptional leaders build accountability and empower their employees by asking them questions. My philosophy of leadership is “ask, don’t tell.” Although you have identified the VP of Sales as causing the current problems, make sure you have all the facts. This could be a great opportunity for you to build accountability – not just in this employee, but in all your employees.

I suggest holding a company-wide meeting, focused on the big picture of how sales orders are processed. Use the situation with the VP of Sales as an example, and ask, “Is this order representative of how this company functions?” Either everyone will agree, or an interesting discussion will ensue between the disagreeing parties. Sometimes, your role as a leader is to stay out of the middle and simply facilitate. The managers of your various departments likely understand the facts better than you do, and it is perfectly ok to admit this. Enter the meeting with an open mind. Even if your employees begin by arguing and finger-pointing, they will eventually work through to the facts. You may need to pepper the conversation with questions, but try not to give answers.

Once the group has pinpointed the actual problem and the individual(s) involved, begin discussing solutions. Ask simply, “How would you like to solve this?” Even if you have solutions in mind, great leadership requires you to trust others to develop their own answers. Given this is the first time you have undergone this process, I suggest you stay in the meeting. Continue to only ask questions, and if asked your opinion, refrain from giving it. Remind your managers that you trust them to run their departments and make money for your company, so surely you trust them to solve issues, such as this one. Initially, this entire process may be extremely time-consuming and frustrating for everyone involved. Be confident that you are moving in the right direction! Your employees will soon become more energized as they feel empowered, and the time will prove well worthwhile. By the end of this process, you too will find your power and realize you built accountability by merely asking questions.

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