5 Steps to Planning A Successful Project

The key to a successful project is in the planning.  Creating a project plan is the first thing you should do when undertaking any kind of project.  Taking the time to plan a project can seem tedious, especially when you are excited about the potential outcome, but having a project plan can save time, money, and many problems.  There are five elements of a project plan:

1. Goals:  A project is successful when the needs of the stakeholders have been met.  The best way to determine who the stakeholders are and their needs is to conduct interviews.  Take the time to understand the true needs that create real benefits.  Once you have a comprehensive list of needs, assign them a priority level and create a set of  SMART goals.  Record the set of goals in the project plan.   
2. Deliverables:  Create a list of things from the goals that the project needs to deliver in order to meet those goals.  Specify how each item should be delivered.  Add them to the project plan, under the relevant goal, with an estimated delivery date.
3. Schedule:  Create a list of tasks to be carried out for each deliverable.  Identify the amount of time required to complete the task, the resource, and any contingencies to carrying out the task.  Use this information to refine the estimated delivery dates listed under the deliverables. One of the common realizations is that the project has an unrealistic timeline based on your estimates.  Consider the following actions to reestablish expectations:  1)  Renegotiation of the deadline (project delay); 2)  Employment of additional resources (increased cost or personnel); 3)  Reduction in the scope of the project (less delivered)
4. Budget:  Assign a cost for each deliverable.  Be sure to include resource wages; equipment purchases, maintenance, or rental; supplies; and contractor costs.
5. Supporting Plans:  Below is a suggested list of plans that could be a simple, one-page memo to support your project plan.

• Human Resource Plan - a list of participants and resources, with their roles and responsibilities
• Communications Plan - a document outlining who needs to be kept informed of project progress, as well as frequency and method of communication
• Risk Management Plan - identify as many risks to your project as possible.  Track the risks with a simple log, write down what you will do in the event that it occurs, and what you will do to prevent it from occurring.  Some examples of risks are:  time and cost estimates too optimistic, unexpected budget cuts, unclear roles and responsibilities, poor communication, and lack of resources.

photo courtesy of MyStrategicPlan.com

Project planning is a skill that improves with practice.  The first project will take some time to develop, but keep at it, for you will find that this exercise will help you to keep the project on track and to clearly communicate expectations.

Why Is Growth So Hard?

         Bottlenecks.  We've all encountered them:  in line at the grocery store, waiting to turn left onto a busy street,  at the end of a long day when we just can't get the beer in fast enough.  Even in today's Now-Now-Now environment, these limiters to action are pervasive.   Failing to account for them in business growth planning would be a mistake.

Courtesy of geograph.org.uk via Creative Commons

         Most operations people are familiar with bottlenecks in processes, and with identifying and unblocking them.  However, another place that bottlenecks show up is in growth planning.  As you prepare your company for the new year and you begin developing your goals, be aware that sneaky bottlenecks may limit you.  Look for them in the following places to ensure that you haven't overestimated your growth capacity:

• Suppliers - make sure that your suppliers can support your proposed growth.  If not, make sure that you can find secondary or even tertiary suppliers.
• Customers - evaluate your current customers, and understand their business.  What are your customers' plans for the next year?  What is the market doing, in general and in your specific industry?  You may know intuitively that new business is out there, but how are you going to connect with that business?
• Production - go through you production process and identify the bottlenecks and at what capacity that they become limiting.  What works at this level or sales may begin to unravel at a greater level. 
• Staff - evaluate your current staff's capacity for change, ability to prioritize, and work ethic. Sometimes bottlenecks are hidden in your current staff.  Inefficiencies or inadequacies in your current staff may not surface until the pressure is on. 

         Identifying your potential bottlenecks to growth is just the first step.  Continue the process by determining how you are going to open it up and improve the flow in that area.  Brainstorm with the rest of your company not just the goals, but the path to get there.

What experiences have you had with bottlenecks?  What did you do to overcome them (or have you)?

Reading A Cash Flow Statement

          Ah, the Statement of Cash Flows.  Most out-of-the-box accounting software has one available in the report section.  You may also receive one from your bookkeeper, or your accountant.  It can seem a little cryptic (and maybe even pointless).  In fact, the Statement of Cash Flows is one of the most useful reports a small business owner can have.  While the actual statement may not have answers, it can be used to ask some telling questions.
          There are three sections of the Cash Flows:  operations, investing, and financing.  As the names suggest, each one relates to the business activities.  The SEC has a great document outlining the accounting behind all three of these, so I am not going to go into that.  The general rule is positive numbers mean cash increased in that account, and negative numbers indicate cash decreased (or was used).
          In the Operating section of the cash flows, the main points are:  operating income, or your profitability for the period; changes in receivables; changes in inventory; and changes in payables.  An increase in receivables and inventory will be a use of cash (negative number).  An increase in payables will be a source of cash (effectively, you are borrowing from your suppliers).  While reviewing the accounts, ask yourself the following questions:  

• If the operating income is a negative number, is it attributable to an event, or a trend?
• Are receivables increasing  or decreasing as a result of sales activity, or collection activity?
• Are payables increasing as a result of more purchases, increased costs, or slower payment?
• How does the activity in payables relate to receivables?  Here, you may see an increase in receivables and an increase in payables.  Effectively, your customers are borrowing from you, and you are borrowing from your vendors.
• Is the change in inventory due to quantity or price changes?  Is the change related to the change in sales?  Is the change reflected in the change in payables?

The Investing section of the cash flows primarily relates to assets you've purchased.  The main question to ask here is:  

• Are the asset purchases contributing to profitability (operating income)?

The Financing section of the cash flows relates to money borrowed to run the business.  This money can be in the form of loans, credit cards, or even your own cash (equity).  

• Are the funds used for operations or for investing?  

If the funds are being used for operations, you may want to look further into the company's profitability.  The use of cash in this section (a negative number) should be intentional, such as a loan to purchase machinery.  Unintentional financing, such as a creeping credit card balance, are signs of larger issues.

          Reviewing your Statement of Cash Flows and asking the above questions will help you get a handle on trends in your business, and how your cash is working (or not) for you.  After a few times, you will find that this report is just a meaningful as your income statement.