Get a Grip (On Your Business)
By James Cannon Johnston
Here’s a simple, life-altering way to be a better CEO. Post a 4×6 index card where you can often see it. On the card, write today’s date and what you think your business’s profit or loss for the current year will be. One month from now, write down a new date and a new value for the year’s profit or loss. If the number has changed, write a few words about why. If you’re unhappy with the change, take required action and reflect the positive impact of that action in your next entry. Do this each month until the year ends. This will change your life.
It turns out that a CEO gets a good grip on the business by knowing at all times what the business is on track to deliver and why. When the CEO’s team also has this grasp, life is good. As CEO, your job boils down to five things:
- Determine at the outset what the year’s performance can and will be.
- Commit to this within your team. Commit to your board and investors. If you don’t have a board, create one—so there’s someone to hear your commitment.
- Develop the sub-plans and interim milestones within your team to do what it will take to perform.
- Monitor continuously and make required changes as you go. This is where the index card comes in.
- Adapt and intervene and pivot as needed. Always keep hold of the thread that connects your current reality to your original intended plan
It’s all about conversations. The real value of getting a grip on the forecast is that you can initiate valuable conversations when there is still time to act.
I’ve seen that most CEOs, most of the time, struggle to answer the question: “What is your forecast for the year?” In January, you can answer because you’ve just done a plan. In December, you can answer it because (I hope) you know 10 or 11 months of actual results. Hello…December is too late. March through October is when you want to be monitoring and adapting. In a dynamic business, monitor every month.
How do you monitor effectively? That’s the real question, isn’t it? Here’s what the masters of this do:
- They know what performance has been so far this year and why.
- They work with the team to forecast what they now expect performance to be the rest of this year, and why.
- They add (1) and (2) together to get a total for the year. That’s an important step. It’s often overlooked.
- They compare this result to the original plan. If there is a shortfall, they act to recover. If the shortfall is unavoidable, they adjust to the new reality in time to avoid disaster.
Give it a try. If you like, send me the monthly entry you make on your index card. I’m at JimJ@JohnstonCompany.com. I’d like to know how this works for you.