John K. Shank, Edward G. Niblock, and William T. Sandalls, Jr.

Balance ^creativity and ^practicality in formal planning Study of six companies shows how different combinations of system-design features can be used to achieve workable equilibrium Foreword This article contends that to be effective every formal long-range planning system must achieve a compromise between "creativity" and "practicality"—goals for planning that are often in conflict. The authors also argue that the problem of maintaining a satisfactory balance can be directly addressed by varying tbe design features of the planning/budgeting interface. After specifying the set of design features, they go on to show how six companies have used various combinations of tbem to aebieve an appropriate de-

E

'very company engaged in long-range planning would like its efforts to attain two fundamental but often conflicting goals. On the one hand, management wants the planning function to reflect pragmatic judgments based on what is possible. On the other hand, it wants planning to reflect forward-looking, assertive, and creative thinking. The primary way of enhancing "realism" is to give the planning function a clear action orientation. Generally, this is done by relating longrange planning closely with short-term budgetary control. And this is where the difficulty lies. While close linkage between planning and hudgeting puts the stress on the desired action, it also promotes a focus that can he disastrous to mind-stretching "reach."

gree of creativity that is consistent with practicality. Mr. Shank is Assistant Professor of Business Administration at the Harvard Business School. This is his fourth article for HBR. Mr. Niblock, who bad just begun his career as a financial planner at Xerox after reeeiving his MBA at the Harvard Business School last spring, died suddenly in September of an aneurysm at age ^2. Mr. Sandalls is associated with the international accounting firm of Artbur Andersen and Company.

We are making the assumption, of course, that for the formal planning system to operate effectively it must achieve a balanced compromise between realism and reach. In this article, we shall argue that these dual objectives need not be mutually exclusive. In fact, our purpose is to illustrate that the long-range planning system can be structured to achieve both an action orientation and a focus on mind stretching. Our discussion will proceed in two steps. In the first stage, it is important for long-range planners to begin thinking about the realismreach trade-off as a problem they can do something about. That "something" involves varying those aspects of the long-range planning system which relate to its interface witb the short-range budgeting process. In this regard, we shall suni-

87

Harvard Business Review: January-February 1973

marize the general features of the planning system which relate to plan-budget linkage, illustrating both the "tight" and "loose" form of each "linkage device." Then, in the second step, we shall illustrate some of the most interesting devices actually being used. These reflect the experiences of six companies which we selected because they [a), are successful in terms of compound earnings growth and [b) have long-range planning systems with both action-oriented and mindstretching characteristics. In short, we believe that man^ agement can control the focus a planning system will exhibit with respect to the realism versus reach problem. It may not always be possible to achieve a totally satisfactory trade-off, but we shall describe the mechanisms being used by a sample of successful companies to achieve what for each of them is a satisfactory compromise.

Plan-budget design On close examination, it quickly becomes apparent that the different aspects of plans and budgets can be linked in three distinct ways: 1. Content linkage relates to the correspondence between the data presented in tbe plan document and that presented in the budget. 2. Organizational linkage focuses on the relationship between the units responsible for planning and budgeting. 3. Timing linkage concerns the sequencing of the annual planning and budgeting cycles. Within each of these categories, there are several specific features of the planning system that can be manipulated to influence the extent of planbudget linkage. Let us take a closer look at each of these linkage devices.

Financial features One important feature of content linkage is the amount of detail in the financial statements included in the plan document. The tightest linkage would be to include statements with the same level of detail as in the monthly reporting package which compares budgeted with actual results. The loosest linkage would be not to include financial statements at all.

88

Another design feature related to the financial content is the level of rounding in the plan document. Although it may not seem particularly significant at first blush, there is evidence that rounding to a much higher level in the plan than in the budget [e.g., millions of dollars in the plan versus thousands in the budget) can foster a kind of mental distinction between plan and budget numbers which reduces the tendency to view the plan as solely a long-range budget. This can in turn facilitate a much more creative planning effort by making it clear that the managers do not have to commit themselves (in a budgetary sense) to delivering the planned financial results. Still another important content feature is the conformity hetween plan and budget numbers for those years which are common to both documents. If the numbers differ, planning may face a credibility gap. Many companies, however, feel that allowing such differences is critical to maintaining the aggressive forward thrust of the planning effort. For example, one conglomerate includes in the first year of its five-year plan the earnings from, acquisitions that are projected to he closed during the next twelve months but which are not yet finalized. The company does not include these earnings in the budgeted results for the next year which line managers are asked to commit themselves to deliver. Several other companies show differences between planned and budgeted profit for the next year because the two documents are prepared at different times. The one prepared later in the year would reflect the latest thinking and this might differ from projections made earlier in the year. Situations like these may or may not be desirable, but they certainly reflect loose content linkage. If numerical differences are permitted, one way of moving back toward tightness is to require that some kind of formal reconciliation of them be included in the plan. Many companies which permit differences require such reconciliation. Related to plan-budget conformity for years common to both documents is the issue of the uniformity of the numbers for any given year as they appear in succeeding annual plan documents. If the planned figures for any one future period change significantly each time a plan is

+

Formal planning

put together, the perceived realism of the planning effort can suffer. Our evidence suggests, however, that rarely do companies require the numbers for a given year to be "cast in concrete" the very first time that year appears in a plan document. This degree of linkage is probably unrealistically tight. As we shall illustrate later, a few companies do require formal explanations in the plan for any changes in the projections related to a given future year. This clearly reflects a tighter linkage form of this planning-system variable than would otherwise be reflected by complete freedom to change future years' projections at each iteration of the planning cycle. At least a few companies feel that some tightness at this point is desirable. A final important design feature is the structure of the content of the plan. In most companies, the budget is structured in terms of the organizational units which will be responsible for carrying it out. Such an approach is a fundamental part of what is often referred to as "responsihility accounting." Given this situation, it is possible to restructure the plan to focus on programs rather than on the organizational units. The total expenditures for a given year are the same in either case, but there is nevertheless a distinctly looser impact on the way in which the plan document is interpreted.

Organizational relationships The major design feature in this category is the relationship between the organizational units responsible for the long-range planning and those responsible for the budgetary-control processes. The loosest form is to lodge planning and budgeting in separate organizational channels reporting to different top-level executives. The tightest form is to bave the two functions combined in one department. Even in those situations in which planning and budgeting are separated in terms of formal organizational relationships, there is wide latitude in the extent to which tbe controller is formally involved in the long-range planning effort. Naturally, tbe loosest linkage situation is to have scant involvement on the part of the controller. However, because of his expertise in analyzing and communicating financially oriented data, it is probably neither possible nor desirable to exclude him completely from the formal planning effort.

Between this extreme of separate planning and budgeting channels and the complete integration of these functions lies a very broad middle ground which can be probed to achieve an appropriate level of involvement for any given company. Among the relevant questions to ask in this regard are the following: O Does the controller provide staff support for the preparation of the financial data in the plan document? O Does the controller review the plan document before it is finalized? O Does the controller have any direct or indirect responsibility for approving the plan? O Does the controller have any direct or indirect responsibility for monitoring planned financial results against actual results? The more questions of this kind that can be answered yes, the tighter the plan-budget linkage, even though the functions may officially be separate.

Timing considerations The most important design feature here is concerned with the sequencing of the annual planning and budgeting cycles. If the two cycles are carried out sequentially, which one is done first? How much time elapses between the completion of the first cycle and the beginning of the one which follows it? If the two cycles are undertaken concurrently, what is the relationship between initiation dates, completion dates, and approval dates? The loosest timing linkage is to have the planning cycle done before the budgeting cycle and to have several months elapse between the two. One major food products manufacturer, for example, completes the annual planning cycle in February and does not begin the budgeting phase until November. Situations like this are least inhibiting to the achievement of "reach" in the planning effort. The tightest form of the design feature related to sequencing would be to complete the budgeting cycle first and to have the planning cycle follow it with minimal elapsed time in between. Since the budgeting cycle almost always concludes in the last quarter of the fiscal year, it is rare to find a company in which the planning cycle comes last. There are, however, many companies that undertake the two cycles concurrently. In general, the more the budget process pre-

Harvard Busmess Review: January-February 1973

cedes the plan preparation—in terms of initiation, completion, and approval dates—the tighter the linkage, since the budgeting focus will tend to dominate the joint planning-budgeting effort. One final timing-related design feature is the time horizon for the long-range planning effort. Usually, the shorter this span, the closer the relationship between the budget and the planning process and thus the tighter the plan-budget linkage. Conversely, tbe longer the time frame, the easier it hecomes to clearly distinguish the process from budgeting and thus the looser the plan-budget linkage. Nowhere in the whole range of system-design features is the tradeoff between realism and reach more clearly defined than in the choice of a planning horizon. The longer the time frame, the wider the range of factors which can be varied and thus the broader the range of strategies which can be considered in moving the company toward its long-range objectives. At the same time, a longer time span increases the uncertainty regarding environmental assumptions, corporate strengths, and the financial parameters which shape the strategy formulation and evaluation process. At some point, uncertainty overcomes the gain in flexibility. What constitutes an appropriate time horizon certainly varies from industry to industry. It is probably easier, for example, for most public utilities to do fifteen-year planning than it is for defense-aerospace companies to do five-year planning. Within tbe reasonable range for any given industry, however, the longer the time considerations, the looser the plan-budget linkage. Furthermore, in our opinion, a planning horizon of three or four years refiects a heavy emphasis on realism at the expense of reach, regardless of the industry.

Linkage examples In the preceding section of this article, we concentrated on a general framework for considering the plan-budget problem. Now, we shall turn our attention to some of the interesting devices actually being used by the six manufacturing companies that we selected as a small but representative sample of those which have (a) participated in formal planning studies, (b) earned

90

the reputation for having both action-oriented and creative planning systems, and [c) been highly successful in terms of compound EPS growth. Since we believe it unlikely that their records of sustained performance could have been achieved without the help of good planning, it should be revealing to examine in some detail how these companies cope with the linkage problem. The six companies we observed were Cincinnati Milacron, General Mills, Quaker Oats, Raytheon, Toro, and Warnaco. In them, we encountered such a large number of different linkage devices that we concluded the variety of specific links is limited only by the imagination of the personnel. We shall use the same categories as in the preceding section in reviewing the most interesting linkage practices in these sample companies. But, first, a note of caution. It is not our intent to propose the right answer to the linkage problem, but only to identify some of the more important factors to be considered in determining a right answer for a given company at a specific point in time.

Content-related approaches One of the most innovative attempts to use structure as a mechanism to overcome the creativity-practicality problem is the distinct separation between group and division planning at Warnaco. Eacb division manager prepares a three-year plan, while each group vice president plans five years out. Warnaco's objective here is to encourage the group vice presidents to think in more general and longer range terms. They then carry this framework with them to meetings with their division managers. This encourages them to do more creative planning. It is important to note that the formats of these two plans are much different, with the divisional plans being done in much greater detail than the group plans. This serves to focus the group manager's attention on the strategy of the group itself rather than on the specific details of the divisions' operating programs. A mechanism we mentioned earlier to overcome the problem of loose linkage is the comparison of a plan with its predecessor from a year earlier. Consider, for example, this situation

Formal planning

taken from the planning records of a large paper manufacturer. Here are this company's profit projections for 1971 as shown i n Five-year plan done in 1966 Five-year plan done in 1967 Five-year plan done in 1969 1971 budget prepared in 1970

$(io $S0 S56 $16

million million million million

At the very least, a plan-to-plan comparison would have called the company's attention to the increasing lack of realism the further the projections extended into tbe future. The threat of having to formally justify this ever-receding bonanza might have served as a sobering infiuence to tbe planners. It is also possible to use plan-to-plan comparisons to overcome the problems of overly conservative forecasting. Thus, if the paper company's profit projections had demonstrated an ascending pattern, the happy surprise of realizing more profits than expected might also have been accompanied hy the undesirable development of capacity shortages and missed market opportunities. In such a case, a plan-to-plan comparison could serve as an impetus for more expansive projections. Of the six companies we visited, only General Mills requires the reporting and justification of significant changes from the preceding year's plan. At General Mills, management feels that tbis checking device is sufficiently useful in preventing blue-sky fantasizing to justify its risk in terms of discouraging open-ended mind stretching. A third-content-related mechanism worth noting is the relationship between tbe plan and hudget formats. As we noted earlier, if the two documents differ in form and style, it is more difficult to directly transpose the plan to the budget. Both Toro and Raytheon approach a program format for planning and a functional format for budgeting, but they also retain the program and project breakout in the budget as well as the functional allocation. In the other companies we sampled, this split is less distinct since the divisions are largely organized by program area or product line. We view this loosening device as a very significant one that bas potential applicability in many companies. Finally, all six of the sample companies vary the level of detail between the plan and the budget. It is interesting to note, however, that the absolute level of detail in the plan also varies significantly among the six companies. Cincinnati Milacron shows only very highly aggregated

summary data, whereas Raytheon's plans approach the same level of detail as its budgets. Tbe other four companies fall in between these extreme approaches.

Organization coordination At the corporate level, it is important to understand who is coordinating the planning and who is coordinating the budgeting. The basic question here is whether the company wants to split the two processes. The splitting of this coordination function has the effect of loosening the linkage between planning and budgeting. Both Toro and Cincinnati Milacron provide excellent examples of this. At Toro, planning is coordinated by the Corporate Planner and budgeting by the Controller. No formal attempt is made to ensure that these two functions proceed in a similar fashion. Cincinnati Milacron handles this in much the same way that Toro does. At General Mills, the end result is tbe same but the mechanisms are much more complex, with coordination being handled by groups instead of individuals. Different handling at the division level can also affect the linking process. The basic split here is between strategy formulation and the quantified explication of that strategy. While in almost all instances both are coordinated by the division manager, the degree of delegation of the quantification phase can vary significantly. It is noteworthy tbat there is very little divergence in the way quantification of plan results is handled by the six sample companies. All of them largely delegate this phase to the divisional controller. This has a loosening effect by focusing the division manager's attention on policy rather than on detailed profit and loss information. Although it is not a "device" in the usual sense, a company's informal communication process can function in a way that tightens the linkage between planning and budgeting. A great deal of informal information transfer across the corporate/divisional interface increases topmanagement's cognizance of what is in the plan and how it relates to the budget. The presence of informal channels of communication may make top management appear to have an omniscient awareness of these issues, even if this is actually not the case. At Cincinnati Milacron, where the planning and budgeting systems are very closely linked.

91

Harvard Business Review: (anuary-February 1973

one division manager stated that he really felt strongly committed to delivering the performance projected in hisfive-yearplan. At Quaker Oats and Toro, where there are loose linkage systems, two division managers reported similar feelings of commitment. It is difficult for us to assess what precise influence the informal communication processes in the foregoing companies had in forging the personal commitments of these three division managers to delivering the planned results. However, the counter-intuitive coincidence of loose systems and strong commitments at least offers circumstantial evidence that this influence does exist and should not be overlooked.

Time horizons A separation in time between the end of the planning cycle and the beginning of the budgeting cycle, as we noted earlier, has the effect of loosening the linkage between the two processes. When the time to worry about next year's performance commitment is still several months away, it is easier to be expansive about the future. In addition, since forecast conditions are always changing, the more time that elapses subsequent to submission of the plan, the easier it is to justify a revision in the budget. Of the six sample companies, only Raytheon pursues its planning and budgeting cycles concurrently. Cincinnati Milacron has a six-month separation between the end of planning and the beginning of budgeting. General Mills, Quaker Oats, Toro, and Warnaco all have at least a twoto three-month separation. In general, as the number of years in the budget is extended, or the number of years in the plan contracted, the similarity between the plan and the budget increases. Different time horizons for the two processes tend to emphasize the different purposes of each. Five of the six companies we sampled have either a four- or fiveyear planning range and a one- or two-year budget span. The exception is Warnaco, which we noted previously.

Appropriate equilibrium Individual linkage devices impact on the planning system by facilitating an overall planning

92

effort which is either more creative or action oriented. As is evident from the preceding discussion, some devices serve to promote a stronger action orientation in planning while others encourage more creativity. Since a single planning system will utilize several devices which may have opposing effects on the plan-budget balance, an "algebraic" sum of the devices is needed to determine where the planning system is located on the linkage continuum. This plays a pivotal role in achieving an appropriate equilibrium between divergent requirements for both creative and action-oriented planning. Whether or not a particular planning balance is appropriate for a given company hinges on the corporate setting. Thus, if the underlying essence of planning is to improve a company's ability to cope with changes, it follows that, as the changes are realized, the need for specific forms of planning will also change. In other words, a dynamic corporate setting may call for heavy emphasis on creativity at one point in time and heavy emphasis on practicality at another. The implication is that, as a company's needs change, devices must be added or subtracted in order to adjust the balance between these planning objectives. The concept of a dynamic corporate setting seems particularly relevant to the four of the six sample companies which are now diversifying extensively beyond the boundaries of their traditional industries. Consider: O The Toro Company is changing from a manufacturer of lawn mowers and snow blowers to a broad-based participant in the environmental bcautification market. O General Mills's Fashion Division, which was established only three years ago, already contributes significantly to the company's sales and earnings and competes in markets dramatically different from those served by Cheerios and other ready-to-eat cereals. O Quaker Oats, in its most recent fiscal year, derived 25% of its sales from nongrocery product sources, including 12% from Fisher-Price Toys. The company has since further diversified in nongrocery areas through acquisition of Louis Marx £i Co. Toys and the Needlecraft Corporation of America. O Cincinnati Milacron, the largest manufacturer of machine tools in the world, is seeking

Formal planning

points of entry into the minicomputer and semiconductor markets. A dynamic corporate setting, however, is not necessarily dependent on the diversification activity of a company. For example: O Cincinnati Milacron, with 80% of its sales in the machine tool industry, contends with market cycles which brought machine tool sales volume in 1970 down 5o7f to 6o'/f; helow the peak reached two years earlier. O The Raytheon Equipment Division, a defense contractor, faces rapid turnover in electronics technology—a contract bidding process that sometimes makes a ticket in the Irish Sweepstakes look like a sure bet—and concomitant uncertainties and headaches in dealing with mercurial government customers. O Warnaco, competing with 30,000 other companies in the apparel industry, finds that although total sales volume is relatively stable, individual markets are highly volatile as fashions come and go in quick succession. Whether the result of extensive diversification programs or corporate response to the challenges of traditional markets, all six companies are in a state of perpetual change. Given this state of fiux, it is significant to note that the planning systems in five of the companies have recently been changed, are in the process of heing changed, or will be changed in the near future (the exception is Raytheon Equipment). To illustrate: O At Toro, David M. Lilly, Chairman and Chief Executive Officer, recently projected the development of looser linkage between the: planning and budgeting systems. O At General Mills, the 1971 planning instructions announced a procedure to highlight where the 1971 plan deviated from the 1970 plan; tbe same instructions reemphasized a year-old procedure which required "new" businesses to be differentiated from "present" businesses. O At Quaker Oats, the corporate planner foresees the emergence of tighter linkage as the company becomes acclimated to its new divisionalized structure. O At Cincinnati Milacron, a new planning system is in its first year of operation; tbis system is very loosely linked to budgeting and shifts the burden of planning from the division managers to the group managers. O At Warnaco, as we noted earlier, a systems modification has been implemented; this re-

quires group vice presidents to plan five years into tbe future and their subordinate division managers three years ahead. In seeking a comprehensive explanation of the planning system changes just described, we find particularly pertinent the observation that management control systems must be consistent with top management's objectives in order to be truly effective. If the same can be said of formal planning systems, then it follows that a change in an effective planning system is usually triggered by a change in top management's objectives. The implication bcre is that wbetber or not a given change improves a planning system may be beside the point. To paraphrase Marshall McLuhan, the planning system and the changes made in it may be "tbe medium that is the nicssage"—i.e., the message from top management.

Criterion of consistency In this section of the article, we shall examine more closely two of tbe planning system changes previously mentioned to see what inferences about top management's objectives we can draw from them. Since 1971, Cincinnati Milacron has been pulling out of a severe recession that afflicted the entire machine tool industry. Operating management's ordeal during the past two years has been something akin to a day-to-day struggle. As tbe company has begim to emerge from this traumatic experience, top management has installed a new planning system to allow maximum opportunity for broad-level mind stretching. Furthermore, the burden of planning has been shifted upward to a level of management where there exists the opportunity and authority to implement a diversification program. The message of Cincinnati Milacron's two planning-system changes appears to be rather straightforward: top management wants aggressive diversification planning. In his memorandum covering General Mill's 1971 planning instructions, James P. MacFarland. Chairman and Chief Executive Officer, indicated the need for a more aggressive capital investment program in the years ahead to achieve the company's sales and earnings objectives. He also referred to progress in the control of capital use and to a change in the planning procedures which would allow top management to focus easily on the changes made subsequent to the previous planning cycle. His

93

Harvard Business Review: January-February 1973

general instructions described this procedural change in more detail and reiterated a yearold proeedure which separated the planning for new businesses from that for current businesses. In our judgment, it is a fair guess that it will be a tougher task to revise estimates upward in order to justify additional capital for a current business than to submit new estimates in order to justify seed capital for a new business. The message of the announcement of both a new proeedure and reemphasis on an old one appears to be that the encouragement of heavier investments is intended for new and not for current businesses. (This message, incidentally, is clearly reflected in the chairman's and president's letter to General Mills's stockholders and employees in tbe r97i Annual Report.) The procedure at General Mills of separating current and new businesses is particularly noteworthy in that it creates an opportunity to differentiate the planning perspectives, and to apply different standards of expectation to each type of busincss. In this manner, top management can encourage a division manager to be creative in planning for his new businesses and action oriented in planning for his current businesses. future-oriented businesses will be best suited for loosely linked planning/budgeting systems. As the potential of a business begins to be realized, tighter linkage will be desirable in order to transform promises into results. At that point, a halance between creative planning and action-oriented planning would be especially appropriate. Later, as the business exhausts its growth potential and evolves into a "cash generator," even tighter linkage will be desirable to accommodate the corporation's capital needs for the next generation of new businesses. In short, recognition of divergent corporate objectives for both the mature and the future-oriented business is manifested in different degrees of linkage in their respective planning/budgeting systems. As evident at Quaker Oats, for example, a divisionalized company can find itself at several points—up and down—on the linkage continuum at the same time. In evaluating whether or not any point on the continuum is "right"

94

or "wrong," the sole criterion must be its consistency with corporate objectives.

Conclusion To be effective, every formal long-range planning system must achieve a workable compromise between creativity and praetieality—twin goals that are often in conflict. This problem of maintaining a satisfactory balance between "reaeh" and "realism" can be directly addressed by varying those design features of planning which relate to its interface with budgeting. However, in order to put in perspective the importance of loosening the plan/budget linkage, it is important to consider the role of informal communications and the personalities of management. At the corporate division interface, companies that have a great deal of informal communication transfer are likely to be constantly aware of what was written in the plan and how that relates to the budget. This has tbe effect of very tightly linking the plan and the budget, even in structurally loose systems, unless management makes a conscious effort to demonstrate that this is not wanted. Even if this intent is demonstrated at the corporate level, there still may he tight linkage built in at the division level because of the division manager's personality. Generally speaking, the divisional planning and budgeting are either both done by the division manager himself or at least coordinated by him. As he coordinates the preparation of the budget, he often feels—either consciously or subconsciously—an obligation to justify the value of the plan by reflecting mueh of it in the budget which represents his short-term game plan for the divisi on. Briefly, loosening devices have much broader applications than to just those companies which have structurally tight linkage systems. In fact, some of them may be needed in any action-oriented planning system. We believe that managers should consider these devices as variables they ean and should manipulate in the interest of more effective planning. Viewed in this context, the linkage continuum can be considered as a powerful in-

Formal planning

terpreter of the top-management objectives implicit in the planning system. Although at first this may seem to be counterintuitive, we believe that it is not the planning system which generates corporate objectives but rather the eorporate objectives which dictate the appropriate planning system. We are neither proposing that there is a "correct" form for any of these design features, nor that it is always

Systematic planning for the very small businessman

George A. Steiner, Tup Management Planning, New York, The Macmillan Company, 1969, pp. 112-113.

Copyright © 11)69 by The Trustees of Columhia University in the City of New York.

possible to structure a planning system so that "realistic creativity" is ensured. We do believe, however, that "realistic reach" in planning is not just an illusory phenomenon which exists independent of management's actions. Rather, it is well within management's control to influence the focus of the efforts by changing the structure of the planning system. That, we feel, is all any manager can ask.

The average very small businessman does too little systematic forward planning. The small businessman has some characteristics which serve as harriers to his long-range planning. He is pressed for time. He has most of the problems of an executive in a medium-sized company but without the help that can be hired in the larger companies. So, he is constantly fighting "brush fires" and, as anyone who has followed business planning knows, these pressures drive out long-range planning. He is a doer; he is a man of action. There is probably more of an inverse correlation than a positive correlation between successful doers and competent planners. Personally, the small businessman is a "loner." He usually starts alone and has a habit of doing things himself. Typically, too, the smali businessman has kept secret his ideas, plans, and intentions. It is not easy to overcome this history of secrecy and share future plans with others. He also may be reluctant to discuss plans which may not materialize because he does not want to be thought foolish or inept. These reasons have some substance but they are not an excuse for avoiding systematic planning. But what can a small businessman do? One approach is to begin to ask some major questions that will stimulate the habit of looking ahead to achieve desired profit and other objectives. Such questions as the following are provocative: What busincss am I in? What is my place in the industry? What customers am I serving? Where is my market? What is my company image to my major customers? What business do I want to be in five years from now? What are my specific goals for profit improvement? Need I have plans for product improvement? If so, what? What is my greatest strength? Am I using it well? What is my greatest prohlem? How am I to solve it? What share of the market do I want? Next month? Next year? Are my personnel policies acceptable to employees? How can I finance growth?

95