Three Year Strategic Planning for CEOs A Roadmap to Success 🚀

Hello everyone, it's Bill Canady. I thought I'd walk you through a typical example of a CEO, a CEO 3-year objective plan, right? So, this is the plan that as the leader, you're going to put together to give yourself a roadmap. Now, it's purposefully at this point, a little high level, but you want to write this out. Now, the thing I've always learned is as soon as I take over a role, as soon as I get in there and get going, I'll sit down and write everything I can think of. And this turns out to be exactly what I work on for the next 3 years. I mean, it's almost amazing, right? You know the stuff in your head, you know exactly where you're going. You'll find as you go, plans change and all that, but the destination really doesn't, right? It, uh, it's based on whatever you want. Do you want a better quality of life? Do you want to sell the business? Whatever it is, you must start with the end in mind and then work that way. If you are going to want to sell this business, this business has to be set up with good books, strong strategic plan, An outstanding team that can work there without you, and on and on it goes. So, start out with this. This gives you a way to think through this, but recognize you'll want to modify this to fit your needs. So, let's just start right here with it. So, the strategic intent here is for you, and again, this would be your language for your company. The example we've used here, and this is a pretty typical example, let's be honest, right? We want to have a high-performing organization that's simplified, scalable, and can drive constant growth. You know, we buy a lot of companies and a lot of times we'll come in and something the owner or the founder did really made it special. Maybe they were excellent at selling a certain technology or maybe they invented something, but whatever it was, right? So whether you're Steve Jobs or the baker on the corner, everybody has some value proposition. You want to make sure this thing is scalable. If it's all you, You can't sell yourself and people won't buy it. But if you have a business that can run without you, you can get this thing sold. So keep that in mind as you're doing it, right? You want good bookkeeping. That means you got to get out of Excel. You got to at least get to QBO. You know, from there, you're going to want some type of enterprise financial management program. The sooner you make investments in these, the better off you are. Now, having said that, don't get ahead of yourself. You can burn a lot of cash putting in a system too big for your company. So make sure it's appropriate, make sure you can manage it. It's a lot better if you're making money and have okay systems than to have great systems and be going broke. So keep that in mind, right? Some kind of balance you have to work through it. The framework around this is you're going to use the 80/20 principle, which is nothing more than focusing on the critical few versus the trivial many to drive profitable growth across it. So our operating system is called PGOS, or the Profitable Growth Operating System. And it's really things around acquisitions, talent, and HR, right? Really making sure that you have the right people. Segmentation, which is 80/20, focusing on a critical few. Lean and things like that, right? Growth. So, it's all the basic tools. We have a way to get you through this. You'll learn this as you go through the course. But for you, it's around clarity. Define the goal. What does good look like? Now, that's not about just selling it. That's what you want to do. That's your goal. But someone's not going to buy your business just because you want to sell it. You've got to have something they're wanting to stick. Their hard-earned money into. So, make sure you define the goal of what good looks like, build that plan to get it there, make sure you maintain discipline. This is hard, right? This is through good times, bad times. You're going up, you're going down, you're doing all these things. Make sure that you stay disciplined for it. You don't have to be perfect every day, but you got to figure out how to get there. And then finally, commitment to excellence, right? You absolutely have to take and execute to win. I see a lot of people with fantastic plans. They got all these great things. They got great theory, but they don't actually do it. You're going to be one of those who actually do it. You're going to have real results that you can point to, that you can deliver, and we'll talk about that. So, let's get into it. So, what's your 3-year vision? There's a lot of people talk 3-year, 5-year. Honestly, it doesn't really matter. It's around what you're comfortable in. Most people who I know buy the business, particularly in private equity, we are always thinking in 3 years or the proverbial 1,000 days. That's how we think about it. The average private equity exit today takes over 6 years. That's right. You're going to have some that come in and you buy and it's an instant hit and you're in and out in a year. You're going to have some that you're hanging on 10, 12 years. The average is 6 years, right? Obviously, sooner is better. Get a return on your capital, your investors, if you have any, your family get their money back sooner. But just recognize that's what average is. 3 years looking at your business is a very realistic goal to run your plan on. Every year you're going to update it regardless. So, if you think it's going to take you 5 years or 6 years, you say, look, this is my goal. This is what it's going to be. You put in your plan to get there, but recognize, heck, it's hard enough to do 1 year and be on top of it with how fast the world moves. 6 years or 7 years, a little bit mystifying. So, what do you do, 3 or 5? Not really important. What is important is you have a plan that you think you can execute on, that you can follow, and you can be prepared to change as the situation changes, right? So, understand your earnings. We always talk in EBITDA. That's how companies are sold. People talk about operating income, net income. It doesn't really matter, right? It'll get converted. But EBITDA, earnings before interest, taxes, depreciation, amortization. That's what people look at. That's like an operating income. It's not exactly the same, but it's close enough. It's what exactly you're doing to drive the business. You know, DNA is non-cash, non-earnings impact. That's an accounting trick. So, uh, taxes got to be paid, but you can take and do things that, uh, depending what the tax code is, it's earnings before, right? That's what we're looking for. All the things you got to do. Interest doesn't really matter. It matters to you, but the person who buys is going to have their own interest, uh, profile. Revenue growth. You can grow EBITDA straight up and no revenue, it's going to hurt you. You can grow revenue straight up and no EBITDA, it's going to hurt you. You've got to have both. The classic one is they want 10 on the top and 20 on the bottom. So in other words, you're putting 10 points in each and every year on revenue growth, top line. They want that to flow to a 2x. Now, is it easy to do? Of course not. But if you can, boy, you got yourself a rocket ship there. Complexity reduction is all about focusing on what really matters. A lot of us struggle with that, right? We think we've got to have all these things, but if you look at the data, you don't really have to have all those things, right? Most of it's just what we believe. What's really important, what do your customers believe, right? What do your folks believe? Return on invested capital, that's the money they're going to put in there. ROIC is the money you put in, that's your investment capital. So, if you buy a business for $100, $100 million, it doesn't really matter. How much of that is equity? How much is debt? It's not unusual to have 50/50. So, you'd have 50% or $50 million equity, 50% debt, doesn't really matter. You're looking on the capital you put in, not the debt. That's why people leverage these things up. You're looking to get at least 400 basis points or 4% if it's on 10 points, right? So, 400, it takes 1 basis point, 100 of them equals 1%. That's the way to think about that. I'm sure you already know it. Employee engagement, that's important. If you got to be there and engage everything, it's going to be a hard business to run, right? That means you never get any time off. You don't want to be working 70, 80 hours a week. Sometimes you will, particularly at the beginning, but at some point you got to have a life. That means you got to have employees who are good, who are engaged. There's all sorts of ways to do that. Be a good leader is a good one. And then exit readiness, right? Always be exiting, ABE. Do the A program. You want to make sure that your business is set up so anyone could come in, look at the books, understand it, run your books clean, make sure they understand what the debt is going on. Make sure you understand what the revenue is. What is what we call an add back? So you do something this year, That is a one-time thing. You can add that back if you're smaller. A lot of places call it seller discretionary earnings. All these things, whatever it is for you, you got to make sure this stuff can be spoken for, it's clean, and the person who's going to take and do this can see their way forward. The less you're ready for that, the lower it's going to be when you get ready to sell it, or if you want somebody to come run it. So exit readiness, always be exiting. Okay, so what's your street, uh, strategic priorities? Uh, here it's build a simplified scalable business model. You want it so that Every time you, to get another dollar revenue, you don't have to invest in another dollar of cost. You don't need another salesperson or another ERP. You want a solid foundation that you could run it at 100, 200, 500, 1,000, whatever it is. The more you can scale it, in other words, use your current resources to do this, the more valuable that business is. The more then it's just about, I've got a model that works. You pour fuel on that, rocket fuel with advertising or sales or whatever it is. Watch it grow. Depends on your business how easy that is, right? So you're going to complete the full 80/20 segmentation and portfolio simplification. That's all about get rid of the things that don't work, double down on those that do. You're going to focus all your resources around the top 20 of customer products, channels, things like that, right? These are really important to do. Look, it's easy to say, it's hard to be 100%. Just keep getting better every day with this, right? And then your resource activation blueprint, or the RAB, as we like to call it. That's around the zero, that's shifting resources from where they're not needed to where they are needed. You probably don't have, if you're like all the rest of us, enough money to do things that don't matter as well as the things that do matter. And if you are, your ROIC or your ROIC is going to be terrible. So, make sure that you're using the RAB to get the resources you need to focus around the growth on. We have a whole program around that. And then pricing power. So, we have a program called the Margin Multiplier that will absolutely help you go through and dig deep into where your pricing opportunities is. Or are. It's easy to say, hey, I'm gonna jack my prices up. You go too much on your pricing in one year, customer's gonna leave you. Maybe not right away, but you can't get there by just simply taking 10% across the board. It works for one time, doesn't work a whole lot. You gotta be thoughtful. You gotta have a process orientated where you're digging in and understanding clearly about what your customers will buy. You need to understand the elasticity of that. We're gonna help you go through and I'll do that. So this is pricing power is absolutely important. People pay for companies that have more pricing power, right? They want to make sure to do it. And how your margin look, what your customer turnover is, all these types of things going to let us know that. So if your margins are going up, EBITDA is getting better, but your top line is going down, we know you don't have pricing power. You've overpriced it. You need to bring it back because you got to grow both. Bottom line 2x faster than the top line. And then what you're looking for, 200 to 500 basis points that we said on average will, will deliver 300 basis points. You just expect the same thing with it, right? Then, strengthen leadership and execution cadence. That's all about having the right team on board. Do you have the right team in the right bus on the right seat, right? We've all heard this stuff before. It's really about you being a strong leader and putting people in, letting them clearly understand what they need to go. You set that goal. They got to go execute it. If you have to tell them everything, might not be the right team. If they're just all C players, might not be the right team. Are you going to have all A players? If you do, you'll be the first one But you need a good team around you, people who operate the way you operate, that this is important to them. There's all sorts of ways to get them buy-in, but a lot of times it's just the people, right? So, we talk about the Rule of Three. That's the Visionary, Operator, and Profit. Our new book is coming out on that, but it's, you're the Visionary. If you're the CEO, you should be. You don't have to be. That can be someone else. The Operator can be the CEO or the presidents or whoever's running your business, whatever the size and ties you have. And the Profit, That's people like us. We help you go execute. We understand the profit, where the money's at, and we also know the wisdom and have the wisdom to get you there. Like the, the Ten Commandments. Not saying we're anywhere near the Ten Commandments, but it's meant just to let you know we know the way, we're going to help you get there. You got to have quarterly meetings. We call those QBRs, right? So, you're going to have that with them. And as long as you stay with us, we'll have the quarterly Visionary Leadership Summits. That's where you can come and meet other CEOs going exactly what you're going through. And learn from them, right? You're going to learn a lot from us. You're going to learn a lot from, uh, reading the material, studying it, but you also learn a lot talking from people, your peers. There's nothing like sitting down over your favorite beverage and asking what they're doing it, right? And then as you go through and you finish the Profitable Growth Accelerator, you start looking at the Execution Made Simple, right? So, that is implementing your set, your simplification and segmentation marks. Really what it's about. You should come out of A PGA would love that already going, but if you want help in continuing, that's the next step we typically go to. Let's— that's the EMS. Let's make it simple. Let's go execute this beautiful vision that you got, right? Then on number 4, accelerate growth and market position. Our process that we have here is the Rainmaker Academy. Uh, you'll come through, you'll build your plan, what it is, and it's a combination of 2 things. First being taking your existing sales force— I'm assuming all those are outside people, some may be inside It's out there calling on the customers you got. It's focusing around what they have and what they're doing, asking for the order, letting them know what you, you have. It's funny, we've surveyed so many customers and they buy from us what they buy from us, but many of us have more products than they recognize. We need to let them know that. The second one is building an inside. If you need a lead generating piece, it is building an inside process. We call those setters and closers. We'll walk you through that. And that is a way to go out there and start driving leads to your business using social media advertising, Google advertising, things like that. Having people to reach out, make those calls for you, set it up, and get them into your process. Now, that doesn't work for every business. It may or may not work for yours. But if it is, it is a whole new channel to market that you can build out. I wouldn't say it's easy, but it's pretty straightforward to go do. And, you know, if you're prepared to invest in it, no way to get the market if you don't already have it. If you are doing that, maybe you should look at outside salespeople, right? Different channels, different ways. Each has its own cost structure, right? So, another piece is looking at M&A. If your business is running really well and you have the processes that you need to run yours, going out and buying another company is a really great way to get ahead of things, right? If you don't have it set up, it's going to make it almost impossible for you to take and grow this business. So, if you're in chaos, you buy another company, be prepared for more chaos. So, you don't want to do that., right? And then you can also look at strategic part— processes or partnerships and digital transformation. So, there's all sorts of things. We talked a little bit about setters and closers, but there's a whole bunch of things you can do around that. So, we'll help you understand that. You'll go through that, particularly as you go through the Rainmaker Academy, right? Then you're going to be looking at embedding a culture of performance and accountability. It's all about your team. Look, to get to the first couple million bucks, you can do that by yourself. You just work really hard. You got something that you did. But it's really just a big job, a big, fancy, hardworking job. To go from $2 to $5 million, that's all about getting processes in. To go from that $5 to $10 million or $10 million or so, maybe to $20 million, that's about taking the processes you built and scaling. And then you'll continue to do that and build that out and scaling continues. But you should generally have everything you need at around $50 million as far as most of your processes, most of your, your business built out. And you should be able to run that as far as you can go. Is that $100 million, $500 million? But we've seen it all. But as you play through that channel, you may need to add additional channels to it, but you want to stay in your core, right? Additional channels will be taking your core product and delivering it in a new and unique way. We're going to help you do that. We're going to help you go through that. But you got to have a culture of performance and accountability to go. You got people who want to work. They're not wanting to work, it's probably not the place for them. That's what I always say. So, make sure your incentives are aligned with your metrics and and how it is, and the way you pay people is how they're going to react. So, if they can pay, get paid doing nothing or keep doing what they're doing, they're not going to change. If you need change, you're going to have to change their pay program. You have to look at how that compensation structure is. People are driven by several factors. One is who they're working with. Do they like it? Do they like the culture? And the second one is, are they getting paid for doing it this way? You're going to institutionalize a profitable growth accelerator across all your divisions. If you're just one company, great. If you have multiple divisions, you sell A products and B products. And the way we decide these is, are they unlike? Is it different products going through different channels, or is it the same products going through a different channel? You have to look at all those, but you're going to take in, if they're separate, if they're different, you're going to separate your unlike ones. It's the only way you can really, really make sure you, you get after it and scale it properly. If you don't, you'll tend to underinvest in certain areas, overinvest in the other, right? And then build a data-driven operating system. You know, we've heard, I've heard people say, Ah, it's more than the books. You betcha. It's a lot more than the books. It's how the business runs, understanding the rhythm of that business and needing to, to, to continue driving it as you go. So, lots of cool things there. You're going to set up your yearly milestones. Remember, maybe you're doing some for 3 to 5, but there's things you have to hit and it comes at you fast. That's why you need a good team around you to help you go do that. But year 1, you're going to divine and simplify. You're going to understand exactly what's going on. Let's see, our little thing here is not wrapping. So, there you go. Defining it and simplifying. Understand what you've got. Completely segment the business. Eliminate all those low-value things. Double down on the things that are working. Once you get it working, once you've got your team built, it's going to be aligning around your organization and scaling. Remember, we talked about this. So, you want it so a great business is one with the foundations you can take and drive revenue 2, 3, 4, 5 times without having to put more assets into it. If you got to buy more buildings, you got to have an army of people, that's going to drive your profitability down. Then you want to know what those stair steps are. So, it's the rare business that's just purely scalable across it all. But there is some out there. Most of us have to continue investing, but investing less is better, right? So, Align and Scale, it's going to be really around discipline. And then once you understand it, so you've defined where you're going, you've got it focused around it, you've now starting to scale it around discipline. 3, Execute and Maximize. That's all about growing this thing. Now you've got it, run hard. In this area, once you've been able to get to this, however long it takes you, you can start looking at M&A at that point, assuming you have the resources and the team to go do it. If you don't have those processes, it's like a bad marriage. You bring a baby into a bad marriage, it does not make it worse, right? Step 5 is around leadership and accountability. So, who does what, right? You're the CEO or someone on your team is, right? If you're looking at this, so the CEO, their job is to be the visionary, lead the planning, capital allocation, and leadership development. So, it's all about how you allocate it and set that goal where you're going, right? Maintain constant communication, make sure they understand what the goals are. Their job is to figure out the strategy to get there. All right. As you get through 80/20 or any process, Lean, it's like, oh, whew, I did it. Check. I'm done. Nope. As soon as you get there, you're gonna need to do it again. You gotta go back and look at the numbers because things change. You may have added products, different customers, different markets. You now need to go through, relook at the data and make sure it continues to align with it. Right? So, ensure you've got people behind you. You make sure you have a succession. So, succession is exactly that. If you, Something happens to you, if you get hit by a bus, who's going to replace you? But it's also, you need strong people. You need people helping you pull this oar, row this boat, whatever you want to call it. And that means you have to have people who are as good, if not better. Try to hire people better than yourself. You'll always be happy if you do. Their expectations, right, is that they are going to run the business day to day, that the department goals are aligned with your goals, they operate as a unified team. No cowboys, right? Doesn't help. You can have a superstar, but if he Rishi, if they drive cancer in the organization, not good. It won't work. They'll drive all your good people off. It takes them all to run it. So you need people who are great at executing, people who are great at the day-to-day. You need people great at visionary. All these are important. Make sure you don't have cowboys who are driving chaos, right? And then, you know, we, we will not be a best effort company. It's what I always say. We actually have to win. So you have to deliver results. People tell me all the time, I did the best best I could. I get it. I know they did. Sometimes the best isn't good enough. Now, that's not being mean or mean-spirited because we're not going to win them all. It's not even important to win them all, but we do have to win some. And we got to win more than, than say 300. You know, 300 batting 300 in baseball gets you in the Hall of Fame. In business, you tend to go out of business if you only get 3 out of, 3 out of 10 customers happy. So, all right, what's your KPIs? We got to get it on KPI. You got to get up there as fast as you can. You got to pull hard, push hard. As fast as you go, so you're going to have the typical financial, operation, and commercial— I'm sorry, cultural— that you're going to have. So your financial is obvious. What's your margin? What's your growth? What's your ROIC? Those are pretty typical. You'll have those, or maybe some other ones that you're looking at, like maybe, uh, your RTG, your right to grow. How's your labor looking, uh, towards your material? You could have CTI or CRI, cash return on investment. There's a bunch of these. I wouldn't suggest measuring everything, Measure what's important, but these are the minimum. Operational, particularly when you're running 80/20, watch your rationalization. Do you have the products that the people want to buy? Now, it's interesting when you go through these things, sometimes you cut too much. You'll learn as you go, because you look at this data all the time. Did we cut too much? If you did, go back, add the stuff back in. But make sure you understand what you're doing. If you don't go just far enough to cut too much, you probably didn't find out where the curve is. Like sometimes raising prices is a little too much. If you raise it too much, bring it back. But now you know where the elasticity is. So, it's okay to go a little too far. Just reel it back in if you do it, right? Cultural type, employee engagement. We do a lot of surveys. A lot of people do. There's nothing like just walking around and talking to your team and looking, are they smiling? What are you hearing? What does the grapevine say? You know, pay attention to it. Don't be so blind. Particularly, if you're the CEO, it's like, I know what I'm talking about. Be a little humble, right? You know, with it and listen to it. Because as the CEO, people will tell you what they think you want to hear because candidly, you can fire them. Be wary of that. That CEO-itis will drive you right out of business. You'll be thinking, well, they told me. They won't tell you. This is not like your spouse who will tell you when you're messing up. These people depend on their livelihood for you. So, pay attention and ask it in a way that you get real answers, right? Push into it. It's worth it. Do your monthly meetings. These are the most important meetings, your monthly MBRs. Some call it MORs. Mine's Monthly Business Review. It could be Monthly Operating Review. Call it whatever you want. But this is really a KPI-driven, KPI initiatives. This is what the numbers are telling us. This is what happened the last 30. Well, our learnings, our ahas, what could we have done better? What do we think coming up the next 30? Finances, your key initiatives, right? This is it. This is all about the day-to-day tactical piece. Your quarterly strategic, right? Your QBRs or QORs, all about strategic. So, you look back and go, how did we do? You need to have these quarterly. Every time I do them less than quarterly, I get off rails. My team always tells me we don't have to do it, and then when we do, we're always so grateful. It's the best meetings, right? At a minimum, I would I would say 2 nights. I, some, I, you know, if you get experienced on that, you can do, you know, a half day, a full day, then a half day. That's 2 nights. If you're really good and you've gotten great at it and everyone do it, you can do 1 night with it. I like the 2-night one. We get more team-building activities because in this world today, who knows what it'll be in the future, a lot of people remote. So just like a lot of people watching this, you're doing it out of your home, maybe you're doing it in office, maybe you're in the office today, maybe you're not, but you don't see them like we used to do 5 years ago. Maybe it'll go back, but we live in the world we are. And then annually, you're going to have your strategic review around that. A lot of times, if you're on calendar, that's going to be somewhere around your third quarter when you've got your business plan done, you're getting ready to present it to the board. That's generally a good time. It could be in the fourth quarter at the beginning, it could be at the end of the third. Make it work for you on how you want to do it. I do a quarterly every one, and then that third one is really where we look at the stuff, how we're doing. And then as we wrap up the end of year, that one's a little more fun. Of course, it's around Christmas. But the Q1 one is when we say, okay, this is how we delivered the year, and we reaffirm. Q3 is where you've got line of sight. Q1 is where you agree. All right, because however you think you're going to end up in Q3, at the end of the year, it's going to be different, better or worse. So you want to make sure you true up, uh, and the Q1 everybody starts from where you finish, not just where you thought. So, that was maybe a little long-winded, but hopefully that works. So, closing comments here, right? We run on a 3-year plan. Run on whatever makes your heart feel content. Recognize it's hard enough to see clearly through the end of the year. 3 years helps us know that we're going, but our goal really doesn't change, right? If you're going to sell this business, or you want to step back, or you want to do whatever in 2 years, 5 years, 10 years, whatever it is, you're still going to have to rerun this thing every year regardless what you do. So, Understand that it is, it is, it is exactly, you know, whether it's 3 or 5, doesn't matter. It's what's important to you and your team that matters. And make sure that you're committing to profitable growth, operational excellence, and leadership, right? Make sure people want to do this and make it a place that they make it a place you'd want to work at if you weren't the boss, right? And so, your job: lead with purpose, empower through clarity, and execute with passion, right? Treat people with dignity and respect. Make it a great place to be. Everyone's going to love being there. So this is exciting. I hope this helps as you look at putting together your 3-year objective plan. Think about these things. Make it work for you. It's all about you. It's not about us. It's about— but this helps you give you a little bit of an outline off of it. Have a great day. Let's go get them now.