How Do You Track a Moving Target? Being in business is like being on a perpetual hunt for multiple targets. The targets you have to keep your eye on are your market and your operating environment, and they’ll never stand still. They’ll always be on the move. At the very least, you have to keep up with them—and at the most, stay ahead of them. In fact, I spend about 90 percent of my time trying to figure out where our business is going to be next year and even five years from now and what we need to do in terms of marketing and operations to respond. CEOs that have good people working for them spend 18 strategy one flashpoint most of their time predicting where the market is going, what the economy is going to do, and how those things affect the company— and I have good people on my team. JK Harris & Company was extremely successful during its first five years, but that was almost by accident because I wasn’t look- ing at the future as I should have been. Had I been anticipating the future, I would have seen so many things—red flags and opportu- nities—that were staring me in the face, but I didn’t notice them and I didn’t deal with them. I don’t know that paying attention to the future would have made a significant difference in our first five years, but I absolutely know that the impact on our second five years would have been substantial. For example, my company became the target of an investiga- tion by the IRS in 2000. That led to investigations by a number of state attorneys general, and those investigations led to some class action lawsuits against us. That blindsided me. I didn’t see it com- ing, and I should have. I wasn’t involved in politics, I wasn’t pro- active, I wasn’t playing the right games. My business was growing, we were helping a lot of people who were in trouble and didn’t know what to do, we were creating jobs and having a positive impact on the economies of hundreds of communities across the country—I thought all I needed to be doing was more of the same. I was wrong. I’ll tell you more about these investigations and their impact on our organization throughout this book, but the lesson for right now is this: If I had been paying attention to the political environment and responding appropriately, I might have been able to prevent the investigations altogether, and if I hadn’t been able to prevent them, I certainly would have been able to minimize them. But the target, which was our operating environment, moved—and I didn’t notice. It’s easy to get so caught up in the day-to-day activities of run- ning your business that you don’t look any further into the future Figure Out What You Don’t Know 19 flashpoint than the next fire you have to put out. But if you do that, you’re risking your company’s future. For the first six months JK Harris & Company was in business, I did my testing and proved my business model. For the next four and a half years, I focused on implementing that business model, carrying out my plan. I had my hands full, and I didn’t do a lot of planning beyond that. We had to open 400 sales offices, hire 80- something sales consultants, and hire enough tax and administra- tive people to handle the work as it came in. In five years, we went from 1 employee to about 400, plus 400 sales offices, with annual revenue of $38 million. The company’s cumulative profits were $6 million. Any way you look at it, that’s a successful business. Those first five years were not without challenges. We survived the investigation by the IRS and all the related fallout from that— including negative publicity and a lender that canceled our line of credit. And we still grew at our planned pace and were profitable. I had no idea how different things would be in another five years. At the end of the second five years, we were sitting on about $25 million in cumulative losses. Now, how do you go from a $6 million net worth to $25 million in cumulative losses in five years? By losing sight of your targets. We thought we were doing every- “The measure of success thing right. The numbers were beauti- is not whether you have ful. We were projecting making $25 a tough problem to deal million or more in that second five with, but whether it is years, not losing that much. We were on the same problem you top of the world—and we might have had last year.” stayed there if I had been looking for- —John Foster Dulles ward. But things we hadn’t anticipated started happening. Yes, I know there are always going to be surprises in life and in business, but you can minimize those surprises by paying attention, being proactive, and tracking all your targets. 20 strategy one flashpoint So how do you track a moving target? With a combination of intelligence and smart guesswork. Start with Where You Are Take a high-definition snapshot of your business today. You need to see it clearly. Look at your industry. Who are the players and where are they—and you—in the big picture? Then look at your company. Study all the numbers, including the financials and the various statistics that measure growth, decline, and potential. Evaluate your people. Are they getting the job done? Do you have the talent you need? If you don’t, is that talent available and what will it cost? Consider your location, your facility, your customers, your suppliers, what political issues are affecting you. This is the time to be brutally honest—even if it hurts. If you don’t know an answer, take the time to find out. Look at every asset and flaw. Whether you’ve been in business for years or are just getting started, you have to know where you are before you can identify and track your targets. Where Do You Want to Be? Create a vision of what you want your business to look like in 10 or 20 years. I know some people will argue that we don’t know what the world is going to look like in six months, so how can we create a 10- to 20-year vision for our companies? The answer to that is simple: You have to do it. Without a vision, you won’t get anywhere. When I designed the model for JK Harris & Company, I had a very clear picture of what I wanted the company to look like in a year, 5 years, and 10 years. Today, the company is very close to what I envi- sioned back then. Yes, there were some detours along the way, as well as plenty of opportunities and obstacles that I didn’t anticipate, but having the vision and staying committed to it kept us on track. Figure Out What You Don’t Know 21 flashpoint As you develop a vision for your company, it’s safe to say that the only thing you can be absolutely certain of is that whatever you’re doing today won’t be sufficient in the future. Whatever kept your customers happy yesterday and even today won’t make them happy tomorrow. Whatever marketing strategies worked last year will likely need adjusting for next year. For example, in the beginning at JK Harris & Company, when it came to our customer relationships, we focused primarily on get- ting the work done and not so much on the emotional aspects of the situation for our customers. That worked then, because our cus- tomers had no real alternative for getting their tax debt problem solved. We pioneered the tax resolution industry. We were not only the largest, but our fees were set at a point that made us affordable to people who couldn’t afford what a CPA or tax attorney would charge. At that time, the only other truly viable option for taxpayers in that category was to try to handle it themselves—and for most of our clients, that really wasn’t an option. Today, those taxpayers have plenty of alternatives—and if you watch television even a small amount, you probably know who they are. We have had to change our operations because of that. Here’s another example: Our early marketing strategies focused entirely on newspaper ads, which worked very well. But if we hadn’t changed to add broadcast and internet ads to the mix, we’d probably be out of business by now. And yet, I’ll repeat: JK Harris & Company is today very close to what I originally envisioned in size, scope, and volume. It was because I had that vision that I was able to guide the company to this point. And it’s because I still have a vision that we’ll continue to grow and thrive. In fact, I have extended my vision for the company out another ten years, so I know what the company will look like then. Create a Plan in Line with Your Vision Once you know where you are today and what you want to be in the future, you can create a plan to make it happen. There are hundreds 22 strategy one flashpoint of books and programs out there that will guide you in the plan- ning process—this book isn’t about how to write a business plan. I will, however, highlight a few key points: • Your plan must be realistic. Certainly it can be ambitious and optimistic, but it must also be fundamentally doable. If you can’t create a realistic plan, you need to revisit your vision. • Put greater detail in your near-term plan than in your long-range plan. The closer you are to implementation, the more the Only Room for One Lead Dog A good general rule is that a company can only have one leading entrepre- neur. You certainly need executives, managers, and rank-and-file workers who think entrepreneurially, but you need one person who sets the direction and the tone of the business. I know I’m that person at JK Harris & Company (and not just because my name is on the company). Ed Oates, who is one of the two software developers who founded Oracle with Larry Ellison, made this observation about Ellison: “Larry was the prime mover behind this thing. There was no question about the fact that Larry was pushing this idea a lot harder than either Bob or I would have pushed it. He had more chutzpah than the two of us combined. One and half times as much. So he got the chutzpah bonus. Bob and I both recognized that we were going to build the soft- ware, but this organization was going to be a success because of Larry’s chutzpah.” The people who joined JK Harris in the first five years who are still with us and have helped build the company and have grown with the company did so because of my passion and vision for the future. I don’t say this because of ego or an inflated sense of self-importance—it’s the truth. We all know what our roles are, and because we do, we are able to play them to the max. Figure Out What You Don’t Know 23 flashpoint details matter. Getting too detailed about how you will do things that won’t happen for a year or more is a waste of time. • Refer to the plan regularly. Use the plan as a measuring tool to evaluate your progress. Take it out and look at it; don’t count on what’s in your head. Check your performance against your plan at least quarterly, maybe even monthly. Then once a year, update the plan and add the necessary detail. • Keep it flexible. Certainly you need to respect your plan, but don’t write it in concrete. Make changes when you have to. In his book Million Dollar Habits, Brian Tracy writes, “An entre- preneur is like a guerilla fighter in the world of capitalism. . . . Perhaps the two most important habits you can develop in entre- preneurial thinking are those of speed and flexibility.” Having a well-thought-out plan that’s consistent with a clear vision will allow you to develop and apply the speed and flexibility you need to survive and prosper. JK Harris, Flashpoint, © 2010, by Entrepreneur Media, Inc. All rights reserved. Reproduce with permission of Entrepreneur Media, Inc.