If you don't have a strategy in place, get with your team. And I promise you, if you do this, (0:05) right, you put in the work, it will make all the difference in the world. I've seen it over and (0:10) over again.

Welcome to Business Strategy, where we talk about how to craft winning strategies, (0:14) how to implement them, and build highly profitable and iconic companies along the way. (0:18) I hope you enjoy and subscribe. I can't believe we're already in the second month of the year.

(0:26) Time just seems to be flying by. And guess what? It's going to go by even faster as the year (0:30) continues on. So I want to make sure that you have these five things in place for your business.

(0:36) So you don't get to the end of 2025 thinking, dang it, I wish things would have been different. (0:42) I wish we would have more profit, more cashflow. And you start looking forward into the future.

(0:47) Let's go ahead and fix it right now here today. So these are the five things you need to have (0:51) in your business.

Number one is a clear strategy.

Now I know sometimes you hear things out there (0:56) in the world that talks about strategy and people are poo-pooing it saying, you don't need a strategy. (1:02) You just need to have a 90-day plan or whatever it is. Well, guess what? That's equivalent to (1:07) getting in the car with your family and saying, let's go on a road trip.

And the kids are like, (1:12) where are we going? You're like, I don't know. We're just going to start driving and we're going (1:16) to figure it out along the way. Okay.

That doesn't work super well. Instead, strategy just comes down (1:22) to making decisions. It's about answering questions about where you're going to compete, (1:27) how you're going to compete, and ultimately how you're going to win.

Now, when you get to the last (1:31) part, how are you going to win? You have to evaluate whether or not you have the resources (1:36) in order to make the returns necessary to make your strategy viable. Well, I just said a bunch (1:42) of jargon there. Let me just be clear.

You can have a strategy in place, but if you don't drive (1:49) cashflow at the end of the day, and if you don't drive cashflow that exceeds the investment in (1:55) your business, guess what? You have a bad strategy. Let me just say it another way.

(2:00) If you put $100,000 in your business and you only generate, let's say $100,000 in cashflow, (2:07) well, guess what? It's going to take you 10 years to recoup that investment.

(2:16) It's all about driving free cashflow and free cashflow drives from value. Strategy is not (2:23) about earning higher profits. Good profits and higher cashflow come as a result of a good (2:30) strategy.

That's the difference.

So having a clear strategy in place and being very decisive (2:36) of what your company will do and what it won't do in order to win in the market is very, very (2:43) critical. And this is your first step.

And if you haven't listened to my other episodes where (2:47) I talk about the strategic problem, this is really ground zero for your strategy. It's understanding (2:54) what is the strategic problem, the number one obstacle or constraint that is holding your (3:00) company back from achieving its full success. Identify your problem and then put in place (3:05) a strategy to help your company to overcome the problem.

Once you have a strategy in place, (3:11) you have to decide, okay, what are we going to do about it? How are we going to make this happen? (3:16) And that's where the second thing comes in that you need to have in place in your company.

(3:20) We call these things IARs at Coltivar, which stands for Initiatives, Actions and Results. And really, (3:28) it just stems from me doing strategy work for over a decade now with a ton of companies that I run, (3:34) that I invest in, and that I advise.

And I realized that organizations, they're good oftentimes with (3:40) putting in place a strategy, right? Some of them. And then it comes to executing and then it falls (3:46) apart.

So if you just take the definition of a goal, a goal disaggregated has these three parts. (3:51) It has an initiative, it has an action, and it has a measurable, a result. And that's where I came up (3:57) with the framework called IARs. I wrote about it in my second book called Outsizing.

And IARs will (4:04) allow your organization to get clear on how you're going to execute your strategy. Okay? This is your (4:08) plan for execution.

Remember, strategic planning and strategy are not the same thing.

A strategy (4:14) helps you to make decisions about where you're going to compete, how you're going to compete, (4:17) and how you will win. A plan with IARs tells the business how you're going to execute that strategy.

(4:25) So don't get those confused.

All right. Initiatives only have about, I'd say one to three for starting (4:31) out. Don't have more than five though.

Remember, initiatives are longer term in nature and they do (4:36) four things. They help you to overcome your strategic problem. They help to enhance the (4:41) customer experience.

They help to foster innovation and they help to build competitive advantages.

(4:47) After you have these initiatives in place, you'll decide what are the actions we're going to take.

(4:52) In other words, what is our hypothesis? What are we going to do to help advance our initiatives?

(4:58) Focus on the most impactful actions with the biggest upside.

All right. And then you have to (5:03) figure out how you're going to measure it. These are the key results.

(5:06) In other words, actions are your inputs. Results are your outputs.

So having clear IARs is number two.

(5:13) You should definitely have this in your business and they go hand in hand with your strategy.

(5:17) Number three, you need to have a financial forecast that is rolling. Don't have this (5:22) annual budget that just ends at December.

Instead, you should have a rolling forecast that extends (5:27) out at least 24 months. Every single month that drops off, you add on another month and it is (5:34) rolling and never again do you have to do the annual forecasting or budgeting exercise.

(5:40) Instead, you always have your numbers projected out into the future.

(5:45) This financial forecast should start with revenue and it should get all the way down to free cash flow.

(5:50) So you can understand if there are any challenges coming your way or what the opportunities are with your (5:55) projected cash flow.

(6:00) You should be making regular updates to your financial forecast and keeping that current.

(6:07) And your financial reporting should be released around the third week of the following month (6:12) after month and close.

(6:56) The last thing you should have in place are KPIs, key performance indicators.

(7:33) These are the five things that I ensure every company that we work with has in place.

(8:25) I promise you, if you do this, right, you put in the work, it will make all the difference in the world.

(8:33) Cheers.