Evolutionary Business Planning for Lenders – Part One

We’re excited to begin discussing lender business plans as part of our four-part blog series on Taking an Evolutionary Approach to Business Planning.

It doesn’t matter if your lenders have completed their annual business plans or are in the process.  I promise that the things we will be shedding light on over these next four weeks will measurably improve the quality of your lender’s business plans and dramatically increase the odds of them hitting their annual production goals.

Taking an Evolutionary Approach to Business Planning.

Business plan over financial charts

Let’s Begin

Did you know that researchers have determined that due to the routine nature of our daily lives; up to 85% of our days are spent operating from an unconscious or subconscious state of mind.  Said another way, we operate without thinking!  Scary right?

Nowhere does this pan out more than with the creation of annual business plans.  As we all know, at the start of a new year it is common for lenders to pull out last year’s business plan (which many haven’t looked at in a year), give it a quick review, make a couple tweaks and call it good.  There’s very little if any value from that exercise, and there’s very little impact on lender productivity as a result. 

Our promise is to look at annual business planning with “fresh eyes” in order to give your lenders a fresh perspective on business planning. 

The Real Purpose of Annual Business Plans

Annual business plans serve six valuable functions:

• Discovery:  At the end of every year, activities and results should always be evaluated against the annual plan.  Great insights are gained from an introspective “look-back” on how closely your activities matched your plan.  These insights can be applied to make next year’s plan more effective.

• Keeping Focused:  After the business plan is submitted and approved, it usually goes into a file never to surface again.  As a result, lenders start chasing deals and spending time on many low quality activities many of which produce low or poor quality results.  Quarterly review at a minimum…and monthly review ideally…helps lenders stay focused on the right balance of quality and quantity of activities.

• Staying Accountable:  Your business plan provides a sobering perspective on your business development activities and results.  Sales people (in any industry), tend to be an optimistic lot.  Always hopeful, we lull ourselves into thinking that our pipeline is stronger than it really is and then one day we wake up and realize it’s April or May and we are already well behind in our production.  Here again, monthly review of the business plan will change lender behavior to the positive.

• Training / Development:  There are no stronger tools for helping lenders uncover weaknesses and inefficiencies in their business development and sales processes than their business plan.  When activities and results are tracked and evaluated against the business plan, very focused training and coaching can be provided to address strategy and behavior weaknesses.

• Improved Sales Management:  Few sales managers use lender business plans as a management and coaching tool.  What a shame!  Regular conversations linked to the business plan enable sales managers to have richer and more developmentally focused conversations with lenders…even seasoned lenders.  Our years of experience can be as much of a liability as an asset.  Seasoned lenders, even those who are successful always have room for improvement and the business plan is what makes that happen.

• Production Goal Attainment:  In most banks, fewer than 50% of lenders hit their annual sales goals.  Ouch!  That’s a lot of comp and benefits paid for mediocre results.  Over the course of a couple years of implementing the process we will be laying this out and through subsequent blogs, more of your lenders will learn exactly what it will take to attain their annual production goals.

Reflecting on the Prior Year’s Activities and Results…

We promised a fresh perspective on business planning and that’s what we intend to deliver so here it goes!  The two-step process we will be outlining requires that we put on our big-boy and big girl britches.  We will be asking some tough questions that if answered truthfully, will provide invaluable insights and if acted upon, will boost lender productivity.

Step 1:  Be Intentional – Block time in your calendar to read and reflect on last year’s business plan.  Set an intention for this process to learn something useful.  Answer the following questions honestly (but don’t beat yourself up in the process):

• How much time and attention went into creating last year’s plan?
• How frequently did you look at the plan throughout the year?
• For what purpose did you create the plan?  Because you were required to or because you truly wanted to create a successful roadmap for your year?
• How well did you follow your plan?  How well did you do what you said you would do?
• Did you target the industries you said you were going to target?
• How did your projected activites and deal targets match reality?
• If you did not follow your plan…why not ?

In an ideal world, lenders and their sales managers would meet to discuss the answers to these questions.

Step 2: Discover Your Numbers and Conversion Ratios – If you are serious about improving your sales effectiveness, you will quantify your sales activities and conversion ratios to better understand where your opportunities for improvement lie.

Along with your 2015 calendar, quantify the following:

New Customer Aquistion Stats:                                           

Number of Face to Face Initial Prospect Calls:

Number of Proposals Issued:

Number of Closed Deals:

Dollar Value of Closed Deals:

Dollar Average of Closed Deals:

Conversion Ratio:  Appointments to Proposals

Conversation Ratio:  Proposals to Closed Deals

Additional Stats:

Number of Warm Introductions Asked For:

Number of Warm Introductions Provided:

Number of Weekly Meals with Prospects & Customers:

Number of Trade Association Events Attended:

Number of Deals Closed from Warm Introductions:

Number of Deals Closed from Trade Association Activities:

Do your best to answer the questions and gather the data listed above.  One of my first mentors in business would always say “don’t confuse efforts with results.”  It is very common for sales people to confuse efforts with results.  If you are willing to take a very candid and honest look at these questions and at the above data, you will create tremendous value from the process.

In The Second Blog In This Series…

In our next blog, after your lenders have answered the above questions and gathered the above data, we will be discussing:  What Your Numbers and Conversion Ratios Can Teach You. 

We are committed to upgrading the process used to develop lender business plans from one that is done with very little thought to one that is done with intention and purpose. 

I will close with a great quote from Jim Rohn who said “Success is nothing more than a few disciplines practiced every day.”