This article is part of our series on Lean Planning, where we go into more detail on aspects of the Lean Planning process. Start with Step 1: Create Your Business Strategy and Step 2: Develop Your Tactics.
Once you’ve finished this article, check out How to Build a Lean Business Plan Step 4: Define Your Business Model, and for a comprehensive overview of Lean Planning, check out An Introduction to Lean Planning.
A business plan and strategy can’t turn into a real business without milestones. Milestones are what you use to convert your business strategy and tactics into action.
Just like a milestone on the side of a road marks how far you’ve gone, a milestone in business tracks your progress as you grow and implement your plan. They’re what you use to manage responsibilities, track results, and convert your idea into a functioning business.
Previously, I’ve written about building your business strategy and then creating tactics to implement that strategy. Just like there’s a link between tactics and strategy, there’s a link between tactics and milestones. Tactics are the things you’re going to do to implement your strategy. Milestones are used to add the specific details to implement your tactics. When you plan a milestone, you’ll determine who’s going to do the work, when they’re going to do it, and how much budget they need to make things happen.
Every business milestone should include:
- A description of the task
- A due date
- A budget
- A responsible person
Milestones are key to management
You’ll use your milestones to manage your business better. Once a month, when you meet with your team to review your business strategy and business numbers, you’ll review your milestones to make sure your plans are on track. If there are problems or changes, this is when you can make course corrections.
Reviewing your milestones monthly gives you more opportunities to spot problems and identify opportunities. If you only check in on your progress once a quarter, or potentially just once a year, you have fewer opportunities to adjust course and change direction. In virtually every business, there’s always new information to review and changes in what your customers want and need. A frequent review of your goals allows you to be nimble and adjust quickly when you need to. For more on why you should review your milestones and other business metrics frequently, check out my post on the topic.
3 types of milestones
When you’re building and growing a business, you should end up scheduling three different types of milestones:
- Plan review
- Assumptions validation
All businesses should have “plan review” milestones. These might be the most important milestones that you create.
The plan review milestone sets aside time to review your business strategy, tactics, forecast and budget. If you don’t regularly check your plan and make adjustments, you can easily get off track. Not that you should follow the plan blindly, either. Instead, a regular plan review meeting will give you a chance to look at what’s working, what’s not, and revise as you go.
Here at Palo Alto Software, we have a monthly plan review meeting on the second Friday of the month. We get our management team together, review our financials, and talk about what got done last month and what’s in the pipeline. This monthly meeting is critical for making changes and adjustments to our strategy and correcting course as necessary.
For early-stage startups, it might just be a few of you that get together and there might not be much in the way of revenue or expenses to review. That’s okay. Instead, your monthly meeting will focus on the next steps you can take to make your business idea a reality, and what progress you’ve made so far. You’ll review your progress on implementing your strategy and tactics, such as developing a new marketing campaign, increasing the number of customers who make a second order by 15 percent, or signing the lease on new office space.
Milestones to validate your assumptions
When you’re just starting your business and figuring out if you’ve got the right strategy, you’re going to create milestones to help you validate your assumptions. These milestones are going to be for interviewing potential customers to figure out if they have the problem you think they have, and to discover if they’re interested in your solution. You’ll also work to try and figure out what your pricing should be.
Remember, in the early days of your business, you’re making a lot of guesses – assumptions, really – about what your customers need and want. Your initial strategy is a collection of guesses about the problems your potential customers have, how they want their problems solved, and what they’re willing to pay for your solution. Your milestones at this stage should be geared around validating those assumptions so you can build a successful business.
Some example milestones might be:
- Interview 20 potential customers in my primary market segment
- Research pricing for my competitors
- Create a sample brochure for my business and see what potential customers think.
The milestones that you create at this stage should be focused on the goal of finding what’s called “product/market fit.” This means that you’ve found a target market that’s interested in buying your product and that your product solves a real problem for your customers.
It’s very likely that you find out that you don’t have good product/market fit right away. That’s OK. It’s easy to make changes to your strategy, come up with new assumptions, and go back and test them again with your potential customers. That’s the benefit of validating your assumptions early in the business startup process – you haven’t invested too much in building your business yet and can easily change directions if necessary.
Implementing your strategy
Once your assumptions have been validated, you’ll start creating implementation milestones. These are the tasks you’re going to do to actually build your business. You’ll be doing things like building your product, setting up your office or shop, developing your website, and more.
Implementation milestones are typically for companies that have progressed out of the very early stages of starting up and have a proven strategy that they know is going to work. These milestones are all about getting things done to execute your strategy.
Some examples of implementation milestones might be:
- Negotiate a lease for office space
- Develop a web site
- Build version 1 of the product
- Develop marketing materials
With Lean Planning, you’ll adjust as you go
Your milestone schedules will evolve as you go, so don’t spend a lot of time initially documenting every last step you’re going to take to launch your business. Instead, plot out the next few steps you’re going to take. When those steps are done, come back add more steps as you go.
After all, Lean Planning is an ongoing process, not just a one-time event. It’s all about creating a plan, running that plan, reviewing the results, and revising before you take next steps. Having solid milestones will make that process easier and more efficient, helping you build a better business, faster.
The next post in this series will talk about your business model—how you’re going to make money. That’s the final component of your Lean Plan.