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It’s true, throwing your business in reverse might just be the best way to take it forward. In this article, you’ll learn how to utilize a reverse chronology strategy to benefit your business.
What is Reverse Chronology?
Reverse chronology is also known as “reverse planning.” You imagine the result you want at some point in the future—1 year, 5 years, or perhaps 10 years. Then, you’ll work your way backward to create a step-by-step plan for achieving that goal.
It’s much easier to make decisions about your business when you have a very clear understanding of what needs to happen each month or year to reach your goal.
Why Use Reverse Chronology?
For one thing, using reverse chronology forces you to define your goal. You have to pick a point in the future and decide what you want that to look like. You may find that helpful for clarifying your vision.
Another way to look at this process is as if you were building a custom home. First, you’d need an artist sketch of your dream house. What do you want your house to look like in the end?
Then an architect would translate that drawing into a working blueprint with a list of materials needed to fulfill the vision. Based on that information, a contractor would then order supplies create a schedule, and contract with trades people. Because some items have to be completed and inspected before other actions can take place, the builder will have a timeline with target dates for important milestones.
If you didn’t have a clear vision of how you wanted the house to look in the end, the architect would have no idea what sort of plans to draw or what types of materials might be needed. And if the contractor had no blueprints or timeline, who knows if a house would ever be built, much less one that matched your original sketch.
Example of Reverse Chronology
Now, let’s take a look at this process broken down into smaller steps using a small window cleaning business as our example. Imagine you’re the owner and you have two full-time employees cleaning residential windows with gross annual revenues of $150k. Your vision is to grow your business to have annual revenues of $10M per year within 5 years.
What does that look like on a yearly basis? To figure that out, we’ll start with the $10M number and work backwards.
For your business to generate $10M per year, you’d have to average about $42,000 per day in revenue. Currently, your two employees bring in about $600 per day. So, to achieve your goal, you’ll either need to add 70 employees or increase how much revenue each employee can generate.
If you can increase the revenue per employee to $1,000 per day, you’ll only need to add 40 employees. That’s only eight new hires a year, or just under one per month. That feels doable, so that’s the path you take. Now you have a clear vision of what your company will look like in 5 years—40 employees bringing in $1,000 in revenue per day.
Now, how do you solve the increased revenue per employee problem? You know that cleaning windows brings in $600/day, but window cleaning is a low dollar service to sell. However, pressure washing is a premium service and can bring in double that of window cleaning in the same amount of time. So, it makes sense to add pressure washing (bricks, siding, decks, and patios) as a service you offer. But to keep 40 people employed, you’ll need to add more services.
You already have the pressure washer and ladders, so you could add roof cleaning. Roof cleaning is a high dollar add-on.
Selling and installing energy efficient UV window film is a good cross-sell and generates even more revenue than pressure washing. So, add that too. Is there anything else that can be added to make sure your employees are busy?
To get to the goal of $42K/day, you’ll probably need to find ways to add revenue without adding to the workload. An easy tie-in would be to sell your own, branded cleaning products. Maybe a special deck cleaner to keep the boards looking nice in between power washings. Or, glass cleaner that streaks less and smells nice.
You also have to consider that window cleaning and pressure washing is a seasonal business. How are you going to keep the money rolling in during the winter months?
Think about related services you could offer such as interior window cleaning? In recent years, many houses have been designed with multi-story windows from ceiling to floor, but most homeowners don’t have the right equipment to tackle that job.
Or get a bit more creative. You have the ladders. Could you offer a seasonal service to hang Christmas lights for people and then take them down? How about snow removal? You have the trucks, are they suitable for adding a plow to the front?
As you can see, by setting a clear goal of making $10M a year, it created a cascade of decisions and ideas flowing from it. Now the task becomes, choosing which ideas are feasible and how are they best implemented into the timeline?
You’ll have to consider which services you could add without much upfront cost? Which items will require financial investment? Which things must happen before other items can happen? This is where your step-by-step planning comes in.
And don’t forget your employees as a part of this plan. You’ve just added quite a few different items to your offerings. If you have crews work in two-person teams, they’ll be able to cross-train and help each other. This can get your new hires up-to-speed more quickly, allowing you to keep pace with your goals.
How to Use Reverse Chronology for Strategic Planning
Even small business owners with a clearly defined vision of what they want their business to look like in the future, may find it difficult to find the time to develop a strategic plan and so they fly by the seat of their pants one month into the next.
However, with this reverse strategy, creating a plan doesn’t look so daunting. When your strategic goal is clearly defined, you can easily work backwards from that vision and develop the steps, schedule, and milestones to bring you back to goal.
- Write down your goal/vision. It should be clearly defined, measurable and achievable.
- Develop a clear vision of what the entire business will look like when the goal is achieved. How will it compare with what your business looks like today? What sort of products or people are you adding? Make sure your vision is a stretch, but realistic.
- Determine what is needed to accomplish that goal. If it’s a revenue goal, where will the money come from? If it’s a market share goal, how will you grab the attention of your target market?
- Set a date for reaching your goal. Be realistic. The target date shouldn’t be so far away that it loses its priority, nor should it be so short that it’s unachievable.
- Break down the steps moving backward from the goal. Start with the step that would happen just prior to achieving the goal. Keep moving in a backward fashion. Think of this as a backward decision tree, until you reach the beginning of where this project starts.
- Determine how much time it’ll take for each step to be completed.
- Break work into steps that can be completed in 1-4 weeks. Any tasks that will take longer than 4 weeks to complete, should be divided into shorter tasks that can be completed between 1 and 4 weeks.
- Assign a deliverable or milestone for each task. A deliverable should be something measurable that can show that a step was completed.
- Put dates to your tasks. Your “end date” is when you’ve reached the goal. Once you’ve established the steps and how long each should take, you can create a timeline. Don’t worry if this timeline moves past the present day and theoretically falls in the past. You’ll address that in the next step.
- Create a realistic schedule on the calendar for getting to your goal. If you ended up in the past in the previous step, you’ll need to reassess your tasks to see if there are any that can be done in tandem with each other. Give scrutiny to the longest tasks and see if there’s a way to shorten them. Maybe you can add more resources or outsource that task.
- Assign resources to the tasks. Work forward from today, assigning tasks which need to be completed first.
- Monitor progress closely and adjust. They say a watched pot never boils, but in business it’s the opposite. An unwatched pot never boils. If a milestone is missed, do whatever is necessary to get back on schedule—assign more resources, outsource a task, or use different resources.
Reverse Chronology Builds Successful Businesses
It seems so simple. Develop a clear vision for your business and you’ll be successful. But sometimes that can feel hard to nail down, especially if you’re busy running the business day to day.
However, taking the time to envision where you want to be in a given time period and exactly what that success looks like to you, will make it far more likely that you’ll achieve that goal.
Think of the marketplace as a vast ocean and your business like one of many small boats looking for sunken treasure. Which boat is more likely to be successful—a boat that previously identified treasure, marked it with a blinking beacon and then plotted a map to make finding it again easy, or a boat that wanders about aimlessly with a depth finder hoping to stumble over a find? Exactly.
Use reverse chronology to create a beacon, plot your path, and watch your business grow.