Action Planning For Early Stage Companies

Some venture capital firms are requiring that a three month or 100 day action plan be put in place as a condition of closing. We also seem to understand the value of planning at the strategic level or at least understand that business plans and marketing plans, and etc. are required for financing. But why an Action Plan or more basic what is an Action Plan?


An action plan is moving business planning from the strategic to the tactical. It breaks down the goals and objectives found in a business plan into action items that must be completed to meet targets. Some of these items may never even be anticipated in the business plan or by more seasoned business people may be assumed.

VCs are moving to action plans as a requirement because all too often the strategies in which they based their funding decision was perfectly fine but the execution was terrible. This is especially important for seed and early stage companies in regions of the country where serial entrepreneurs are scarce and the management team relatively inexperienced.

About a year ago, I was working with a company that had a great product good gross margins and around $5 million in sales all over the globe. They were losing all kinds of money and not until I went in and watched the operations for a few days was it apparent what the problem was. They had no policies in place for travel or purchasing and there were no clear lines of authority or areas of responsibility. Sales people would travel from the Midwest to South America or Europe for a $10,000 sale and they couldn’t seem to find time to hire additional sales people needed to scale the business. One of the founders would allow credit terms he and sales discounts that were not those stated in the company policy or allowed by other sales people.

They started business by developing product and then selling it. That might have worked when the two founders were the only employees and the only owners, but when I entered the scene they had seven employees and 15 shareholders! What they needed was an action plan that stated that a travel policy would be put in place by the 15th of the month, inventory controls would be developed by the 30th of the month.

They needed a schedule that ended the day they needed someone to be on board and work back to when job descriptions needed to be ready, solicitation begun and interviews started. They needed personnel policies, a compensation plan and monthly sales goals by individual. Each of these items needed to have dates attached to them and some one or a team needed to take responsibility to complete them on time. They needed an action plan!

Once these items began to take shape, morale improved, people could work more effectively and the bottom line improved. This really helps at the beginning of a company’s life but the most effective action plan is a rolling one where each time one month is over another is added to the end of the plan.

Could you benefit from an action plan? Do you have a client or a friend in business that could use one? Let me know what issues you need to address or if you could use some help getting started.