How The Business Unit Manager Sets Near-term Objectives

Setting short-term goals is the same as creating an operating plan. It involves projecting revenues, lowering cash-flow and increasing margins. 

When a fresh business unit manager asked: “Why can’t we use previous budgets and set the new objectives based on them?” his supervisor quipped: “That’s exactly what we don’t want.” He was right; developing the operating plan isn’t a numbers' game or about past performance. It isn’t an overall plan but helps the near term objectives of the business. 

business unit manager training on how to set near-term business objectives


Who does the business unit manager need to talk to? It’s to the right people in operations, who can discuss what they’ve tried in the past and what they’ve learned to expect. In developing the operating plan, the business unit manager has to create growth, new value-driven proposals, new channels and new customers. It’s he who changes beliefs, behavior, staff and divides resources. Besides, the business unit manager needs to ask questions about how competitors will change prices, increase marketing into our area and introduce products. Distribution channels need to deliver on time and accounting needs to bill accurately if the business needs to hold on to customers.

When a fresh business unit manager asked: “Why can’t we use previous budgets and set the new objectives based on them?” his supervisor quipped: “That’s exactly what we don’t want.” He was right; developing the operating plan isn’t a numbers' game or about past performance. It isn’t an overall plan but helps the near term objectives of the business. 

Operating plans identify key areas for sales, margins, cash flow, productivity, market share, capital expenses and return on investment (ROI). Next, the business unit manager develops action plans and creates contingency plans. The people who will carry out the plan need to agree on follow-through measures. The right method gets all the plans from different departments before assigning budgets. The business unit manager needs a good look at both revenues and gross margins when settling the plan. It’s clear the business needs tough talk on:

  • Price
  • Grouping customers 
  • Assumptions about the economy
  • Competitors and their expected actions

Everything follows gross margins. If customers won’t pay the price, then the business unit manager has to cut costs. Usually, the final finance measure for the business is earnings per share (EPS). It’s the business unit manager who synchronizes and balances the near and far term objectives. He or she has to find contingencies to preserve gross margin performance. It’s important for the business unit manager to make certain the operating plan considers the ability of the business to carry it out. Follow-through is key and the business unit manager has to set up clear actions and measures to close the gap for the business to shine.

Written by Suresh Iyengar, P.E., President, Business Unit Execution LLC––“Explosive Business Coaching Houston Results For Small Business”. Want even faster results? Are you ready to learn? Call 281.410.5375 and speak to your Profitability Coach Houston today!


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