What is HLP?
I’m not sure what I love more in my work … accessing new levels of financial capital for fast-growing firms or HLP.
HLP has been around forever. I’m probably the first financial consultant to abbreviate high-level planning to HLP, which (I recently found out) stands for something different. Well, at least Dan Sullivan hasn’t trademarked HLP, so I’ll keep using that term.
I really don’t have a definition for HLP. In short, it’s a conversation I have about annually with a CEO. Sometimes, we include members of the management team.
When I start the exercise, I never say what we’re doing. We just jump in. I don’t even use the term HLP, either.
So what is it? If it’s a conversation, what’s included?
The bare essentials of HLP start with units, pricing, revenue, costs, and free cash flow. Peter Drucker states the effective executive knows what needs to be done (always). Accordingly, the HLP conversation focuses on our friction points over the past six to twelve months and how we’ll circumvent that friction in the year ahead. The ensuing conversation pairs our feedback with a handful of numbers.
There is no rule book for HLP other than a few core principles:
- we focus on the vital few (priorities)
- we focus on the fixtures, not the plumbing
- we never forget free cash flow as we think ahead
If you are intrigued, consider investing about 10 minutes as I allow you a peek inside one of my private playbooks:
HLP Output and Outcomes
I mentioned earlier that HLP focuses on the vital few, not the “trivial many,” as my friend Gary Harpst would say.
The output is not about the bottom number in the grid labeled free cash flow. That’s useful, but that number is merely describing or quantifying our existing business model as it stands today.
The ultimate output in the HLP conversation is a short list of initiatives for the year that could take part or most of the year to complete. In our example in the video, the four FTEs are responsible for their own admin work. This company is only five years past its startup date. They have learned the power of bootstrapping as they are financed by personal mortgages on their homes and a term note. Now, with a little cash on hand, they are ready to add their next FTE.
Adding an FTE is initiative number one. The firm already has a footprint in two farming organizations, but there are two others they would like to join and become a keynote speaker at their annual events, respectively. The goal is to gain more traction in their industry. Building these two relationships will take time and possibly eat into client development meetings for the CEO. We’ve decided the short-term cost is lower than the longer-term return.
Outcomes? We want more unit sales and to become a bigger name with hobby farms and small ag operations. While we have desired outcomes on our minds, we can’t measure the outcomes until we start working on our action plans. Accordingly, the ultimate outcome of HLP is our output – a simple action plan with several initiatives.
Overly simple? Yes. Effective? Very much so. And fun too. That’s why I enjoy these conversations.
Intrigued? Want to learn more? Try with a question over here.