How are your business dreams looking today? I’m not hearing about many dreams. Maybe some nightmares, but few dreams.
To be truthful, we need to look at the good signs. For one, business is picking up. There seems to be a positive attitude in many places. But how many more years like 2011 can you endure? We need a dream – a plan to keep the ball rolling.
“What are the options,” you ask? Well, now might be the time to start your own new business right within your own walls.
Think back when you first started your business. Remember that business plan you labored over night after night? Remember the excitement you felt and the confidence those written words inspired in you to go out everyday and build your idea, your business? I didn’t think so.
In many cases, a business plan wasn’t part of the work you did before starting or purchasing your business. For those of you who did write a plan, who followed it and are today still trying to operate under those guidelines, I applaud you.
But even those of you who had or have a plan you’re still using today might benefit from a rewrite. For those of you who did it the other way – following the path of blind ambition, blood, sweat and tears, I suggest that it’s time to put pen to paper.
Think about this: you can look around at the four walls, maybe bash your head against a couple of them and maybe even move a few machines around to create a better flow of work through the shop. It may help to some extent, but these are not the actions that alone will create more business, income or enough change to get you to the place you want to be. I say there is nothing like a clean sheet of paper to open your mind for ideas and to obtain the clarity needed to make some major changes in your business model.
This is your chance to outline the business you thought you were building. It can help you focus on more of the positive attributes of your business and make cuts to the ones that don’t work, don’t make a profit or simply don’t fit in any longer.
Don’t get me wrong. I don’t for a second suggest that this will be an easy task. The great thing is, there are some wonderful business plan software packages out there that make it easier for someone like myself to look at what is important. If you have all your data ready, this will be a less painful job.
Make no mistake, though: many, if not most, of the words may already be there, but you’ll still need to push this plan to its end. You’ll still be creating the spreadsheets and projections and organizing the facts. There are simply no prepackaged paths to the business of your dreams.
Though I hope it doesn’t send you into uncontrollable convulsions, fits of rage or severe depression, this exercise will certainly open your eyes.
If you have your numbers, if you put in the effort and if you open your mind to the potential opportunities to exploit (while simultaneously identifying where the current model is losing money and draining resources from your business), I firmly believe you can map out a new business model that will put the hope back into your dreams.
Think of your business plan as a set of goals along with the plan to achieve these goals. It’s your decision-making tool. While there’s no “required”?content, per se, it must include all content necessary to support the attainability of your goals.
Getting there also probably includes your plans for funding and financing, operations, marketing, expansion or downsizing and use of human resources, to name a few. And remember that a business plan is a work in progress: if your goals change, so does the plan to achieve them.
Business plans that are externally focused would include detailed information about the management team or the organization charged with attaining goals important to a financial stakeholder. If you were to use these documents to obtain a bank or SBA loan, then you would be writing an externally focused plan.
However, I want to zero in on a simpler internally focused plan. This plan targets the immediate goals necessary to reach more “big picture”?goals like increased business or increased profitability. This may also cover restructuring your business, the purchase of new computer operating systems, adding personnel or the addition of new equipment. It can also be called a strategic plan.
Have you ever heard the acronym SWOT? It stands for Strengths, Weaknesses, Opportunities and Threats – and it’s an analytical process you’ll want to remember and use as a gauge while examining every aspect of your current and future business model.
Your business plan should start with a general overview of the business and must include in detail your vision of what the operation will become.
• Identify the things that are working and the things that are not. Things that are working will need to be examined to see why they work and how they can be improved or fine tuned for even better performance.
• Identify the things you will change as well as the things you will eliminate.
Specifics for your business will include what your company bills per hour vs. what you must make per hour to keep the doors open. This will require breaking down each machining operation charge to determine if you are currently charging enough. What does your competition charge for the same job??What will the market bear? The question then becomes, does it stay or does it go? Does it add to the bottom line or is it a liability? Would it be a financial benefit to upgrade a certain piece of equipment to make an operation more profitable? What changes must be made to help reach your business goals?
Change also comes at a cost. You will need to detail your assets, your financial resources and possibly consider those externally focused resources that may be necessary to effect change. Since we are admitting things are not so rosy, let’s look at what can be done without going for outside capital. The decision to go into debt just might call for an entirely different plan: one called, “second career path.”
It can be difficult to honestly analyze our current model’s effectiveness in producing income unless you first understand your hourly rate, cost of business, billable hours and hourly income. The most obvious goals are to lessen overhead and increase income.
To get there, your business plan is essential. To reach your goals, you’ll probably need to spend money. Some upfront dollars may be needed for improvements and new equipment. But overhead is a cost of doing business. Part of your plan for success will be to recognize and manage your overhead.
After all, gross revenue minus your overhead gives you your profit. And a profitable business should be one of your goals defined in your plan. Acting on those decisions are what will ultimately lead you to obtaining your goals so don’t miss anything.
Dave Sutton has more than 33 years of automotive aftermarket experience, starting with his days as a jobber store stock clerk and driver. He currently operates a manufacturer’s rep agency in Minneapolis, MN, and is a District Sales manager for Sterling Bearing. You may contact Dave at [email protected].
