What if someone walked into your office with a live, two-ton elephant, and said: “Eat this elephant in 30 days, and I’ll pay you $1 million.”? First, you’d be overwhelmed. Next, discouraged. Then, you’d decide you’re too busy to take this project on. Finally, you’d decide it’s impossible and give up — even though the $1 million would certainly help cash flow.
Why don’t all companies create and follow a business plan? For the same reasons no one wants the challenge of eating an elephant. The task seems overwhelming: you have to find a format, create the plan, and measure progress; you’re discouraged by the size of the task; once the plan is created, it must be implemented; you don’t have the time; so, ultimately, you decide it’s impossible.
According to www.businesslink.gov: “Businesses that have and follow a business plan generate higher than average profits.” Yes, it requires some effort, but creating, following, and measuring results of a business plan can generate sales, profits, cash flow, and improved efficiencies — perhaps even totaling $1 million.
Analyze the Elephant An elephant can’t be eaten in one bite, so analyzing the situation is a necessary part of accomplishing the task of creating a business plan. A business plan allows ownership to contemplate what it wants from the company long-term. A business plan also allows ownership to analyze the business and determine the direction of the company for the upcoming year. The business mix should be evaluated to determine where changes in that mix should be made. Ownership and management should evaluate the benefits of new products and services, and assess existing products, services, employees, competitors, and regulations. In addition, an objective assessment needs to be made of the company’s strengths and weaknesses. (Visit www.contractingbusiness.com/businessplan for a sample business plan you can use as a model.)
Evaluate Strengths and Weaknesses Reacting to business opportunities (or lack of opportunities) takes a business first in one direction and then another. The business’ cost structure, technical expertise, management staff, and experience may not match up well, but ownership pursues a new opportunity because it’s there, not necessarily because it matches up well with company strengths. Creating a business plan, however, allows ownership to first identify issues — growth, cost control, margin management — and then drive the business toward the company’s strengths while developing and improving other areas for future growth. (Visit www.contractingbusiness.com/assessment for a sample assessment form.)
Determine Priority Goals If everyone in the company follows his or her personal strategies about how to eat the elephant, at the end of 30 days, the elephant will still be standing. Everyone in your company may understand that the goals are to increase sales and profits, but without clarification, employees may work at cross purposes, or follow strategies that don’t connect. For example, a promotion flyer may be mailed, but the service technicians aren’t told about the promotion and haven’t been trained on how to educate the customer.
Creation and communication of three to five annual company goals focus the company’s resources and employees.
Goals without Action Plans are Day-Dreams Action plans are the heart of the business plan. Goals equal what is to be accomplished. Action plans equal how the goals will be accomplished. Action plans are the “what do we do” direction to management and employees. Without action plans, the goal won’t be accomplished.
Remember the elephant goal. The goal is specific: eat this elephant. The goal is measurable: the elephant will be gone. And the goal has a time frame: 30 days to accomplish. So you know the what.
Now brainstorm the how or the action plans. You could serve elephant sandwiches every day at lunch for all the employees. Elephant cookies could be offered as a promotion with the purchase of a maintenance agreement. You could have an open house and serve elephant hors d’oeuvres.
Now, you’ve done the marketing plan, but aren’t there a few steps to take before implementing the marketing plan? First you must find a processing plant, and then a good chef who knows how to prepare elephant. You might need to rent a truck to get the elephant to the processing plant. You need to determine how many pounds of elephant need to be eaten each day so progress can be managed.
You get the idea. Action plans must accompany each goal. Action plans describe the processes, procedures, systems, behaviors, actions that need to be taken to accomplish the goal. They are defined steps that ownership can hold management and employees accountable for accomplishing. If the action plans are completed, the goal will be achieved.
Measure Progress A business plan is a living, breathing document. It shouldn’t sit in a desk drawer, gathering dust. By the same token, the plan shouldn’t be written on a stone tablet. In the implementation of the action plans, adjustments and additions will need to be made.
Each month, as the monthly financial performance is reviewed, measure progress on the business plan. Ask management and employees to explain progress on the action plans they are accountable for. Discuss how action plans have been implemented and integrated into the daily operations of the business. And, perhaps, make adjustments and additions to the action plans.
Finally, communicate implementation progress and adjustments throughout the organization each month. This keeps the company focused on the goals and action plans.
The Elephant is Eaten Virtually everyone reading this article could immediately list three to five goals that his or her business needs to accomplish, but no one ever seems to get around to. Too often, we do the immediate and not the important. A business plan allows you to do both. Analyze your business, determine where you want it to go, objectively analyze its strengths and weaknesses, and establish three to five goals with action plans. And then, sit back and watch your company eat that elephant. But don’t get too comfortable — there will be another elephant to eat next year!
Editor’s note: No elephants were harmed in the creation of this article.
Vicki and John LaPlant are the founders of Vital Learning Experiences (VLE), a Pottsboro, TX-based training and consulting business for the HVACR and plumbing industries. To learn more about the practical training seminars and one-on-one consulting for contractors and distributors offered by VLE, visit www.vitallearningexperiences.com, e-mail [email protected], or call 903/786-6262.
This article is based on the presentation, Action Plans — The Difference Between a Daydream and a Real World Business Plan, which Vicki and John LaPlant gave at HVAC Comfortech 2006, held in Baltimore, MD, Sept. 13-16, 2006.
Watch upcoming issues of CB for articles from HVAC Comfortech 2007, which was held Sept. 26-29 in St.Louis, MO.
For more information about HVAC Comfortech 2008, which will be held September 10-13 in Atlanta, GA, call 216/931-9550 or visit www.hvaccomfortech.com.