Custom Install: A New Year is here!
While there is no way to completely predict the future, spending some time as a business owner developing your business plan will help you set your high-level objectives, guide the investment of your time and money, and give you a method to track and adapt your business as 2014 unfolds.
How detailed you make your business plan is up to you. Some companies produce detailed strategic plans covering an outlook of three to five years in the future that span hundreds of pages and are created by planning teams of 30 or more people. Others are drawn up on bar napkins by guys named Bill. The most important element of your plan is not the number of pages, but that it meets the needs of your business, and that it is both actionable and measurable. If it does not meet those criteria, it will quickly collect dust on your desk. For those of you who have not formalized your planning in the past, here are few guidelines to get you started. Adapt them to meet your needs—your plan is your business.
You business plan should start with a look at 2014 from two perspectives: 1) External market factors and how you believe your market will perform (top-down); and 2) The ability to meet the needs of the market (bottom-up).
This is where you will use a mix of external data and your experience to draw a picture of what 2014 will look like. You can use Gross Domestic Product (or GDP—the overall growth expectation for the economy) data as a starting point, which many companies do.
GDP forecasts are available at many sources for free and can be found quickly via an online search. Often the data is made available not only at the country level, but for your state and in some cases city or metro areas. So, if GDP in your market is expected to grow at 2.5 percent in 2014, you can assume your business should grow at the same rate if you are keeping up with the competition. Then ask yourself if you think that there are any major economic factors that would increase or decrease that growth. Are new jobs coming into your market? Are housing values and home sales picking up? Are corporations or local government making major investments? If so, you will need to make judgment calls on how much these should impact your growth goal.
The last components are technology trends and shifts. Are there new technologies or shifts in products that you sell or would like to sell that will help or hinder your sales? Make note of the pluses and minuses of each.
Finally, take a look at the number as a business owner and see if you are comfortable with it. Does 5 percent year-over-year growth meet your expectations for the performance of your business? Adjust accordingly.
Now that you have a growth target based on external factors, it is time to take a look at your business. How did your business perform in 2013? If your 2013 growth meets or exceeds your growth target for 2014, your focus may be on continuing to do what you are already doing with some minor adjustments. If you fell short, how large is the gap between 2013 growth and what you would like for 2014? Either way, take note of what helped or hindered you.
An Actionable Plan
What are the major things you will need to do to meet your goals as 2014 continues to unfold? Do you want to expand into a new technology? Start serving a new customer segment? Develop additional competencies? Improve your infrastructure such as your trucks or billing system?
Two important points about this list are to make sure that it is not too long (try to keep it to less than 10 items in total, five or fewer is better) and evaluate each of them to make sure that they will meaningfully and positively impact your ability to meet or exceed your 2014 goal. If your list is too long, you may not end up getting enough of them done and be challenged trying to prioritize them. If the items don’t materially impact your growth, are you making the best use of your time and money by focusing on them? Your ambitions may be infinite, but your resources are finite. Think best use of time and money for the return. When will you start each of these activities? How will you invest your time and capital in each? When will you complete the activity? What is the expected benefit? Seems like a lot of questions, but if you answer each of them, you will be able to measure your progress during the year.
Tracking and Adapting
At this point, you have your goal for 2014 and your key actions to achieve it. Now it is time to track your progress and adapt your plan as the year progresses. In my close to 20 years of building and executing business plans, the most successful plans are “living documents” that are reviewed regularly and adjusted as the year unfolds. Some of your predictions will come true. Some will not. You will be surprised at least a few times. If you are tracking, reviewing and modifying your plan on a regular basis, you will be better-prepared to take advantage of these changes than your competitors, and you may even see them coming.
I hope that you all had a successful 2013, and that your plans for 2014 show continued growth in our markets. One last note: The plan that was drawn up on a bar napkin that I described earlier became a multi-million dollar business within 12 months after Bill left the bar with it. Happy planning! •