Hank Darlington: Does your company have a business plan?
For the past 2 1/2 years I have been doing some pro bono consulting work for two guys who own a countertop fabrication business.
We needed an 8-foot countertop for a craft room. While meeting and talking with Dan and Tom, they learned I did consulting work in the kitchen and bathroom industry. They admitted their business was running them — not the other way around.
They had been in business for 17 years, were working six days a week, had a dozen employees, were making a little money and paying themselves about what they could have made working for one of the big boxes.
Two-and-a-half years later, they have the latest QuickBooks accounting software, generate monthly financials and have learned how to read and respond to them. They have written job descriptions for every employee, do twice-a-year job-performance evaluations, have a new website, company logo and a presence on social media.
Sales and margins are up, they’ve bought the building they had been renting for 17 years and two expensive machines that will make the “rock shop“ more efficient and profitable. They’re still working long, hard hours, but for the first time they’re actually having fun.
Since I owned a one-stop shopping business (decorative plumbing and hardware, kitchen cabinets, appliances and countertops), I have encouraged the boys to expand into these areas. They have just hired a long-time, experienced kitchen designer and are making plans for a new, expanded showroom space.
By meeting every other week I have been able to guide Dan and Tom into a much more professional way of running their business.
Heading into the new year, I challenged the boys to do a detailed budget for 2019 and to do their very first three- to five-year business plan. They asked why a business plan? I liken it to the GPS that many of us have in our cars or on our phones. You want to go from point A to point B and you want to know how to get there. A detailed written business plan does the same thing — it tells you where are you are in your business, where you want to be in three to five years and how you’re going to get there.
I’m sure many of you larger distributors have business plans for the overall company — but do you have one specific to your showroom business? It really is a different business, — so it should have a detailed plan of its own. And my experience tells me that too many of you smaller showroom businesses don’t do business plans.
Working with Dan and Tom has been a primer in good business management. I should have mentioned their business had too much employee turnover, but job descriptions, performance reviews and a monthly bonus opportunity (that employees have received 10 out of the last 11 months) has improved the morale of the “blue team” immensely. (All employees wear blue shirts and hats with the company name/logo on them, thus the “blue team” moniker.)
Let’s create one
Creating a solid business plan should be your first step toward success in your business. From obtaining funding, to hiring employees, planning for expansion, to buying a building or new equipment, a business plan can be your guide to keeping your business on track. It will keep you focused on your goals and keep you moving forward when faced with obstacles. Here are some key concepts of a business plan.
Communication: One of the key purposes of a business plan is communication. It serves, in effect, as a resume for your business. You can and should share the plan with all current and prospective employees to let them know what your priorities are.
Management: Helping you to manage your business is another important purpose of the business plan. As a management tool, your business plan helps you evaluate your progress and provides insight into aspects of your business that might need attention. As you manage your business, the experience you’ve gained will help you modify your plan, and make adjustments according to changes in economic conditions and other circumstances. Use your business plan to establish milestones, and gauge your progress against timelines and goals set forth in your plan.
Strategic planning: Your business plan can continue to guide you through various stages of growth as your business progresses. Use it to help make decisions, such as when to hire additional personnel, whether to open more showrooms or whether to diversify your product and service offerings.
Marketing and sales: Your plan should include a strategy for marketing your business based on your market research to determine the best ways to reach your customers. Use it to create a marketing and sales plan that will work within your budget. Your plan will help you make decisions such as what media should you use to tell your story and attract potential clients to your showroom. Should you use telemarketing or outside salespeople to contact leads and close sales? And, of course, you can modify your plan as you find out what works best.
I’ve seen business plans that are as informal as you can get and I’ve seen 30-page business plans that go into minute details. Once you determine that you should have a business plan and why, then you can select the style that works best for you.
I strongly suggest you start with a short plan, emphasizing your mission and goals. Your purpose is to ensure your showroom business is headed in the right direction for the next three to five years. If you’re planning to grow your business, focus on market, products and services, making sure you have sufficient resources.
Most business plans start with an executive summary followed by financial statements. In between are sections that describe the business idea operationally. It’s your plan! You can arrange it the best way you feel it will work for you. Years ago, I bought one of those business plans for dummies-type books. There were lots of examples and explanations, even a rough outline that allowed you to fill in the blanks. I bet it or something similar still is out there.
If you’re not sure you need a business plan (you definitely do) or how to create one — find an outside coach or advisor. There are a lot of us out there. Go to the Small Business Administration (SBA) website. It has lots of good information on the subject and it may even have an office and courses in your area.
A well-done business plan will help you allocate resources properly, handle unforeseen complications and help you make the right decisions. You wouldn’t get in your car without a navigation system, would you? So why would you try to run your business without a darned good roadmap?