A well-researched, crafted and implemented business plan can be an important element in your shop’s growth.
Regularly reviewing and updating the plan can ensure your company stays on the right track, no matter what outside pressures it faces.
You probably wouldn’t take a long road trip without consulting a map, so it makes sense to apply that same principle to running your shop.
Like a map, a business plan helps you chart the course for your shop, identifying the different changes you want to make and any challenges you foresee along the way.
Here, a panel of manufacturers and business experts answer 11 questions about crafting and updating a business plan.
What is a business plan? “A business plan is a worthwhile process, it’s not a product, it’s not an endpoint, it’s a process, so it’s never complete because issues are always changing around them,” said Phillip S. Bessler, associate professor, business clinic director and SIFE Sam Walton Fellow at Baldwin-Wallace College in Berea, Ohio. “Markets are changing, competition is changing, and potential customers are changing.”
“It’s a statement at a point in time and it must be maintained,” he said. “A new venture needs a business plan to think through all the issues before they actually execute in order to minimize errors or catastrophic failure. An existing business needs to at least annually revisit their business plan to look at, particularly, the external issues that affect their business, the industry, the competition, and edit critical sections of that market analysis and marketing and sales plans.”
What should a business plan do? “I think at a very simplistic level it’s where you want to be at a certain point in time and what your plan is for getting there, so you can say it should have goals and, therefore, it should have the strategies to reach those goals,” said Raman Chadha, clinical professor and executive director of the Coleman Entrepreneurship Center at DePaul University in Chicago. “It should have objectives and then the action plan to achieve those objectives.”
“Whatever the language is that’s used, the basic concept is it should be forward-thinking, obviously, because that’s what a plan implies, and in being forward-thinking it should contain what it is that you are striving to achieve, what are the ambitions that you have and then what are you going to do in order to achieve those ambitions,” he said. “Those should be very tactical in nature because when you get down to a tactical level it’s easier to execute. There are a lot of other things that can and should be considered along the way, one is resources, ‘What types of human capital and financial capital will I need to execute these strategies and achieve the goals?'”
“Then lastly is the notion of milestones and a timeline, ‘Even though I say I want to open up 10 stores or 12 stores within two years, what’s my timeline?'” he said. “‘Maybe I want to open up the first store in three months and then two more in six months and so on, and the timeline should incorporate the real important measuring sticks of progress, ‘When can I have a sense that I’m actually making progress toward that goal of mine?'”
What should the business plan address? “Make them real, think about what causes you to wake up at 2 in the morning in a cold sweat and figure out what you can do to address those issues,” said Bessler of Baldwin-Wallace College. “A business plan is not a theoretical document written from 50,000 feet. Create a vision of what success looks like three to five years from now. Where do you want to be in three to five years?”
“Paint a multidimensional, high-definition 3-D image of what success looks like to you and describe that, and then write your business plan so that you can take the proper steps to achieve that vision,” he said. “Be honest with yourself when you’re assessing the present situation. Look at yourself in the mirror and be brutally honest with yourself as to what’s going on with your business, what are your strengths, what are your weaknesses, what are your competitors’ strength and what are their weaknesses, and figure out how to either fix yours or take advantage of theirs.”
What types of business plans are there? “All businesses should have a strategic plan, and what that means is it’s a plan which is a multi-year plan,” said John M. Rapanos, dean of the School of Business at Berkley College in New York City. “It talks about the long-term direction of an organization, it could be a big business, it could be a small business, so these are really critical decisions.”
“Small businesses should have strategic plans. They don’t have to be elaborate but they should be thinking about the direction of their organization, where they want to go, who are their customers, how will they approach these customers, what products would they use to serve these customers, so there [are] a lot of important decisions that have be made in a strategic plan,” said Rapanos. “The other part of it is once you have this strategic plan, you then develop tactical plans. Normally these are one year or less, [and] talk about action items, and detail how you are going to do something.”
How do you start crafting a business plan? “[First] keep it simple,” said Jim Maher, owner of Good Vibrations Motorsports, a performance parts manufacturer based in Whittier, California. “[Second], pretty much write down what you want to do in the next 12 months. It’s fresh in your mind now but it won’t be three months from now when you’re in the storm and things are chaotic and you’re being pulled different ways, so write down what you would like to achieve in the next 12 months. “[Third], be flexible,” he said “If something changes, this is not etched in stone, this is more of a road map but there are different highways besides the freeways, you may have to take a detour or something short-term. Don’t feel like you’ve got to follow this to the T. [Fourth], remember it’s there to get you back on course when you do stray.”
What research do you need to do? “I think what is really critical is to do the market research so that [you] really understand [your] industry, [your] customer and [your] competitors, and that market research should be a combination of Internet-based research, library-based research and actually talking to potential customers,” said Greg Henley, director of AcceleratorWorks, a Roswell, Georgia-based company that develops and nurtures small businesses. “I think the concept of talking to potential customers can really fine-tune the business plan because you’re talking to people who will potentially buy your product or service.”
“A business plan itself should be a living, breathing document that changes whenever conditions in the market change,” he said. “I can’t really stress more the idea of talking to real customers. A lot of people think business plans are going in a room [alone] and just simply doing research and writing. One of the things I suggest is that you get out and talk to people who are potentially going to buy your product or service.”
What questions should you ask about your shop? “When you’re preparing a business plan, you need to look at all of the wonderful things you can do as a company and you need to look at all the pitfalls and the mistakes you can make,” said Al Kamhi, general manager at Control Freak Suspensions, a manufacturer of suspension systems and components based in Winter Springs, Florida. “You have to be willing to take a very realistic view of your company’s capabilities, of the competition’s capabilities, of your strengths, and take a very hard look at the weaknesses within [your] own company.”
“If you’re not willing to hear the truth, don’t do it, because you’re going to fail anyway, don’t waste the time,” he said. “One of the things people discover, if they’re doing their business plan correctly, taking a hard look internally, taking a hard look at their capabilities and weaknesses, they’re going to discover a lot of inconvenient truths about themselves and their company. We did, and you have to deal with those inconvenient truths and strengthen your company. Take those weaknesses as a lesson, use them as an opportunity, build on those weaknesses and turn them into strengths.”
“If you’re not willing to accept that you have weaknesses or that you have warts and blemishes, don’t look in the mirror because that’s what this is doing-a business plan is taking a hard look in the mirror,” said Kamhi.
What outside people should you consult with? “When we start looking at the market and trying to analyze the marketplace and analyze our competition in the marketplace, then we call on the experience of companies that are larger and older than ours where we have friends and we ask them to assist us in understanding the marketplace,” said Kamhi. “It might be a conference call with their national sales manager or their national marketing manager or even the president of the company, and they share their insights on the marketplace, and that helps us, and hopefully we can provide them like information.”
“Alliances are very important,” he added. “It’s kind of a check-and-balance system, just because we analyze a market to be a certain way, doesn’t make it so, but if we get that same kind of feedback from two or three others out there in the marketplace, then it really helps us understand and it helps us with our decisions.”
How often should the business plan be updated? “It’s an ongoing thing, all throughout the year you might be tweaking it, like right now we have two slow months of the season, November, December [so] this is the time that we can really dig into it deep and say, ‘What bigger changes do we need to make, if any?'” said Maher of Good Vibrations Motorsports. “Throughout the year you’re just too busy, you can’t make wholesale changes.”
“Throughout the year, we look at [the business plan], fine-tune it, but now is when you really get into it and make any bigger changes,” he said. “Plus, you also use it as a barometer and you look back 12 months, say, ‘OK, we decided to do this and do that, and now let’s look back and review that and see was that good, if so, let’s continue, if not, what can we do to change it?’ You’re not always looking forward, sometimes you’re looking back and looking at the numbers and seeing if this is working for you.”
When should you write your business plan? “There’s no better time to do it than right now,” Chadha of DePaul University said. “Planning is something that doesn’t generate revenue [or] profit, at least in the short term, and so it often gets put on the back burner. There’s never a good time to do it and so it’s something that I think should be attended to as soon as possible. It doesn’t have to be a big project, it can be something as simple as a one-page document that says at the very top, ‘Here are the three things I want to achieve in the next six, 12, 18 months,’ and the rest of the page you write out how you’re going to be achieving that. ”
How will having a business plan benefit your shop? “[The business plan] helps you get back on course after you already drifted,” said Maher of Good Vibrations Motorsports. “If things are going [well], that’s great, but there are times that, for whatever reason, you’re going to stray, you’re going to drift one way or another, and this helps you get focused back to what your actual goals were. Those goals may not be the best goals, but you have to go back and reevaluate and change them.”
“The plan helps us get back focused on what our intention was, good or bad,” he said. “We like to stick to a plan for at least 12 months and then look at the hard numbers. [We’ll] go back after 12 months, look [at the numbers and ask], ‘Was that a good decision?'”