One brief example of action steps in place might be the decision to add another service to your business. For instance, let us look at a flatwork concrete contractor who is adding concrete counter tops to their field of services. The action steps might include the following list of items.
- Identify best market for concrete counter top opportunities.
- Review current clients with potential for concrete counter tops.
- Determine needed expertise for forming, pouring, and finishing counter tops.
- Determine needed tools and equipment for concrete counter tops.
- Set realistic goals for concrete counter top revenue for first three years. (Determine optimum profit potential.)
- Purchase needed equipment and tools.
- Hire needed workers for selling and producing concrete counter tops or train existing employees to do.
- Look at marketing strategies and needed marketing budget to support new sales.
- Make the monitoring of concrete counter top revenues, gross margin, etc. part of the company's overall effort to monitor business.
The actionable steps outlined above are completely different than how many contractors make the decision to add a service. Far too many contractors make the decision on the fly, almost as a knee jerk response to one customer that has a need. While there are spontaneous decisions to add a service that work out, such decisions more often leave a contractor having purchased tools and equipment that are rarely used in the future.
The third section of a business plan requires more consistency on the part of the contractor. Reading the financials for a business has become a recognized need for successful contractors. More than reading their Profit & Loss Statements or studying their Balance Statements, successful contractors incorporate this third business plan component to create monitoring processes that measure the success of their business objectives. Once again it will take some very practical measurements that can be easily tracked.
While you can measure just about anything you want, consider the following targets that might signal if your business planning efforts are taking the company in the right direction.
- Gross Profit for each job completed.
- Percentage material use against estimate.
- Percentage hours worked against estimate.
- Percentage bids won against bids created.
- Percentage bids won against goal per market type.
- Overtime hours worked versus overtime hours budgeted.
- Customer call-backs versus customer call-back target.
Each target above should be quantified if possible. Certainly the items addressed above can be. However, there may be other signs of a growing business that can be difficult to measure. For instance: Does the customer like our company? If so, how much? How will our construction success positively impact our future growth? How can we determine if our customers would purchase more services from our company?
The questions just shared are important to address but admittedly difficult to measure. However, the successful contractor seems to find the method to determine what those answers are and then determine a way to incorporate such feedback into their future plans for success.
For many measurable items, there should be targets created on a weekly, monthly, quarterly, and annual basis. Targets need to be clearly and regularly communicated to the workers who most impact the results. Remember, what is not regularly discussed is quickly forgotten.
Effective business planning requires focused attention by owners and their senior leaders. It is more than simply putting some goals out there and then making a mad scramble to reach the goals. Business planning forces leaders to think more logically, methodically, while also allowing enough wiggle room for adjustments and changes throughout the journey.
If you have never developed a business plan start working on developing yours as soon as possible. There really is not a bad time to create your business plan. You will find however that reviewing and updating your business plans in the future should be done in preparation for each new business year.