Last month I discussed operating metrics. Hopefully by now you are gathering your first set of those, and by this time next month you are going to have a good idea where to focus your efforts for increasing sales or and/or profits.
Chapter 2 of my book, How To Salvage Millions From Your Small Business, discusses making a plan and understanding your customer. (There are other topics in Chapter 2, as well, but I will cover them later.) It’s funny how we wave our arms in the air (figuratively speaking) and talk about what we are going to do, but never get around to putting the plan on paper. Equally humorous is how later we have selective memory and justify our lack of success by remembering only what we want to recall from that plan.
There is no substitute for putting the entire plan down on paper. Some of the benefits of this exercise are these:
- With the plan on paper, you can show it to key employees for comments and ultimately use it to get their buy-in.
- You can use it for the bank and gain great respect. You may want to “dial it back” for the bank so that you can always exceed the banker’s expectations.
- In the process of putting it on paper, you will find many assumptions you thought you understood but which don’t play out as anticipated.
- Putting it on paper will force you to go back and look at prior periods to “test” your assumptions. Great enlightenment will come from this process.
- You will probably realize, as a result of putting it on paper, that you haven’t been gathering all the operating information and metrics necessary to make fully informed projections.
Setting goals on paper will also allow you to set milestones. In other words, if you are now at $100,000/mo. in sales, and you are predicting that you will be at $135,000/mo in 12 months, it’s easy to see that you need to have one or more milestones along the way. Although you may not have achieved 50% of the forecasted increase in 6 months, it’s reasonable to assume that you will have achieved, say, 40% of the goal. If at that point you haven’t achieved the milestone, you need to figure out how to get back on track. Don’t wait until year-end to make adjustments (or excuses).
When I do consulting, I always find the lack of operating metrics and no written plan to execute against.
Know your customer. Meet with your staff, and decide who that core customer is. Following that, in every planning meeting, make sure you are matching your product, warranty and service level to that customer. Recyclers, I believe, have tried to be too much for too many for too long. Many of us believe anyone driving a vehicle (regardless of age, whether it’s import or domestic, customer’s location, wholesale or retail purchaser, or type of part needed) is our potential customer. To thrive, and achieve significant success, you simply must decide who your customer is.
Next month: “Is Bigger Really Better?”, tips on building a business plan, and more good stuff from Chapter 2.
Remember, only you can make BUSINESS GREAT!
Please email if you would like me to send previous articles.
Ron Sturgeon is past owner of AAA Small Car World. In 1999, he sold his six Texas locations, with 140 employees, to Greenleaf. He now manages his real estate holdings and investments, and does limited small business consulting. You can learn more about him at WWW.salvagingmillions.com. (Click on “more about Ron Sturgeon”.) He can be reached at 5940 Eden, Haltom City, TX, 76117, or firstname.lastname@example.org.