You’ve likely heard the expression, “The definition of insanity is doing the same thing over and over again and expecting a different result.” Yet, it’s a sin of reckless hope and ambition I’ve found so many small-business owners commit year after year.
But it’s a new year. Let’s start with a new approach for your business in 2020.
My team and I work with independent, residential service contractors. We teach them the best practices to help them earn more for their hard work—and they work hard. Our clients serve as the backbone of society: They ensure our lights work, the heat is on and the water is running (but not through your ceiling).
Our clients are also grinders. If you’re a small-businessperson, you’re built the same way. It’s not uncommon for you to work late nights or early mornings, and often the two meet in the middle. If you’re not making the sales—or more importantly, the net profit—you expect, stop doing the same thing over and over, and instill real change.
Getting better begins with developing a comprehensive strategic plan (I know, planning is something few of us enjoy, yet it’s a necessity). To build your plan, your road map, you must have a destination. What do you want to achieve in 2020? Be specific. Put a top- and bottom-line number to it, but make it realistic. Twenty percent growth is a tangible number I often give our clients.
With a target in place, strategic planning reverse engineers your desired outcome. You’re probably thinking, “It’s easier said than done.” So, let’s dive into the four steps to building a rock-solid business plan:
1. Build a budget.
Your budget identifies what parts of the business make and lose money. Countless clients of ours will insist a certain division is highly profitable. Once we work with them to construct their budget, they discover the scary truth—and it comes in the form of red font.
Using an example from our industry, let’s say you own a large plumbing company and want to increase sales in 2020 by $4 million. Each truck produces $1,500 in revenue every day, and there are 260 working days in a year. Simple math tells us each truck produces about $390,000 in sales annually. To increase revenue by $4 million, you will need 10 more trucks if everything else, like your pricing, remains the same.
How you will achieve your top-line goal has become clear thanks to the information provided by your budget. You can determine how to increase your bottom line as well by knowing your numbers.
2. Develop a hiring plan.
Growing revenue often means hiring new people. You must plan for their addition; you need an organizational chart (another dirty term, I know). Yes, organizational charts clarify the chain of command, but they can also identify where you need to grow.
For our fictional plumbing company, we need 10 new plumbers. We must create 10 empty spots in our organizational chart, and let’s assign a date to have each position filled. Give yourself a deadline.
I preach to our clients the value of recruiting new employees every single day because it can take months to find the right person. Never hire from a place of urgency. If you’re looking to hire this year, get started today. You don’t need to hire that individual today, but at least you’ll know who to contact the minute you’re ready.
3. Create a training plan.
Outside of increasing their pricing, one of the most important pieces of advice I give our clients is they must train their employees. You could be losing hundreds of thousands of dollars or more a year by simply not training your people on how to communicate with clients and create an extraordinary purchasing experience.
Look at Chick-fil-A: Employees say, “My pleasure.” They offer to fill up your drink, rather than make you walk to a dispenser. Watching their drive-thru on a busy Saturday is impressive, as they have four or five employees working outside to ensure expediency. Yes, Chick-fil-A has a good product, but it’s their service that makes you smile before taking that first bite.
Do your employees make customers smile with every interaction? If not, you need to invest in communication training. It must be regimented. We tell our clients to huddle daily and train weekly. Training will drive both your top- and bottom-line results every time.
4. Write a marketing plan.
You want to increase revenue and add people? You need more clients, which means you need a marketing plan. First, decide how much you have to spend. We tell clients to aim to invest 10% of revenue (if that would kill your business, you’re not priced properly).
Next, create a simple spreadsheet. Write how much you will spend on each medium in each month, and stay true to those amounts. Budget more money in those traditionally slower months, not your busy season.
Where to spend your money really requires a conversation. Each situation is different. However, if you have a small budget, say no to radio and TV. I believe running three spots a day over 24 hours is throwing money away. Instead, invest your funds in immediate response and online mediums, like pay-per-click and SEO. Catch people when they’re looking for your services or product.
Your strategic plan is a road map showing what you intend to follow. Don’t let it shackle you. If you notice something not working during the year, adjust. The plan can be changed, but it will give you an excellent start. By modifying and perfecting your strategic plan each subsequent year, you will strengthen your business and see real results.