I’m talking about 2016. Where did it go? It seems like a blur, a blink of the eye, and the year is almost over.
We started with so much promise and expectation. Each year is a new race full of promise, hope, and challenge. Some of us exceeded the previous year, and better yet, our plan. That is a beautiful thing because it means we had a plan.
Sun Tzu wrote that, “Every battle is won or lost before it’s ever fought.” He was a pretty sharp guy. I bet if he were in business, he would have been as successful as he was as a general. He knew that to succeed you need to have a plan. This is the time of year that wise business owners are building their plan for 2017. I’m talking about a comprehensive business plan that includes staffing, marketing, overhead, conversion rates, and of course, sales.
The companies I have seen experience the highest levels of growth have business planning in common. I see them come back year after year to formally build their plan with their team and execute it as a team. It’s the difference between being proactive or being reactive. We can’t anticipate everything that can occur in 2017, but with a plan in place, businesses are better equipped to make the right decisions.
Building your business plan starts with knowing your numbers. Let’s start with the obvious number: total sales. If we know where we project to finish this year, we can use that information to start forming the projection for next year’s sales. We typically expect to move forward and grow, but if we are exiting revenue streams that are drying up or are unprofitable, we need to plan for that and adjust the rest of the plan accordingly. We can plan for ways to capture that revenue in other ways. This is where marketing comes in.
Your marketing plan will identify how much you are going to spend and what return you expect from that investment. Marketing is an ever-changing world, so identifying your cost per lead and which mediums are working or not working is crucial. Building the marketing spend not only gives you the revenue numbers, but it also helps you identify the number of calls or leads that result from the investment. Don’t forget to factor your average invoice, closing rate, and call capture in to that equation.
Do you have enough staff to achieve the goal? If we expect to do 20 percent more revenue next year, we may need to add more people, both direct labor and indirect labor. How many we need to add is a good piece of information to have. This is especially true in seasonal businesses such as HVAC, where the number of techs needed can swing significantly from one month to the next. This is where the budgeting of maintenance plans sold and retained becomes important so we can keep the business stable. Don’t underestimate the cost and time required for recruiting either. That is a real expense.
Unfortunately, our costs or overhead will go up even if the revenue doesn’t. Plan for cost increases and increases in cost from growth. Growth costs money and that’s OK, as long as it’s not a surprise. Plan for added trucks, fuel cost increases, and vehicle maintenance, etc., so our beautiful revenue dream doesn’t get gobbled up from overhead.
To borrow from Sun Tzu, your year should be a success before it starts!