The simple fact is that most garage owners don't have a business plan.
So why are business plans such a low priority for Garage owners?
Whereas if you look at successful businesses in other sectors, planning seems to be quite normal.
What happens if you don’t have a business plan?
That’s the first question? Well, you’re probably going to get similar results to the previous year.
That’s common sense, isn’t it?
You know, if you don’t plan to change anything, nothing probably will change.
So you’ll end up doing the same as last year. And that’s great. If last year was brilliant for you and you’re going to get a similar result to that. However, it doesn’t allow for changes.
It doesn’t allow for planning ahead for what is going to be a period of intense change in our industry over the next five to 10 years, because what we’ll be working on will change radically.
We need to have an idea of how are we going to deal with change, whatever the future brings.
That requires an element of planning. Change is inevitable, It’s too easy to be reactive rather than proactive. If nothing else a reason for having a plan, is so you can have a plan B, C or d.
What is a 1-year business plan?
Using my method of business Planning, a business plan is a one-year plan that sets targets for the coming year. Even if you don’t have a plan, you probably set two targets for the year.
- Net profit
If they are the only two targets you set yourself, then write them down.
That in in itself sets the challenge for you.
How are you going to achieve those two numbers?
How are you going to get that level of turnover and how are you going to make that profit?
To do that you’re going to have to then break that target down.
For example, into how many sales in a year, or what the turnover is per day or per week or per month or per quarter.
That’s basically the essence of the 1 Year Business Plan, set out your target and how you will achieve it.
How do you know what those Numbers are going to be?
How do you write a business plan?
Especially if you’ve never written a business plan before?
How do you set your one-year targets?
It’s not easy and that’s probably why most people don’t do it.
You have to Start with the end in mind.
You need to know where you’re going, or work back from.
I call this the vision or the endpoint of your business.
That can seem really far away for some people. So we limit our long term vision to 10 years.
While it is difficult to imagine what’s going to happen in 10 years’ time, you might have an idea, of what you want from your business in 10 years.
So that’s the basis of the vision. It’s the best version of your business. How you want your business to serve you in the future.
These are the first steps in establishing what you want your business to do for you. What does it look like?
Once you know this you can continue to make this picture more vivid, colouring in the vision, until it is real.
Next you take your 10-year vision and you break that into what I call goals. This is your mid-term Plan. Consisting of three, three-year planning cycles with a spare year.
This is the point that you start really thinking about the kind of numbers you want your business to be doing.
Your 10-year vision may be a number, or a statement.
But the 3 year planning cycle sets out how you aim to achieve it.
I suggest in the first 3 Year Planning Cycle, you achieve around about 20% of your 10-year vision.
In the second 3-year planning cycle you achieve 30% of your 10-year vision, which leaves 50% for the 3rd and final 3-year Planning cycle.
I suggest this because it takes time to build momentum, the compounding effect if you like.
1-Year Business Plan
You have a choice with your 1 Year plan you can either;
Split your 3-Year Plan into thirds, aim to achieve 33% of the total your 3-year goals every year.
Repeat the 20%-30%-50% method outlined above. Whereby you aim to achieve 20% of the 3-year goals in the first year and so on.
The targets do not have to be numerical.
But most people start with Turnover and net Profit as their primary goals.
Now you have an idea of what you need to achieve in that first year.
Write it down, make it official. This sets targets. The first two targets are Turnover and profit. The next four to seven items on your Plan are simply what you need to do to achieve it.
These are your objectives, which become your business plan for the year.
Three reasons for having a business plan.
- Makes you to focus.
- Makes you think Strategically
- Sets Metrics
Your Business Plan will make you focus on the things in your business that are going to achieve your three-year planning cycle, which then means you’ll achieve your 10-year vision.
You might focus on stuff in your business that isn’t going as well as it should.
Or focus on why your business is doing well, so you do more of it.
But you don’t know how your business is performing until you start to analyse it.
The second reason for having a business plan, is that you can’t have a strategy for achieving anything. If you don’t know what it is you’re trying to achieve.
Now, it sounds obvious, but most Garage owners in my experience don’t know what is they’re trying to achieve. Their idea of a successful year in business is still trading. That’s what defines a successful year for them, but that doesn’t get you to your end purpose or the reason why you’re in business. So whether we like it or not, unless we’re a charity, the reason we’re in business is to make money.
If we’re not making enough money, what we need is a plan.
It forces us to think more strategically.
The third reason having a business plan is it forces you to set out some metrics that you’re going to measure. Whatever those metrics that you come up with are, they are going to be the metrics that enable you to hit your numbers.
When you set a metric, you have to measure it. And if you’re measuring something, you manage it. So if you’re falling short, you take steps to improve your business, to improve that metric, to hit your target.
A business plan will give you focus. It will allow you to think strategically, and it will provide you with the metrics you need to measure.
When you’re thinking about the next 12 months, most people underestimate what you can do in a year, but overestimate what they can do in a week.
So you want to set a stretch goal.
That comes back to your vision, which if it is not a big audacious Goal, then your three-year cycle planning, won’t set big enough goals. Therefore, you’re when it comes down to your 1-year plan, the objectives you set won’t be big enough to stretch you.
If you set a list of stretch goals or objectives that you want to achieve within the next 12 months and let’s say you achieve 7 out of 10 of them, that’s a pretty good year. Especially if your previous measure was the doors stayed open, or managed to pay all your bills.
That’s my take on the 1-year business plan.