OF CONTRACTOR'S STAFF
BALTIMORE — Saying that 90,000 to 100,000 plumbing and HVAC contractors are in business today, consultant John LaPlant added that less than 10% do any planning.
"A business plan is a journey, not a destination," he told contractors Sept. 14 at HVAC Comfortech here. "And while you may take detours, a business plan with an action plan allows you to run the business, rather than the other way around."
LaPlant presented his workshop, "Action Plans — The Difference Between a Daydream and a Real-World Business Plan," with his wife and partner, Vicki, who told contractors that a business plan is a tool for planning, company management and communication. A business plan gives contractors an opportunity to step back and take a bird's eye view of their company.
"Look beyond the day-today operations and visualize what it can be," Vicki LaPlant said. "This is very important. As business owners, this too often is the part we miss!
"Use the business plan to define what kinds of opportunities and markets you want to pursue, now and in the future. Too often we let the business that comes to us define us."
Too many owners focus on improving their company's weaknesses when analyzing thier business to the point that they forget about what it does well, she said. Contractors should focus on their strengths too.
While the analysis of a company's processes is important, the most critical part of any business plan is the action plan, she said.
" The hard part is getting it done," she said. " It's all about the discipline of doing it. The action plan is the part that makes it live. Without the action plan, don't bother."
To get started and to help focus their efforts, contractors should choose three to five of their most important goals, she said. Each goal must be specific, measurable and contain a specific time frame. For example, a contractor's goal may be to increase the gross margin percentage in the service department from 42% to 50% by July 1, 2007.
Contractors then must define the steps of how they will make their goals happen. The steps, procedures, systems and behaviors that must be implemented to accomplish each goal comprise the action plan.
Keeping with the above goal as the example, possible action plans might include:
- Imposing a 5% price increase on service parts and labor;
- Implementing a flatrate pricing system for service calls;
- Dispatching service technicians from their home rather than the shop; and
- Tracking callbacks by individual technician.
As a communication tool, business plans must be shared with investors, potential buyers and, perhaps most importantly, employees. According to a survey cited by John La-Plant, employees with high levels of understanding of their company's goals say it improves their performance.
In the same survey of 55,000 people, 29% of employees say they understand and support their employer's goals. That means "two-thirds of employees are either knowingly or unknowingly sabotaging the company and have little or no emotional commitment to it," the survey concludes.
"Part of it is that we haven't shared our vision of what the company could or should be," John LaPlant said.
As successes are achieved in the action plan for each goal, the company should celebrate them with employees.
"Don't forget this part," John LaPlant said. "Put charts on the wall."
Another important element of the business plan is the passion, value or purpose statement. This is a statement that can include or combine: the contribution that the company makes to society; how the company is different from its competitors; how the world is richer with the company than without it; and why the company exists, not just what it does or produces.
"What are you? Do you remember that passion and excitement of what you wanted this company to be?" Vicki LaPlant asked. "Find that passion again and communicate it to your employees."
The workshop also defined what a business plan is not. It's not a worthless exercise, a list of goals without action plans or a budget, which is a goal and should be part of a business plan.
And, Vicki LaPlant said, a business plan is not a 50-page document that no one looks at after it is created. She admitted, however, that many contractors perceive business plans that way.
"That's why a lot of smallbusiness entrepreneurs don't do one," she said. "The first time you go a week without looking at your business plan, it is buried. It is no longer living.
"A business plan is a constant process. We make adjustments in it, we check our progress and adjust it again. It's about successful accomplishment of goals, but it's also how we implement action plans on a daily basis."