Blueprint for Success
When POB asked me to write this article on company planning, I jumped at the chance. As many of you already know, I love working with and giving advice to surveyors on how to run their businesses. I think my article will allow both small- and medium-sized companies to develop a sound, workable business plan. If you don't approach writing your plan with the attitude that it will change the way you do business, we are both wasting our time.
Over the years I have acquired written plans by big companies that were so complex and confusing no one could implement them. One was a full two inches thick and stamped confidential. I can tell you what that plan was used for-collecting dust. We are not going to fall victim to the two-inch thick business plan syndrome. On the other side is the one-page plan. I wish we could write a good plan on one page. Most of us need more space to outline our intentions in the one- and five-year range, so maybe we are talking five to 10 very well thought-out pages of information. We are going to practice the KISS (Keep It Simple Stupid) principle.
I have heard people say, "But I have a plan in my head." That is fine, but how do you communicate the information to others? Also I have heard people say planning is "dumb" or "boring." A business plan will only be as successful as you-the company owner-makes it. The best way to start is by interviewing members of your firm; you may be pleasantly surprised at the great input you get from employees. They may know what is at the heart of making your company a success.
What's in a Plan?
This is a list of goals developed during the planning process. Most lists contain at least five but never more than 10. Be very specific. The items should not make statements like "the largest company in area," but should instead read, "grow from 10 employees to 15 in the next year." If you just accomplish this part of the plan, it could be the most important thing you do as an owner this year because carrying out the goals in this part of the plan will show employees you are committed to the planning process.
The Business Goals Sheet
Mission StatementThis should be the place you pull together your thoughts and ideas on what you want your company to become in the eyes of clients and the community. Most survey/engineering firms' statements should read something like this: "A professional association of employees gathered together to serve clients with quality services in the fields of surveying and engineering, while giving employees an environment in which they can develop their technical skills while allowing them the opportunity to earn compensation dependent on their level of expertise." This statement should be specific and tailored to your business. The most important consideration is not just to "talk the talk" but to "walk the walk."
Business Goals and ObjectivesThis will be different if you are starting a business as opposed to having an existing business. If this is a new business, you want to cover items such as when you will open the doors and start providing services. Your long-term business success has a lot to do with how you perceive it at conception. If you want a company to continue long-term, you may give up profitability along the way. Bringing in future owners and training them costs money and will affect profit. If you want to run a company to extract the most profit and close the doors when you retire, you will most likely reap more financial gains. This is known as running the company as a cash cow. These are the types of strategies that need to be reflected in your business plan. If you do run a company as a cash cow, you will experience problems keeping key employees. You also might want to consider the size of the geographic area where you want to provide services.
The Business DescriptionHow do you perceive your business? What services will you offer? Where will the business be located? What are the estimated gross sales? How many employees will you need to meet this goal? These are the more practical questions that need to be answered in this section of your plan. While this is not considered by many to be a very glamorous part of the plan, if you can get a good handle on this part of your business, you will improve your company's chance of success.
Market Analysis and StrategyI recently read a statement that said the difference between a business and a hobby is profit. A business must make a profit to survive. In the market analysis section, you outline who your clients will be and whether they will be willing to pay the type of fee to allow you to make a profit. You may want to address what percent of the market you believe your company can capture. Is there more than one market segment that you can serve with your existing resources? How will you get the word out to potential clients about the services you offer?
Most experts involved in business planning feel this is the single most important part of your plan. A second part of this section would be a marketing plan tailored to your specific services.
Management and OrganizationThis addresses the operational structure of the business. What will the company become: a sole proprietorship, partnership or maybe a corporation? Who will manage the work? Who will manage the business aspects of the office? Who will manage the employees? I think you can see where I am going with this part of the plan. Each phase of the business has to be addressed in the plan for it to be successful.
Financial PlanThere are many important items to address in the financial part of the plan. If you're starting a new business, you need to address start-up capital. If you have an existing business, all these items need to be addressed: the accounting system, working capital, income projections, current balance sheet, knowing your overhead, and planning for technology and capital improvements. You may want to outline insurance needs and costs. You may even want to try your hand at one- to five-year income projections. This plan can take you anywhere you want to go dependent on your needs and desires.
The Business Plan SummaryI know this sounds odd, but the summary is written after the plan is completed. The summary is all that is read by many people and should contain all the different parts of the plan in a few well-written sentences. The summary is most often a few paragraphs at most. You can think of it as your one-page plan.
When you finish, don't put the plan away, rejoicing that your work is completed. The plan needs to be shared with all the employees that have a direct role in making your company successful.
You know the old saying, "Feed a person a fish you helped them for a day; teach a person to fish you helped them for a lifetime." I think you now have the tools you need to get busy and write your business plan. Enjoy the process.
Why a Business Plan?
Planning for Starting a New BusinessThe planning for starting a new business differs from planning for an established business because there are a number of constraints that do not exist in starting a business. Here are some ideas to include in your new business plan.
The first and most important idea is geographic location. You are free to locate the new business anywhere your little heart desires. Just a reminder that we in the survey business are dependent on the investment of money into infrastructure and real estate development. This dictates that you locate in an area where there is plenty of action. This most likely means there are a number of existing companies in the geographic area. This is good; it shows there is plenty of work.
The second idea to address is working capital. Sense you currently do not have equipment, you can wisely invest in the latest technology. Study your equipment needs carefully and buy equipment that can save labor costs. Look for special buys in field equipment, like dealer demo sales or used equipment. Buy the fastest computers available new; they can save you time. This relates to cost savings.
The third item to keep in mind is to start slowly and don't spend borrowed money. Try to get some cash flow started. Remember, deadbeats flock to new businesses wanting to charge with no intention of paying the bill. Start out by requiring a signed contract. You may want to consider requesting a retainer. This could become your standard operating procedure.