Why Every DETAIL Operation Needs a Business Plan
A BUSINESS PLAN is your map to the money. It tells you where you're going to get it, and how much of it you're going to be able to keep. And, like any map, the more specific the plan is, the easier it will be to get to your destination.
Do you need a Business Plan?
Would you give a price estimate without looking at the car first? I'm sure not! So, can you run your business without a plan? Unfortunately, this is common in the detail business, and many businesses for that matter. Which is one of the reasons why well over a 500,000 businesses fail every year. Most of the detail business owners I deal with really know detailing. They know what chemicals to use, which type of pad works best on a particular paint finish and which tool to use. Some are even good business people. They understand controlling expenses, watching labor costs and pricing their services to make a profit. They work hard and are justifiably proud of their success.
Too often, however, their Business Plans, are nothing more than: "If I offer the service, they will come." That works in the movies, but it is not a formula for success in the real world.
Why Plan?
If you expect to run a profitable detail business, you need a business plan for the same reasons you need a plan to build a house. The plan helps you focus on all the important factors that contribute to success. It helps you make key decisions on everything from the types of customers you look for to the number of employees you hire.
A sound Business Plan is also an absolute must if you need financing whether it be from a bank, potential investors or even your suppliers.
The Business Plan identifies the customers, the amount of sales they will produce, and show you how profitable those sales will be. It's like a job estimate that begins at the end of the process [the sale to the customer] and works backwards.
The plan helps you determine how much inventory to have and how much labor you will need. It helps project the costs, and figure out whether the work will be profitable at the prices charged. Only, instead of doing it on a job-by-job basis like an estimate, the Business Plan does it for your business as a whole over a specific period of time.
Business Plan Elements
A Business Plan isn't about what kind of detailing you're going to do, or how big a shop is or if you need a trailer or van. Those are considerations, but are very minor, you might say, footnotes. Here are five really important basic components.
Business Description
A short statement about why this detail business exists and what it hopes to accomplish. Generally, the more specific � and shorter � the better.
Marketing Plan
This answers the questions about: How the business will be successful? What are you selling? Who will buy it? Why? What need does it satisfy for them? How many potential customers exist for your service? How often will they buy? What alternatives do they have, COMPETITION? Where are they? How do you reach them?
Financial Plan
This shows the expected financial gains from the marketing plan. How much money will you generate? How much net worth will be generated? Who receives that income, (you or the bank)?
Cash Flow Plan
Step-by-step instructions for generating cash and keeping it. How will the working assets be acquired? When will operating cash be needed? How soon will profits appear? What happens until then?
Management Plan
This describes the owner's (and/or manager�s) role in the business. Who does what? What are their qualifications? How much training expense and time is required to learn? How much time will be devoted to production, marketing, and administration? Also included are contingency plans for events like natural disasters, up and downturns in the economy, and competitive changes.
This is a very brief description of each component and do not think it is complete. However, it will give you an idea of what kind of information, data, guesstimates, and reasoning go into a Business Plan.
Most of all, a good Business Plan needs to be realistic, not include "pipe-dreams", should produce an "optimistic outlook based on pessimistic expectations."
Preparing a good Business Plan doesn't happen in an hour. It requires you to do research and most of all think. Sound Business Plans can come in many forms, but they all have one thing in common: they are in writing. You can use one of the many software packages available, or simply fill a loose-leaf binder with pencil-written notes, it is the act of writing it down that forces you to give your plan the time and thought it deserves. Don�t do it if you can�t write it down.
Who Needs It?
Many small businesses think a Business Plan is something only a start-up business needs. But that's like saying that once you look under the hood and start overhauling your engine, you won't find any hidden surprises under the manifold or behind the old water pump. There are going to be surprises. When a surprise occurs, you can turn to your Business Plan, make the necessary adjustments, and most importantly � trace what these adjustments will have on the rest of the business. Having a blueprint � a Business Plan � saves time and eliminates errors.
A well thought-out Business Plan is essential if the shop detail business is to grow. Growth requires capital for things like more space, equipment, people and material � everything that will hopefully lead to more profit.
That capital may be available from the business� current revenue or the owner's bank account, but most of the time it's going to have to come from a loan, vendor credit, or even outside investors. But all these sources are going to require not just a financial history of the business, but financial projections as well � projections supported by a Business Plan.
Even if no one else is involved and the money is coming out of the owner's pocket, the decision to reach in there and get it should be based on a sound plan. The most successful business people I know are stricter when spending their own money more so than spending anybody else's. That's how they got that money in their pocket in the first place.
Plan Help
One final thought: Preparing a sound Business Plan is like detailing a Motor Home, much easier if there are two to do it. Fortunately, there is a wealth of help available.
The Small Business Administration is a starting point and a good connection to other resources. Look for the local SCORE chapter [Service Core of Retired Executives) or a SBDC [Small Business Development Council) through your Chamber of Commerce, community college, or public library. Your banker or accountant should be able to provide some direction, too. If I can help you please contact me buda@detailplus.com
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