How to create page three of your three-page 2014 Business Plan

In the past two months you’ve created your 2014 goals with your employees and your 2014 marketing plan.  This month you’ll complete your three page business plan by estimating your 2014 budget.  I’ll end this series with some implementation suggestions so that you make 2014 your best year ever.

Your financials are your scorecard.  Here are some questions to ask:

1. Are you getting your monthly financial statements in a timely manner?

If you are not getting your financial statements within 15 to at most 20 days after the month has ended you are doing yourself a disservice. It makes absolutely no sense to get January’s information in March.  By this time any minor issues which you would have seen may have become major crises.

2. Are your financials formatted in a manner that helps you operate your business rather than makes it easy for your accountant to do your taxes? 

Many accountants put revenues, expenses, assets, and liabilities in a format which makes it easy to do taxes but impossible for you to check your business operations easily. 

You need your financial information in a format to make good decisions on labor productivity, gross margins, and overhead issues.  If your accountant can’t or won’t put the information you give him in a format that helps you operate your business, one of your personal goals for 2014 should be to find another accountant.

3. Are your financial statements accurate? 

This means that you’ve taken an accurate inventory at the end of the year, you have all of your payables and receivables current in the months that they were incurred, and accurate job costing for all departments.  Remember that garbage in equals garbage out.
If you need to work on any of these areas, then they should be the initial financial goals that you set for 2014.
Other questions to ask:

4. What are your gross margin and net profit goals? 

These are important and an integral part of budgeting for 2014.

5. When you create your budget for 2014 look at what happened in 2013.  Did you have revenues or lack of revenues because of situations out of your control (i.e. the economy, the weather, a competitor going bankrupt, one of your top employees going into business and taking your customers, etc.) or did you do some creative referral/marketing programs to generate new customers that caused sales to increase? 2013’s budget should be the basis for the 2014’s budget. 

Look at what happened during the year and make reasonable assumptions about what you will accomplish next year. Then, when you begin the new year, make a final goal to review your financial statements every month. Compare them to your budget.  Look at the comparison both positively and negatively.  If your sales are ahead of budget – what happened to generate more than expected?  Can it continue? If sales are behind budget – what happened to generate less revenue than expected?  Can you generate more in future months to get back on track?  If not, then you should redo the budget.
After you’ve created your goals, marketing plan, and budget, it’s time to implement them and track them.

The first page is your list of goals for the year.  Put your list of goals somewhere your employees and you can see them often. This is a consistent, subtle reminder for you to get them accomplished. When your employees can see the goals and progress towards achieving those goals, they will help keep everyone focused.  They want to see the progress and will help with ideas to stay on track.

The second page is your marketing/advertising plan.  This is the grid which describes the activities you will do to accomplish your sales and customer goals.  Again, put this marketing/advertising grid where everyone can see it. If you have assigned marketing tasks to one of your employees, this is an easy way to make sure that you know what is supposed to be accomplished and can measure whether it has been accomplished.

Track results on this grid.  Make a copy of the grid and instead of an “X” for the activity to be accomplished, put the response percentage.  This allows you to easily see which forms of advertising and public relations are effective for you.

The third page is your financial budget.  You probably don’t want to put this sheet where everyone can see it.  However, you need to keep it where you can compare “budget to actual” results each month when you get your financial statements. 

Hopefully this business planning series has shown you a way to easily create and use your operational business plan for 2014 and beyond. 

I’ll leave you with the statement that has been attributed to Dwight Eisenhower and others: “Failing to plan is planning to fail.”

I wish you a happy and prosperous 2014. 

Ruth King has over 25 years of experience in the hvacr industry and has worked with contractors, distributors and manufacturers to help grow their companies and make them more profitable. She is president of HVAC Channel TV and holds a Class ll (unrestricted) contractors license in Georgia. Ruth has authored two books: The Ugly Truth about Small Business and The Ugly Truth about Managing People.  Contact Ruth at ruthking@hvacchannel.tv or 770-729-0258.