Many good home improvement contractors make all their sales pitches in person, and they
count on referrals from satisfied customers to generate new sales prospects. It would be difficult
to rely on a separate sales organization when the essence of the job includes creating estimates
and selling the prospective customer on your ability to deliver what the customer wants.
In contrast, if your business deals in the sale and production of large quantities of product with little associated service, then you face a different challenge. Customers may not know or care who you are.
A coffee distributor roasts and grinds coffee for resale to a number of local convenience stores.
The stores brew and sell the coffee by the cup. The people who buy and drink the coffee are
the end users of the product. But the convenience stores are the target market for the
distributor’s product. The sales plan must address how to reach them, as intermediaries
between the producer and the end user.
Planning for selling is, therefore, based on the particular mix of goods and services that you plan to offer and on the way you intend to reach potential customers. If you are going to have a sales force of some kind, be sure you know what you will expect them to do. When making hiring decisions, do your best to find people who can do what you want. If you will be the entire sales force, try to quantify the activities and time involved. For example, a remodeling contractor won’t spend all of the time actually working on houses. In addition to the back office tasks, the contractor will also spend time meeting with potential customers, discussing the job, preparing and submitting bids or estimates, etc. These are vital sales activities and are essential to keeping work lined up.
Action Plans
The action plan is our name for the portion of the business plan in which you account for business operations that weren’t covered in the marketing and sales plans. The marketing and sales plans spell out the steps your business will take in an effort to achieve its financial and sales goals. The action plan explains how you will operate and manage your business. It also addresses the back office activities that don’t relate directly to providing goods or services to customers. These include activities such as:
employee hiring and management
obtaining and working with vendors for needed materials and supplies
ensuring that production takes place as planned
providing customer service and support after the sale
order fulfillment
collections
dealing with a changing business environment
These types of issues can be conveniently grouped into three categories for purposes of dealing with them in your plan. The categories are:
operations plan
management plan
contingency plans
Planning Your Business Operations
Your marketing plan sets forth the details of promoting, pricing, advertising, and physically reaching your customers. These core business activities focus on getting to the customer and providing the product or service that will generate income. But you also need to plan for the activities that support the primary business activities. An operations plan summarizes how you will create and deliver your product or service to your customers.
The types of operational issues that you’ll face will vary tremendously based on the type of business you operate. For example, a consultant who deals primarily in assisting customers with network communications isn’t going to have an extensive manufacturing or inventory control plan. A fast food vendor, in contrast, will have to carefully plan for inventory storage and turnover; the cooking process; wrappers, bags and beverage containers; employee sanitation; etc.
In most businesses, there is a lot going on in addition to the primary business of providing products or services to customers. You may find it useful to look at your business as if it were a linear process that starts with raw materials and ends with a delivery to a satisfied customer. You’ll probably be surprised at how many steps there are and how critical the timing and duration of each step is.
While it is easy to relate to production issues in a manufacturing or other process where goods are fabricated, grown, or otherwise produced, the concept is also applicable to other types of businesses.
As a consultant you are engaged to help a company convert from a paper-based billing system
to a computer-based system. The end “product” that you will deliver is assistance in selecting
the appropriate software and hardware, training on that new equipment, and supervision of the
process by which the data is converted to electronic format. You can do a great job without
“producing” anything tangible beyond, perhaps, documentation of the process.
This doesn’t mean that you can ignore “production.” Consider all the work that you would have to do. First, a working knowledge of the client’s existing system has to be acquired. Then, software and hardware combinations are evaluated in light of the client’s needs and budget. A conversion process has to be developed so that those portions of the existing data that carry over to the new system are available in the new format. Documentation must be prepared to train the client’s employees in using the new system. Whether you thought of them that way or not, each of these activities would be part of your production process.
Another production issue you may have to consider in drafting a plan is that there may be situations in which completing the job requires work outside your areas of expertise.
A self-employed plumber deals primarily in pipes, faucets, and fixtures. Those pipes have a
nasty habit of being inside walls, and when the plumbing goes bad, the walls frequently stand
between the plumber and the pipe. A good plumber knows that his production process goes
beyond his primary area of expertise and will plan for the time and costs associated with the
non-plumbing activities, such as plastering, required to satisfy customers. If you or someone else
has to do it to finish the job, plan for the time and cost.
Planning Management Activities
Small business owners have to orchestrate all of the different activities that are needed to make a business work. These activities include providing goods or services to customers. They also include managing any employees you have, as well as performing the back office or administrative duties required to keep the business running. Having a business plan helps to organize and prioritize these activities.
Many large businesses have project managers whose job it is to track and manage internal corporate processes. These managers work from a project plan, which sets forth the timetable for all the events, milestones, deadlines, etc., that make up the project. Frequently, project managers have no other part to play except to ensure that the project stays on track.
You, however, probably won’t have the luxury of hiring a project manager. Instead, the difficult task of making sure all the diverse elements of your business come together as they should is left to you. Of course, you are also probably a major player in the process being managed. This dual role is made much easier if you have a comprehensive list of what should occur, and when.
It’s easy to overlook management as a major drain on your time and resources, but even a very small business can present some complex logistical issues. Almost every business relies to some extent on outsiders to contribute to the success of the business. Keeping everything on schedule requires you to monitor all of the diverse activities and actively intercede when things aren’t going according to plan. If you operate an existing business, you know just how many balls you have to keep in the air at once. If you are just starting out, don’t underestimate the demands of managing.
Managing your employees. Managing people is far more time-consuming than you might imagine. Even if the people who work for or with you are talented and self-motivated, some direction must be provided. While you may have a fairly good idea about what needs to be done, the people working for you are less likely to see the entire picture. If some task “falls through the cracks,” your entire business can be placed in jeopardy. On the other hand, if two or more workers are duplicating each other’s work, your
business will be wasting time and money. It’s up to you to divide up the work in a reasonable manner and to assign particular tasks to those best equipped to handle them.
Tracking progress is another important element of managing your business. It isn’t enough to divide up the work and assign it out. You also have to see that the work proceeds at a reasonable pace. If realistic deadlines were set at the outset, you can keep tabs on whether individual activities will be completed when needed. It is far better to find out half way through a project that some essential element is lagging behind than to be surprised later in the game. You have to be aware of all the pieces of the plan, including your own. Managing your own time can be even more difficult than managing the people who work for you. Don’t put
pressure on yourself by taking on too much.
Administrative activities. Every business deals with a variety of operational issues that don’t relate directly to providing goods or services to customers. These back-office activities are part of the overhead of doing business. Someone has to open the mail, pay the bills, keep the books, remit taxes, provide customer service, handles collections, and do the hundreds of little things that make up running a business. It is a serious mistake to ignore the demands that these activities will place on you and your business.
A good starting point is to make a list of all the activities that someone will have to perform to keep your business operating. A house painter has to do a lot of things that are not directly related to applying a fresh coat of paint to a house. Someone has to purchase the ladders, tarps, paint and brushes, masking tape, and other necessities. Someone also has to bid on jobs, bill customers when jobs are completed, and deal with complaints if a customer isn’t happy. And those