Developing a 5-year business plan
Where do you want to be in 5 years?
By Jeff Sheets
Why did I choose “Where do you want to be in 5 years?” as a subtitle for this article? Because talk of “business plans” can cause grown men and women to run away screaming, “It’s too complicated! I can’t do it!” The simpler question posed in the subtitle is really what you need to answer. Yes, something like this takes time, especially initially, but if you continue to update it each year, it becomes easier.
In my monthly articles, I hope you can see the types of things that you need to include in your future plans. Last month, I addressed customer wait time. I consider that something that you should always be working on and incorporate in your plan in some way. How you process your customers and treat them can go a long way toward making you better 5 years down the road. The opportunities are endless, but you need all of these plans to fit together in a cohesive way, and hopefully, this article will take you in that direction. Knowing what direction you are heading today makes you keep moving forward when the temptation is to say, “We’re doing pretty well.” Let’s not strive for okay but for great, and that is what a plan like this can do. I am breaking this down into 5 basics of “know(ing)” how.
#1 Know who you are and where you are going
I hope that this is something that every dealer understands. However, after being involved with many businesses over the years, I see that most of the time it is really not something integrated into the process of doing business. What do you hold important? What are you attempting to accomplish both long term and short term? These are great questions to address in your plan.
Mission statements and vision statements can be really important to create. If you’ve created them, then revisit them to see if they really apply to your current situation. An example might be selling equipment or parts on the Internet. Does this fit in with who you thought you would be 5 years ago? If the answer is “no,” then how does it work into your belief of who you are going to be tomorrow, and how does it affect your long-term goals for your business? I think that sometimes dealers can jump into a new area before really evaluating its impact. This is where asking important questions like this can help. The plan is not static. It is an evolving document based on answering these two questions — not just in the original planning process, but also throughout your time in this business.
#2 Know your market
The word “research” applies to this category. You need to look at the outdoor power equipment market as a whole, and see what is happening in the industry and how that applies to how you are going to do business now and in the future. For all of the vendors that you interact with, you need to know their goals and how you fit in as a dealer, so that you can make sure that you are working with the right vendors. You also definitely need to know your local market because that is where your products are sold, and you need to know how best to get your products to those customers. You need to know everything you can about all of these topics, so that you can put the best plan in place to further your objective of getting to where you want to “grow.” Research is the key, and this can be the most time-consuming part of the process, but it can also be so worth it in the end.
#3 Know your strengths, weaknesses, opportunities and threats (SWOT)
Analyzing your strengths, weaknesses, opportunities and threats (SWOT) is one of the best things that you can do as a business owner even without a full business plan. You also need to have a realistic idea of all of these things, so that you know what direction to head. If you are particularly weak in an area such as email marketing, now is the time to identify it and then formulate a plan to do a better job marketing in that way. If you find that you really have no way to expand your products or services because your building and parking area are too small, that could pose a threat to your ability to grow the way that you want and give you a chance to address it. In each of these categories, your goal should be to try and move forward in some way. Sometimes, they might bleed over into another 5-year plan because they are that complicated and cannot be solved within a 5-year window. The key here is that you identify your weaknesses that eventually need to be addressed. If you keep opportunities or threats in your plan, then you can look at it periodically so you at least have the option to deal with it and make progress. If you have no plan, then you probably won’t even think about these types of categories.
#4 Developing a 5-year financial plan based on knowing all the information you have researched
The financial plan includes forecasting sales for the next 5 years and projecting the cost to produce those sales. If you plan to introduce a new product or service during that 5-year window, how is it going to affect the bottom line? Are you going to incur new personnel expenses, new expansion costs, travel costs, etc., based on the new product or service being introduced? If the expenses will be increasing during the year, along with projected sales, then that needs to be included. Obviously, when you are trying to plan something 5 years ahead, there are a lot of things that you can’t exactly plan for. That may mean some delay in implementation because of new information or expediting matters because it is going better than expected. I remember having to do 5-year plans for a department that I used to be in charge of years ago, and I really did not enjoy it much until I would see the fruits of my labor. A new service or something that we had decided to do that was implemented and watching it happen was incredible. It might have been something I planned 3 years ago that finally came to pass, and it just reinforced to me why these plans are so important.
#5 Know when the plan is a success
You need to realize when you are being successful and celebrate it when it happens. Do this by creating milestones or places that you want to reach at a given point. For example, say your goal is to send all of your sales personnel to a sales training session to teach them how to sell professionally, and you set a goal of increasing your sales this year in units by 10 percent. If you meet that milestone at some point during the year, then stop and celebrate the success with those who attended the sales training session and show them how that goal has impacted the dealership as a whole. The more you can do this on all of the objectives you set, then the more you know that your plan is working and the more likely you will continue to update the plan from year to year.
I know you have a limited amount of time to spend on things in your business, and prioritizing something like this may not seem to fit into that priority schedule. However, I would encourage you to really invest in and set up a business plan. In my research on this topic, I came across a quote that I think sums up why you want to set a plan into motion. “If one does not know to which port they are sailing, no wind is favorable,” said Lucius Annaeus Seneca. Don’t just drift in a sea of aimless wandering. Take the wheel of the ship and try to point your business in a proper direction, so that you can be proud of your accomplishments. A business plan is a roadmap to success, and looking out 5 years on the horizon is just the thing that you need to move forward.
Jeff Sheets is the founder and owner of OPE Consulting Services. Whether a business is thriving or struggling to survive, Sheets’ rich experience in both the corporate and not-for-profit sectors allows him to partner with business owners to customize unique strategies for their needs. For the past nine years, he has worked extensively with hundreds of outdoor power equipment dealers to create best practices in business structure, personnel management and financial profitability. For more information, he may be contacted at opeconsultingservices@gmail.com or (816) 260-5430. You can also follow him on Twitter @opeconsult, connect with him on LinkedIn, and visit his website at www.opeconsultingservices.com.
