It’s already October. (Can you believe it?) Before we know it, the holidays will be over and a new year will be upon us. Cliché or not, the new year brings with it all sorts of fun resolutions. But a silent giant lurks in the shadows – your 2023 business plan.
An annual business plan gives you the opportunity to formally review your goals, update them, and review the progress you’ve made throughout the year. If you’ve never made a formal annual business plan, now is the time to do some research and start formulating one so you can get and stay ahead of the game.
Making plans for the future gives you a better chance of overcoming obstacles that arise, doing your best when things don’t go your way, and enjoying the good times with more clarity and satisfaction.
An annual business plan should be part of an ongoing effort to help you more consistently and effectively achieve the things you want and deserve.
Here are some things to add to your toolbox when formulating your business plan:
Determine the most important benchmarks for your business. A combination of activity, gross profit, and payroll as a percentage of gross profit is a great place to start. If you subscribe to the 80/20 rule, like me, you’re really looking for the one or two benchmarks that help you assess impact and design an approach with the most clarity for your teams and the least effort.
In my opinion, gross profit dollars per invoice cuts out a lot of the noise and can very easily be tied to day-to-day behaviors. It’s also easy to understand, provides a simple dashboard, and gives you the ability to improve/change these behaviors to achieve a particular goal.
Develop a good understanding of your current performance. Knowing where you are is the first step in developing a route to get you where you want to go. No single measure will help you generate more financial results than the combination. I suggest targeting a combination of activities consistent with what we know about consumer spending – i.e. for every dollar a customer spends on a tire, they are also spending a dollar on labor. mechanical work and a dollar for parts. How much of this mix do you collect?
If you subscribe to consumer spend benchmarks, your business should be about 30% tires, 30% labor, and 30% parts. If you get to know your business mix and how it affects your gross and net lines, you will be able to effectively achieve your financial goals in a much more efficient and successful way.
Set new realistic goals in each of the key performance areas. Arbitrary goals are the fastest way to lose focus and buy-in from your team. Being realistic with your goals is extremely important. Keep in mind that the goal setting process is not a static task. It’s a smooth process. Even the best projections will likely miss the mark in one way or another and being flexible when considering your goals is a must. Start realistically, review regularly and adjust as needed.
Identify the gap between current and desired performance.
Finding the gap is easy. Identifying the behaviors that need to change and how you are going to do it is the hardest part. I suggest thinking in terms of system, process and behavior. What system does the gap use, are the processes within the system adequate, and how does the system and process help support the desired behavior?
Create meaningful dashboards. Regular, simple and meaningful dashboards are a game changer. We do a great job of bringing data to our teams from our own perspective and often overlook the importance of data that comes from them and, more importantly, that is meaningful to them. Ask them how they would like to see the data and give them the resources to report it.
Create an accountability system. “We just don’t have the time” is the biggest excuse we allow ourselves when it comes to creating an accountability system. In reality, we really cannot afford not to take the time to be accountable. If not, how do you intend to move the needle? Weekly “huddles” focused on a specific topic with a concise explanation of goals, a meaningful scorecard, and a straightforward narrative are crucial.
As former football coach Lou Holtz said in one of his many leadership speeches, “In this world, you either grow up or you die.” So get moving and grow. Now is the perfect time to plant the seed, as 2023 is right around the corner.