Involve Your Employees in Your 2014 Business Plan
Originally published: 10.01.13 by Ruth King
Setting goals is the first phase of business planning
It’s the last quarter of 2013. You reflect on the previous year: its good points and its bad points. You think about how the weather contributed — or detracted — from your profits. Then you start thinking ahead to 2014.
What you’re actually doing is creating a business plan. But it’s in your mind. You need to put it on paper. Most contractors resist this because they think it is too hard to create a plan; they believe it takes too long or that implementation is just another thing to be added to an already overloaded to-do list.
If you think that way, you’re wrong.
A business plan does not have to be an onerous, 30-page document. It can be as simple as three pieces of paper. Implementation can be accomplished in three phases, one month at a time. Over the next three months, you’ll learn my easy, three-page business plan and implementation process. And it’s easier to get started then you may think.
In reality, you plan all the time. For example: when a customer calls wanting you to replace his heating and air conditioning system, you usually follow a specific process, whether or not it is “written down.”
It might go something like this: Your salesperson looks at the job and determines the best system for the customer based on his needs, desires and the configuration of the home. The salesperson gets the customer’s approval on the contract. Then, someone gathers the materials necessary for the job and explains the job to the installation crew. The crew installs the system and someone collects payment for the job. Finally, someone follows up with the customer.
The better your plan is, the more efficient you are, and the more profit you make.
You don’t install a system without a plan, even if the plan is just in your head. If you do, you run the risk of putting the wrong equipment in, not doing what you promised the customer, running to the supply house to pick up forgotten parts, or doing a poor installation that takes longer than the budgeted hours. Having “an idea” rather than “a concrete plan” is a formula for losing money on a job.
If you plan your jobs, you can easily plan your business.
Phase One of your 2014 business plan should be establishing goals for the year. The best way to accomplish this is to involve your employees. They know which of your competitors are getting stronger or weaker, and they know who your new competitors are. They know what is happening because they are on the front lines talking with customers, suppliers and other team members every day.
Get input from your employees so everyone knows where the company is going and they have a stake in its success. If you set the goals without asking your employees, they are your goals: some of your employees won’t buy in. If they have input, they will care about the results…and often push you to do things you might not have continued to focus on without them asking where you are with respect to such-and-such goal.
Determine their reward for helping the company achieve the goals. You might think, “a paycheck is enough.” However, for most, the paycheck is only part of the reason they work for you. Establish a profit-sharing plan, a retirement plan, or some other incentive when the entire company helps you achieve the goals.
The first time you ask for ideas, many employees won’t believe you are serious. They may give a half-hearted idea or two. However, if you convince them you are serious, create the company goals with their suggestions and report results during the year, you will get more ideas and generate even better results the next time around. I’ve seen companies where the employees actually report and help get rid of unproductive hires because they know it affects their bonuses and profit sharing!
Here are five simple questions to ask your employees:
- What went right in 2013?
- What went wrong and what did you learn from it so you don’t do it again?
- Have you run into any new competition?
- Have you seen any of our competition go out of business?
- What would you like to see our company do in 2014 and how can you contribute to making that happen?
Put these questions in an envelope along with paychecks and ask your employees to answer them and return them. They don’t have to put their names on their answers – just make sure they give the sealed envelopes to a person you designate by a specific date.
The answers to these questions will spark great discussions. Make sure you have these discussions on your employees’ “turf” – in the field, at their desks, etc. — rather than in a formal company meeting or in your office.
Goals for the year should include sales goals, profit goals, maintenance agreement goals and any other goals your employees want to achieve. Once you get feedback, have discussions and settle on a list of goals, then put the goals where everyone can see them. If a goal is “at the top of the stairs,” you’ll have to determine the stair steps, or objectives, necessary to achieve that goal. Break the goals down into monthly objectives. Put the objectives where everyone can see them and review them each month. Check off each objective as you complete it.
Congratulations! You’ve just completed page one of your three-page business plan for 2014.
Articles by Ruth King
Your Accounts Receivable to Accounts Payable Ratio: Do You Have a Collection Problem?
Use the accounts receivable to accounts payable ratio to determine if you have enough money to pay your bills.
Your Acid Test - Do You Have Too Much Inventory?
Your Acid Test - Do You Have Too Much Inventory? Track This Indicator to Get a Clearer Financial Picture
Do You Have Enough Cash to Pay Your Bills on a Long-Term Basis?
Check Your Liquidity Ratios
Why I Hate KPIs
Comparing KPI ratios to industry standards alone can be a risky move.
Finishing and Implementing Your 2014 Three Page 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.