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
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.
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 become more profitable. She is president of HVAC Channel TV and holds a Class II (unrestricted) contractors license in Georgia. Ruth has written two books: The Ugly Truth About Small Business and The Ugly Truth About Managing People. Contact Ruth at firstname.lastname@example.org or 770.729.0258.
Articles by Ruth King
Increase Your Dispatch Profitability
Your dispatcher can make or break the profitability of your service department and potentially your company. Here are five ways to increase dispatcher productivity and, therefore, profitability.
Pricing for Profit
If you don’t price to earn a profit, the more revenue you generate the deeper in the hole you will get. Takes these steps to profitable pricing.
Increase Service Technician Profitability
By reviewing each technician’s service tickets, you’ll see a pattern and notice whether there are areas of technical weakness.
Build Your Company’s Profitability
Implementing new procedures and ideas is change. Most employees hate change. As the leader, you must give them reasons for the changes, ask for their input and remind them of why the company is doing new things.
Why Net Profit per Hour is a Better Way to Price
Calculating pricing using net profit per hour ensures your overhead costs are covered in each job.