Return to the home page

Business Planning, Part 2

Originally published: 12.01.06 by Ruth King

Once you’ve finalized your easy three-page business plan, which I described in last month’s column (see Business Planning Made Easy), it’s time to learn how to put it to work. First, remember that the three-page business plan is not appropriate if you need bank financing or have other investors. Rather, it is meant to serve as an operational plan that guides your day-to-day business activities—to help you see the forest through the trees.

The key to success with this plan is implementation and tracking. When you track your results, you’ll have a better hance of making corrections as events unfold. Several years ago, one of my clients achieved his yearly revenue numbers within the first five months of the year. Everything had gone perfectly (unfortunately, it never happened again). Rather than let him coast for the rest of the year, I insisted that he reformulate the budget. So, grumbling, he revised the budget upwards—and achieved those new, higher numbers, too. It was one of the highest revenue and profit years he ever had. The next year, he maintained those numbers and achieved even more.

On Page 1 of the business plan, list the goals you plan to accomplish in 2007. The goals must be specific and have a deadline, so you can measure your progress. For example, “increase service agreements” is not a goal, but “increase service agreements by 25%” is. “Increase the number of service agreements from 200 to 400 in 2007” is a better goal.

Hopefully, you will arrive at these goals with input from your employees. If you decide the goals by yourself, then they are your goals, not your company goals. You need everyone’s buy in to ensure that the goals get accomplished; the best way to do this is to involve everyone in creating the goals.

Post your list of goals somewhere you and your employees can see them often. This will serve as a consistent, subtle reminder for you to get them accomplished. It also will be a reminder of why the company is doing the things that it is doing.

Page 2, your marketing plan, is a spreadsheet. On the X-axis are the weeks of the year. On the Y-axis are the activities that you will do during the year. Put an “X” in the box under the week that you will perform each activity. Some activities, such as phone directory advertising, will have an “X” every week. Other activities, such as trade shows, may have only one or two “Xes” for the entire year.

Make sure you include marketing to your current and prospective customers, as well as your employees. Include advertising, public relations, and personnel activities such as telephone follow-ups and company gatherings.

As with Page 1, post this marketing/advertising grid where everyone can see it. If you have assigned marketing tasks to one of your employees, this is an easy way to make sure that you know what is supposed to be accomplished and can track it.

You can also track results on this grid; simply make a copy of it and replace the “X” with the response percentage. This allows you to easily see which marketing/advertising efforts are effective for you.

Tracking results is critical, because it is the only way that you will really know what worked and what didn’t. Of course, you have to define what “what worked” means. Is it a 2% response? A 10% response? Earning a profit on the activity? Some activities, such as trade shows, may take a long time to demonstrate whether “it worked.” I’ve known contractors to get a telephone call a year or 18 months after a trade show. The customer had been gathering information at the show for future planning. When he was ready, over a year later, he pulled out the marketing materials and called the contractor.

Page 3 is your financial budget, where you’ll estimate revenues, expenses, and profit for 2007. This estimate is based on your growth and expense goals, as well as what actually happened in 2006 and prior years.

If you practice open-book management, where everyone in the company sees the financial results, then you’ll put this document where everyone can see it. If not, you’ll keep this page to yourself. However, you need to keep it where you can compare “budget-to-actual” results each month when you get your financial statements. An Excel spreadsheet is perfect for doing this. If you create your budget on a spreadsheet, then it is very easy to input the monthly numbers to make sure that you are on track to meet your financial goals.

When you use a three-page business plan to run your company, these three documents will keep you on track. Of course, these are summary sheets. I suggest that you review your goals and the marketing-plan grid each month when you review your financial statements. List the activities you need to do in the next month to stay on track. Review the activities of the past month. Did you accomplish what you wanted to do? Why or why not? Do you need to make additions or deletions in the budgets? If so, make them and note why you are making the change.

If you are running behind revenue projections or ahead of expense projections, ask your employees for input. They are on the front lines and often have great ideas that will increase sales or decrease expenses. Implement their suggestions, and you’ll likely get more. When they see you are serious about incorporating their ideas, the flood gates usually open. The result will be a better company.

Hopefully this three-page business plan series has shown you a way to easily create and use your business plan for 2007 and beyond. The most successful companies in our industry (and I would bet in most industries) plan, execute, and measure. I’ll leave you with Dwight Eisenhower’s famous statement: “Failing to plan is planning to fail.”

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 or 770.729.0258.

About Ruth King

Ruth King

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 or 770.729.0258.

Articles by Ruth King

Keep Your Employees from Stealing this Summer

Don’t let policies you enforce during slow times get ignored when you’re busy.
View article.

7 Places to Look if Your Gross Margins are not Consistent

A consistent gross margin means that your profit and loss (P&L) statement is probably accurate (unless you discover overhead mistakes).
View article.

How Much Cash is Enough Cash?

Save the amount of cash that is comfortable for you. Get in the habit of putting money in savings accounts.
View article.

Cash, Profits or Profitability — Which is Most Important?

Continuous profits, turned into continuous cash, give your company the best chance for survival and building wealth.
View article.

Wealth Rule No. 10: Have an Increasing Current Ratio

Your company’s current ratio should be monitored monthly. It should always be greater than one. It should be constant or trending upward.
View article.