It’s October already. (Can you believe it?) Before we know it, the holidays will have passed and a new year will be upon us. Cliche or not, the new year brings with it all sorts of fun resolutions. But a quiet giant lurks in the shadows - your 2023 business plan.
An annual business plan gives you an opportunity to formally review your goals, update them and review progress you have made throughout the year. If you have never set a formal, annual business plan, now is the time to do some research and begin to formulate one so you can get and stay ahead.
Laying plans for the future gives you a better chance to work through the obstacles that arise, do your best when things don’t go according to plan and appreciate the smooth times with more clarity and satisfaction.
An annual business plan should be a part of an ongoing effort to help you more consistently and effectively achieve the things you want and deserve.
Here are a few things to add to your toolbox when formulating your business plan:
Determine the benchmarks that are most important to your business. A mix of business, gross profit and payroll as a percentage of gross profit are great places to start. If you subscribe to the 80/20 rule, like I do, 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 amount of effort.
In my opinion, gross profit dollars per invoice gets rid of a lot of noise and can very easily be related back to daily behaviors. It’s also easy to understand, makes for a simple scoreboard and gives you the opportunity to improve/change those 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 where you want to go. No single metric will help drive your financial outcomes more than mix. I suggest targeting a mix of business consistent with what we know about consumer spend - which is for every dollar a customer spends on a tire, they also spend a dollar on mechanical labor and a dollar on parts. How much of that mix are you collecting?
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 mix of business and how it affects your gross and net lines, you’ll be able effectively achieve your financial goals in a much more efficient and successful manner.
Set new, realistic, goals in each of the key performance areas. Arbitrary goals are the quickest way to lose focus and buy-in from your team. Being realistic with your goals is super-important. Keep in mind that the process of goal setting isn’t a static task. It’s a fluid process. Even the best projections will likely miss the target in some way and being flexible upon review of 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’ll do it is the hard part. I suggest thinking in terms of system, process and behavior. Which system does the gap use, are the processes within the system adequate and how do both the system and process help support the desired behavior?
Create meaningful scoreboards. Regular, simple and meaningful scoreboards are a game changer. We do a great job of pushing data to our teams from our own perspective and often overlook the importance of data that comes from them and more importantly, is meaningful to them. Ask how they’d like to see the data and give them the resources to report up.
Create a system of accountability. “We just don’t have time” is the biggest excuse we allow ourselves when it comes to creating a system of accountability. In reality, we really can’t afford to not make time for accountability. How else do you expect to move the needle? Weekly “huddles” centered on a specific topic with a concise explanation of the goals, a meaningful scoreboard and a simple narrative are crucial.
As former football coach Lou Holtz stated in one of his many leadership speeches, “In this world, you’re either growing or you’re dying.” So get in motion and grow. Now is the perfect time to plant the seed, since 2023 is right around the corner.
