Get Your Business to Work Part 2: Draft Your Business Plan

Editor’s Note: This is the second in our 2008 series of “Get Your Business to Work,” written by our regular columnist George Hedley.

Imagine you want to build your dream vacation lakefront home. You own the perfect two-acre waterfront lot free and clear. You have plenty of money saved in the bank for construction. You’ve selected a great architect and excellent contractor. You are ready to start the building process. At your first development team meeting, you’re asked the “big” questions: “What do you want? What would make this house perfect for you and your family?” But you aren’t sure exactly what you want just yet. You can’t envision the finished house at this early stage. You figure you’ll get started and see where the project goes.

So what should the architect do? He can’t design a house without the client describing what he wants. The contractor also can’t build the perfect home without a complete set of working plans or blueprints.  

Most business owners operate their business without a set of plans. They don’t know what they want so they take whatever they can get. Think about your company. What would make it perfect for you? If you could hire a business consultant to design and build the perfect business for you, what would the finished product look like? How would it work? What would it do? How big would it be? What type of products, services or projects would it be known for? What type of customers would it specialize in? How much money would it make? Would it make a difference in your industry or community? Would it be organized, systemized and in control? What would it do for the owner? Would it deliver peace of mind, security, freedom and fun for the owner and managers?

Why Are You in Business?

When entrepreneurs start their companies, they’re excited to be on their own, land some work and start making money. They do a good job for their customers as they remain intimately involved in every aspect of the business. Then, they get busier because they have more employees, more customers, more overhead and more jobs to worry about. They get unfocused after putting out the multiple fires that attack them constantly. They forget why they’re in business. They keep fighting and working to make enough money to stay alive, keep the doors open, keep their crews busy and keep the cash flow coming.

After five, ten or twenty years of this, business owners eventually wake up and start questioning their efforts and methods. Nothing seems to get better. Their repeat customers ask them to work cheaper, faster, better and accept slower pay. Their employees want more while doing less. And the government makes it tough for them to make any money. These business owners have been in business for years but don’t have much to show for their efforts except a sour attitude, more wrinkles, more aches and pains, less hair and more stress. In fact, they’ve lost their passion and have forgotten the real reason they went into business.  

Remember Your Dream?

Remember when you first started your business. You had a big dream of building the perfect business. It would deliver excellent service, great quality, repeat customers, hard working and loyal employees and stability for your future. In return, you would receive a large financial reward and plenty of free time to enjoy the benefits of owning your business.

What Do You Want Your Business to Do for You?

Do you have a personal “Business-Builder Blueprint” or written plan that will keep your business focused to deliver what you want? Do you know what you want? When will your dreams become reality? Or have you been working too hard to think about it? What happened to your dream? Why can’t you get your business to work the way you want it to? What happened to your written targets and goals? Are you too busy working to make any money? Are you waiting for the economy, your employees or your customers to change? Perhaps you’re waiting for a miracle to happen!

As I think about my perfect company, I know exactly what I want. Do you?

I Want My Business to Give Me Exactly What I Want!

I want my business to:
 

•     Be run by the management team 100 percent
•     Be organized and systemized
•     Have lots of loyal repeat customers
•     Have a culture of high integrity
•     Make double the industry average profit margin
•     Generate at least 25 percent annual return on equity
•     Create wealth-building opportunities
•     Build my net worth by at least 20 percent per year
•     Give me time and money to contribute and give back to others
•     Deliver me plenty of freedom and time to enjoy the benefits of business ownership

Answer the questions below to determine your purpose for owning your business—establish your vision, targets and action plan to achieve your dreams.

 My Business Purpose            

1. What is my purpose for owning my business?

2. Why does my business exist?

3. What do I want my business to do for me?

4. Describe what I want my business to give me in:
 

•     Profits
•     Equity
•     Wealth
•     Freedom
•     Fun
•     Status
•     Stability
•     Other

5. Describe how I want my business to give me the ability to:
 

•     Help Others
•     Give Back
•     Contribute

6. Describe how my business will allow me to live my life “on-purpose and on-target!”

Once you have rediscovered why you own your company and the real purpose for your business, write out a simple and concise personal “Business Purpose Statement.” For example, my “Business Purpose Statement” is as follows:

  “The purpose for owning my business is to give me what I want! First and foremost, I want my construction company to make lots of money, build my net worth and create opportunities to own passive-income producing properties. I want my business to be organized, systemized, in control and 100 percent run by the management team. I want my company to provide excellent commercial construction and development services, deliver first-class, on-time projects and provide full value for our customers with high integrity. I want my business to create long-time loyal repeat customers who give us plenty of work at a profit margin double the industry average. This will allow our equity to grow at least 20 to 25 percent every year. I want our company to also seek wealth-building opportunities as a major part of our overall business plan.   

I want to do all of this so I can enjoy time with my family, take several annual trips with my wife, spend time with friends and enjoy the benefits of business ownership.  

My business will allow me to become wealthy, debt free, have enough passive income to avoid seeking cheap work or bad customers to stay busy, contribute to others and have time to give back to my family, industry, community and charities. And I will have the ability to live my life ‘on-purpose and on-target!’”

Now it’s your turn to write out your personal “Business Purpose Statement.”
 

What’s Your Business Vision?

Next, let’s get specific about the future targets and goals you want your company to accomplish. What exactly do you want your company to be or do in the next two, five and ten years? Think about precise targets and results you want to shoot for and achieve (think big and be specific).

What Do You Want?

Then, write out and draft your personal “Business Vision Statement” using the descriptions you outlined above describing future accomplishments and results your company will achieve. An example of a business owner’s personal “Business Vision Statement” might be:

 “Within the next seven years, we will build our company into a major full-service and full-value commercial construction and development company. We will pride ourselves in meeting our customer’s goals in the areas of schedule, cost and quality. Our goal is to make every project a success! As a general contractor, every year we will build ten to fifteen projects totaling $40 million to $50 million in annual sales. This will generate a 4 percent minimum pre-tax net profit. We will participate in the development, ownership, acquisition, planning, design, construction and management of at least two industrial and office building real estate development projects annually at least 50,000 square feet.  

We will specialize in building great projects for a small exclusive group of loyal customers who demand trust, integrity, expertise, full value and total service. Our project types will include: office, industrial, manufacturing and warehouse buildings; corporate headquarters; multi-tenant business parks; and small buildings for sale projects throughout Southern California and the Las Vegas market. Our average project size will be $6 million, and the minimum project will be $2 million. Our customer targets will include privately held corporations and professional developers with a mix of 80 percent loyal repeat and 20 percent new customers every year. We will negotiate 80 percent of our contracts. 

We will be recognized as the leader in providing the best personal, professional and knowledgeable construction and development services available. We will be known for our open-book, full- service management system, competitive prices, great subcontractor relations, the best pre-construction services available, accurate cost estimating and value engineering. We will be known as a financially strong, fiscally responsible, systemized, organized, in-control company with leading edge technology. 

Our company will be 100 percent managed by the executive management team including the general manager, financial manager, business development manager, chief estimator, operations manager and office manager. My role as the owner will be to provide leadership, inspiration, direction, motivation, set the targets and goals and keep people focused on achieving the results we want. I will also seek, create and generate new business opportunities, be active in the community and not get involved in the day-to-day business management activities.”

Now, it’s your turn to create your “Business Vision Statement,” which will describe how you see your company in the future.  

My Business Vision Statement

Within the next _________ years, my company will grow into a successful and ______________________________________________________________________(My Dream)

___________________________________________________________(Business Characteristics)

__________________________________________________________________($$/Profit/Size)

________________________________________________________________ (Type of Company)

It will provide _________________________________        (Description of Products and Services)

to ____________________________________________________________ (Type of Customers)

throughout _____________________________________________________________(Location)

We will be recognized as the _______________________________________________________

_______________________________________________________________________________

My company will be managed by _________________________________________ (Employees)

My role as the owner will be ______________________________________________________

and ____________________________________________________________________________

and ____________________________________________________________________________

 

Put Your Dreams into Action!

The next task is to take your vision and purpose for being in business, and turn it into a working action plan. The one-page “Business-Builder Blueprint” will clearly describe what you want your business to become in the future and the action steps you’ll take to achieve your dreams. Start by simplifying and recapping your “Business Purpose Statement” and your “Business Vision Statement.” Then think about what specific targets you must achieve to make your purpose and vision become reality.
 

For example, if one of your goals is to grow your company, you may want to create a “Business-Builder Target” as follows: Seek ten loyal customers within five years who will generate at least $5 million each in sales at a gross profit margin of 10 percent. Another target you might want to achieve is to develop a management team who’ll run your company for you. A “Business-Builder Target” could then be: Within five years, have a full-charge management team in place including a general operations manager, field manager, office manager, financial manager and business development manager. Fill out your targets to achieve specific goals.

My Business Builder Targets
 

1.     ________________________________________________________
2.     ________________________________________________________
3.     ________________________________________________________
4.     ________________________________________________________
5.     ________________________________________________________
6.     ________________________________________________________
7.     ________________________________________________________
8.     ________________________________________________________

Put Your Plan into Action!

After you have identified your “Business Builder Targets,” think about what actions you need to take to achieve your personal business vision and purpose. Some actions might include: drafting a marketing plan, hiring a general manager, installing a professional accounting software package, getting a line of credit, selling some of your underutilized equipment, getting a handle on your job costs, improving your estimating accuracy, creating a better way to serve your customers, finding an excellent project manager or seeking additional capital to grow your business.

What actions are necessary to achieve your business goals? Fill out the action plans to make your dreams become real.
 

My Business Builder Action Plan
 

1.     ________________________________________________________
2.     ________________________________________________________
3.     ________________________________________________________
4.     ________________________________________________________
5.     ________________________________________________________
6.     ________________________________________________________
7.     ________________________________________________________
8.     ________________________________________________________

Now that you’ve done all the work to layout and draft your future business plans, the fun part is to get everything written precisely on one page. This document will be your blueprint as you manage your pressing activities and decide what you should do first every day. Review your business purpose, vision, targets and action plans, and write them onto your personal one-page “Business Builder Blueprint.”

My Business-Builder Blueprint

My business purpose statement:

My business vision statement:     

My business builder targets:
 

1.     ________________________________________________________
2.     ________________________________________________________
3.     ________________________________________________________
4.     ________________________________________________________
5.     ________________________________________________________
6.     ________________________________________________________
7.     ________________________________________________________
8.     ________________________________________________________

 

My business builder action plan:
 

1.     ________________________________________________________
2.     ________________________________________________________
3.     ________________________________________________________
4.     ________________________________________________________
5.     ________________________________________________________
6.     ________________________________________________________
7.     ________________________________________________________
8.     ________________________________________________________

My business will achieve my vision and purpose by: ____________________
 

                                    Signed: _____________________________  Date: _____________

Construction Business Owner, February 2008