Creating a Successful Business Plan
In an ever-increasing competitive world where auto repair shops face an uphill battle, creating a solid business plan helps minimize the risks.
Over the years, we’ve had the opportunity to work with thousands of shop owners, providing advice and tools to help them grow a profitable business. We’ve discovered that one common key element missing from most of those businesses was a formal business plan. Most shop owners don’t realize that a good business plan reveals a complete story about their business to them and to anyone else who needs to have a comprehensive understanding of it.
A well-developed and comprehensive business plan (updated at least every six months) serves three key purposes:
- It forces you to take an objective look at your business the way someone outside your business would. It assists you in setting goals and determining how workable and profitable your business is or can be.
- It’s virtually a must when applying for a loan. To a lender, your business plan reveals your business’s feasibility and future viability, and reflects your management abilities. It gives the lender assurances that you’ll have the ability to repay the loan.
- It’s a starting point for creating a more detailed operational plan, and becomes an important management tool for monitoring the growth and performance of the business, and for charting future direction.
Business plans are not all alike, but vary depending on the type and size of the business. The importance of a business plan is not just the written document itself, but rather the process and thinking involved in creating it.
Many shop owners will argue that the marketplace changes too fast for a business plan to be useful, or that they’re too busy running their operation to prepare one. While many owners are reluctant to invest the necessary effort to put the details in writing, the time is well spent when the business grows and prospers as a result.
Why Develop a Business Plan?
The importance of a comprehensive business plan for your shop cannot be overemphasized. It’s essential for starting a new business, buying a franchise, purchasing an additional business, or even simply remaining competitive.
A well-prepared business plan can serve several additional purposes. Essentially, it’s your entire business concept put on paper. For instance, it contains detailed information of the following:
- Where you’re headed and how you’ll get there
- Your production processes and capabilities
- The size of your business and its growth potential
- Your products and services
- Your competitor’s strengths and weaknesses (including price comparisons)
- How you’ll advertise and promote your products and services
- How much money you’ll need and how it will be spent
- Your staff’s ability to execute your plan
When starting a new repair business, a business plan helps the owner(s) determine the feasibility and desirability of pursuing the necessary startup steps. it’s the only way to determine if the new venture is really a solid business opportunity.
As previously mentioned, a business plan is typically required to obtain financing from outside investors or lending institutions. In a nutshell, it provides the answers to all the pertinent questions investors seek, including who, what, why, where, and how.
A business plan is also useful in obtaining initial or extended credit from suppliers. And since details about marketing and competition are a significant element of a plan, it can help you better promote your products and services.
Finally, when you sell your business, a business plan provides an effective means for the purchaser to evaluate and perhaps validate the investment required. It will also provide the purchaser with a set of “instructions” by which to operate the business.
For all these reasons, your business plan can and should be your road map to success!
Who Should Develop the Plan?
Many repair shop owners ask this question. There are several options available, including:
- Doing it alone, following the outline presented here.
- Seeking assistance from your local Service Corps of Retired Executives (SCORE) or similar nonprofit organization.
- Contacting your local community college to seek assistance from a business instructor.
- Hiring a professional (accountant, business consultant, etc.) to help you with portions of the plan. For example, an accountant can provide guidance about the financial aspects of your business, including charts and graphs.
- Hiring a professional advisor to perform the entire job for you.
There are some significant advantages to preparing a business plan yourself (see “10 Tips for Developing a Business Plan” below). For example, simply going through the process puts you more in touch with what’s really happening in your business. After all, no one knows your business as well as you.
Also, when it comes time to modify or update the plan, you’ll know exactly where to look and how to do it. Finally, developing your own plan will make it much easier to present it to a lender or investor, especially when it comes time to answer questions relevant to the business.
10 Tips for Developing a Business Plan
- Take all the time you need to build your plan. Be prepared to spend several weeks at it.
- Keep your plan in sight so you can work on it consistently a few hours each day.
- If a particular section of the plan is too difficult or requires more time than you have immediately available, move on to another part, then go back to it when time allows.
- Once you complete a section, don’t update it unless it directly ties in with another section you’re working on.
- Employ the KISS principle (Keep It Simple, Stupid) and avoid overcomplicating the plan.
- Ensure accuracy by doing your research thoroughly.
- Rather than wait for the whole plan to be finished, have completed sections proofed for spelling and grammar.
- Use color wherever you can to add visual impact to the plan’s overall appearance.
- Give serious consideration as to how the final document will be bound. Note that some methods require wider margins than others.
- Use tabs to divide sections to make it easier to read.
That’s it for today! Join us next time as we delve deeper into what should be included in every element of your business plan. In the meantime, if you’re interested in learning more about planning for your business, enroll now in Guerrilla Shop Management, which covers all of that and so much more. Click here or call 800-755-0988 for more information or to enroll.