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There may be a few remodelers who have built a project without plans, but having done it once I'll bet they would never want to repeat that mistake. A good set of plans provides direction for the project, helps resolve problems during construction and sets resource needs and schedules. When things change (as they surely will) the plans can identify areas that will be affected and ensure the project is finished as intended. While a well-developed set of plans is best, even a simple sketch is better than no plan at all.
Assuming we all accept the need for a plan before beginning construction, shouldn't it also hold true for our businesses? A simple business plan can help to set goals, control growth, provide guidance for decision making and establish benchmarks to monitor our progress.
What keeps most remodelers from creating a business plan each year? The most common reason is a perceived lack of time. The very reason they don't have time is because they lack the control that would result from a plan. Start with a very simple plan that can be created in about four hours. Now is the perfect time to put your plan together for 2008.
Your business should help you achieve your personal goals. Start by listing five short-term (12–18 month) and five long-term (2–5 year) personal goals. Next, create a similar list of short- and long-term business goals. Make sure your short-term goals help achieve the long-term ones and that the business goals support the personal. You should involve your spouse or partner in setting personal goals, and if you have people in the business, be sure to get their input for the business goals as well.
A budget is the most important part of a simple business plan and is not as hard as you might assume. If you have at least one year's financial history for your business, you have the template for next year's budget. Make sure your books are in an accepted format such as the NAHB Chart of Accounts and confirm that you are using the accrual method. Your accountant can help if you are not comfortable with the concepts. Now create a profit and loss statement for the last 12 months. Using this P&L, make some predictions about next year's revenue and overhead.
The final section of your plan is a marketing and lead projection. Be realistic about your close rate and create a marketing plan to generate the leads you will need to meet your revenue goals. Chart these lead goals over the year to create benchmarks to confirm you are on plan.
Always include best- and worst-case scenarios in your plan. Calculate the effect of lower or higher sales revenue. Plan for how you will deal with these outcomes such as cutting overhead, postponing new purchases or changing your markup.
Now with a simple plan for your business you have a much better opportunity to achieve your goals. I'm sure once you experience the effect of this simple plan you will want to create a more detailed business plan for the future.
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