By Clare Curley
A business plan is the road map that helps guide a company—outlining goals and strategies, identifying risks, and spotting opportunities for future growth. One of the biggest mistakes contractors make, however, is considering their plan a static, unchanging document.
"My experience has shown that most small business operators spend 30 percent of their time planning and monitoring, and 70 percent of their time building and re-building," says Alan McCafferty, chief operating officer of Ontario-based Hyde Park Canada, which builds sustainable retirement communities. "Once you commit to building an apartment building or community centre, it’s hard to change focus due to poor planning and management and the high cost of construction."
Companies would bear more fruit with the ratio reversed, McCafferty continues, by putting more emphasis on analysis than on chasing projects. Having an up-to-date business plan that factors in external changes could also make it easier for companies to raise money, sell property and make intelligent long-term decisions.
Keeping your plan alive
Nowadays it’s more important than ever to stay relevant, says Lee Carey, president of Small Business Association of Canada (SBA-Canada). "We’ve had a recession, globalization—a whole bunch of [external factors] that will affect plans," he says. He urges companies to review their business plan quarterly, and if the projections aren’t at least 90 percent accurate, they should rebuild the plan to better reflect the reality of the business.
Revisit key elements
When reworking your business plan, be sure to focus on these seven key elements:
- 1. Focus: One of the most common ways contractors get derailed is by pursuing projects outside of their realm. "The reality is you need to know your market," McCafferty says. Be sure your plan clearly identifies your target market. A company’s focus may evolve over time, but it should do so intentionally and carefully, based on a company’s analysis.
- 2. Established time frames: Whether monthly, quarterly or annually, businesses should regularly revisit aspects of their plan to keep projects on track—monitoring key performance indicators against past projections. "We adjust our plan at the beginning of the year and, if need be, again on a monthly basis," McCafferty says. This method helps his business execute projects proactively according to plan rather than reacting to issues after the fact.
- 3. Market analysis: Hyde Park Canada typically factors medical services and socio-economic requirements for people over 55 into their projects. But McCafferty says the company recently postponed the construction of a 30-unit building after a market analysis indicated they’d have more success by expanding and targeting the local demographic and by admitting people younger than 55. "Research showed us that, because of the economy, we had to add some additional features and lower our age of entry to get people to travel a little farther to and from work everday," he explains.
To appeal to a younger demographic, McCafferty’s company overhauled the landscaping and incorporated an outdoor exercise station, outdoor kitchen, spa and trails—modifications that wouldn’t have occurred without a reevaluation. McCafferty says, "This opened up our market and created a waiting list of potential purchasers that we previously didn’t have."
- 4. Collaboration: "Ask vendors about their business planning—can you help them? Also, what are your past clients’ short-term and long-range plans?" Carey asks. Brainstorming with as many players as possible—employees, subs, vendors and clients—can help improve every aspect of your plan.
- 5. Strategies: When revisiting your plan, identify whether you’re doing enough to reach your customer base, and if you’re not, establish steps to make that happen. "You want your plan to up-sell, cross-sell, leverage customers you already have and strategize for netting new clients," Carey says.
- 6. Cash flow: A company’s cash flow warrants the most frequent attention. The plan should include a review of your cash flow history in order to establish a projected analysis that forecasts revenue and expenditures. McCafferty suggests monitoring project costs on a daily basis to keep your projections on track.
- 7. Marketing: "Competitors are using new tools like social media and changing how they search and advertise," Carey says. Update your plan to incorporate advancements in technology that will help you build your brand and stay ahead of competitors.
"If you’re a one-person company, the business plan may only be one document," Carey says. "If you have a marketing and sales manager and construction foreman, then each of those departments should represent a piece in the plan." Whatever shape the plan takes, though, reevaluation is critical. It will help you adjust projects wisely, tweak your strategies and renew your focus with a sharper eye on the road ahead.