The following comes from the January 2017 issue of Truck Parts & Service. To read a digital version of the magazine, please click the image below.
No matter the industry, generally each business owner has a long-term goal in mind.
Distributor and service providers’ long-term goals could be something far-reaching they hope to accomplish for their business, whether that’s related to how many storefronts they open, how many service shops they operate or how much capital they hope to earn.
There are many separate and distinct ways of reaching a final goal, and planning carefully is an important part of that process.
In developing plans to reach ultimate goals, it can be useful to separate planning into phases. This allows for a business to track immediate improvements while evaluating progress toward eventual goals and targets.
The different time frames of the planning process place the focus on time-sensitive aspects of the company’s structure and environment.
Dave Settles, president of Weldon Parts, says his company talks about its plans for the next several years before business planning each year. “We talk about the things that we want to accomplish three, four or five years down the road, but we only sit down and put on paper what we are looking at for that year,” Settles says.
“We look at what will get us to that point in the future.”
Known as short-term planning, this strategy allows a company to look at its operation in the present and develop strategies to improve into the future.
According to business planning software LivePlan, creating a short-term business plan to reach goals is not without challenges. The company cites employee attitudes and equipment as two viable short-term concerns.
To address these issues, LivePlan advises putting in place short-term solutions to address problems. Employee training courses, equipment servicing and quality fixes are short-term solutions. These solutions set the stage for addressing problems more comprehensively in the longer term, the company says.
Medium-term planning applies more permanent solutions to short-term problems. In the long term, companies want to solve problems permanently and reach their overall targets, LivePlan says.
No matter the length, effective business planning is critical to a company’s long-term success, and its ability to raise capital and grow successfully.
A properly prepared business plan should tell a company’s story, make an argument and conservatively predict the future. Since all companies have different stories to tell, there is no hard “set in stone” plan to follow, says Azhar Kozami in the book “Business Policy and Strategic Management.”
Every business must choose what’s best for its own individual needs. A well-written business plan also should lay out an optimal growth path and strategy, as well as the rationale for selecting one strategy over other alternatives.
LivePlan says growing a business requires setting short- and long-term goals. Often the short-term goals are the steps necessary to achieve the longer term goals, and LivePlan says businesses should choose related areas such as advertising and revenue, and base short- and long-term goals within these categories.
An example of a short-term goal is to increase your advertising budget each month for the next three months. An example of a long-term business goal that the short-term goal helps achieve is to double business revenue by the end of the fiscal year.
Short-term goals are goals a business sets out to accomplish in six months or less, and typically are flexible.
“When you look at things at six-month increments, you get a better idea of what’s really taking place,” Settles says.
When it comes to achieving short-term goals, a good place to start is determining what you can do in the time you have available.
For example, suppose an aftermarket distributor’s long-term goal is to double its customer base. To do so, it creates a plan that involves a series of short-term objectives. The company then moves from one short-term objective to the next, knowing that each completed objective brings it closer to its overall goal.
That may require developing advertising plans, customer service goals or cost cutting measures. There are many variables to look at when deciding the best options for a short-term goal.
“Our fiscal year starts on July 1, so I spend the previous couple of months planning for that,” Settles says. “In December we look at the numbers compared to what we projected in July and see if it’s real. We talk with our managers and see what’s what, what’s realistic, and start from there.”
Weldon Parts must do that when considering plans to roll out across its 18 locations. locations. “We have to look at it by region and then down to the specific stores when we are planning,” Settles says. “For example, Florida is different from Nebraska, so we have to take all of those factors into account.”
He adds that looking at goals and patterns based on six-month increments has been a strategic value for the company.
“When December rolls around, we can adjust and make different plans from what we put in place in July. You have to deal with what’s real,” he says.
Additionally, what counts as a short-term objective depends on a business’s needs. A company might set short-term goals for longer periods to accomplish its long-term goal in several years. For example, a business that hopes to expand into another region might break down its long-term growth strategy into a series of short-term plans, such as implementing more service features at a later date.
Short-term objectives also must be verifiable to be valuable, says Kozami.
An example here could be an aftermarket business that aims to improve the company’s customer service department may implement customer surveys over the course of several months and measure changes in consumer attitudes, tracking whether they are meeting short-term goals that have been set in place.
And while planning carefully, even the best long-term plan can fail, which is another reason short-term objectives are important.
If an aftermarket distributor is failing to achieve its short-term goals, that’s a sign it should reevaluate its strategies.
Being able to adjust also is an important key to any short-term plan. Many factors in the market are often unpredictable and cannot be considered when plans are made, so the ability to shift gears is a necessary component.
“We set budgets and put marketing plans and sales goals in place each year, but we have to be flexible because things change,” says Ian Johnston, vice president of operations and marketing for Harman Heavy Vehicle Specialists. “We have to look at new product lines, whether new processes or equipment are needed, look at the year to year cost effectiveness of everything we are doing.
“From a sales standpoint we are more flexible from our plans because so many variables can change. Sometimes what we do is affected by vendors and other things that we can’t control.”
Deviating from a plan is occasionally going to be necessary.
“You can’t sit back and rest on your plans that you have in place on paper,” Johnston says. “You have to be receptive to the marketplace and what’s going on around you. You can have a plan in place and then a vendor has something that they want you to be a part of and everything changes. You just have to be willing to adjust.”
And short-term plans allow for quick adjustments. It’s better for any business to know early on that they are stalled or heading in the wrong direction.
A business owner who fails to measure their progress with short-term objectives might waste years on an ineffective strategy.
