Planning for Growth Means Planning Ahead
It has been said that if your business isn’t growing, then it’s dying. It’s not possible to simply maintain the “status quo” in today’s business environment. On the other hand, unplanned, uncontrolled growth can also be disastrous to your business. The secret is to sit down and carefully think out where you want to be one, two or five years from now and create a plan that will take you there. Then, as time goes by and you work your “plan,” make every effort to stay on it. Make every effort not to fall behind or get too far ahead of it. Rapid growth can create a cash flow crisis or can cause you too make rushed and poorly planned decisions.
Part of your growth plan must include the addition of new equipment and personnel to produce the additional work called for in the plan. Old equipment and employee turnover also create the need for replacements along the way. Many companies fail to build these factors into their plan and have difficulty working them in on an “emergency” basis.
Equipment is necessary to provide the services that bring in the income; not just any equipment, but efficiently working equipment. Regular maintenance and repairs and/or replacement must be part of the planned expenses, as well as new equipment for growth. You should know the life expectancy of your equipment and realize that trying to push it beyond its expected performance parameters can result in costly repair and down time expenses. Planning for replacement is as simple as the following formula: equipment replacement cost divided by years of expected performance equals the amount of money you should be putting away annually. Then, when the time comes, you can easily replace the equipment without significant sudden financial impact on the business.
Many agree that having an equipment fund is a great idea, but very few actually establish one. It’s one of those things on the list of things to do, but never quite makes it to the top. Unfortunately, this leads many businesses to fall behind on their plan because they can’t get the work done with the available equipment and can’t afford to buy more right now. They push “old reliable” to the limits and nearly kill the loyal technicians. They then find themselves in a crisis when Joe quits and old reliable breaks down in the middle of the busy season. Clients get mad, accounts are lost, and the owner says, “You just can’t find good reliable help anymore” or “That equipment always breaks down when you need it the most.”
You should know the approximate level of production where a primary piece of equipment will max out. For example, a typical truckmounted carpet-cleaning unit operated by a trained, certified technician can consistently produce about $120,000–$150,000 of carpet cleaning per year. So if your business goal is $300,000 next year and $360,000 the year after, and you have only one truck, then you need to think about adding an additional unit right away and possibly another in the second half of the year.
Remember, if you want to keep growing, then don’t work your crew and equipment at maximum capacity at all times. It will result in breakdowns and burnout at inconvenient times.
Another item to establish within your business growth plan is a time frame for when you will need new employees. Factor in the average turnover rate for your business, then start looking for good people before you actually need to hire them.
Keep a list of potential employees in a file. If the employee is the type you really want, they’re probably working. You’ll need time to work on them and convince them that working with you is better than whatever they’re doing now. You also need to factor in enough lead time for training so that you are not sending poorly prepared employees into the field.
Recruiting from help wanted ads typically brings in people who aren’t working. In today’s economy the only people not working are the ones that don’t want to. Now don’t just say you will put these things on your list, take a hint from that little shoe company in Oregon and “Just Do It.”