When did you last prepare a business plan? Many executives draft them only when a lender or investor demands it. Some write business plans just once – when they try to get financing for their company. And still others have never outlined a formal business plan.
Just as people make New Year’s resolutions in December, set aside a few days this month to review or draft goals for the coming year. If developing a business plan sounds daunting, think of the process as setting New Year’s resolutions for your business.
Often, managers don’t think business plans are necessary because they aren’t facing or initiating major changes in their operation. That’s precisely why you need to draft business plans periodically. If you are stuck in a routine that seems acceptable, you aren’t likely to question whether there’s a better use of your resources. The sky might not be falling, but that doesn’t mean you are getting the best return on investment.
Are you capitalizing on your strengths? Perhaps you or your managers have some solid relationships with potential shippers. You might not be pursuing new business because you are doing OK serving existing customers. But with late-model used trucks available for a song and a much improved driver market, now is the time to grow, provided you have the business to support it.
Are you correcting your weaknesses? Maybe you are still carrying some marginal drivers because for so long you had no choice. Chances are, the supply of drivers in your area now is more in line with demand. If you wanted to replace your worst performers, could you?
Are you jumping at opportunities? A cross-town competitor has a great book of business but is about to go under due to a cash crunch. Meanwhile, you have cash – or at least a way to get it. It’s a great opening for a perfect acquisition or merger.
Are you trying to counter threats? Your largest shipper has been laying off employees and cutting production. Are you prepared to replace the business if this customer shuts down?
These are the kinds of questions owners and executives should ask themselves daily. In a perfect world, most of what you do would be geared toward taking advantage of strengths and opportunities and eliminating weaknesses and threats. Instead, most managers spend most of their time putting out fires and never make time for strategic or tactical planning. If that’s you, shouldn’t you spend a few days doing it at least once a year?
Right now, cash flow probably is a bigger issue than ever. That’s all the more reason to draft a business plan. If you suddenly need to ask for a line of credit, for example, your banker will be impressed if you present him with a fresh business plan that shows why he isn’t throwing money down the drain.
As you draft your plan, look for new ways to take advantage of opportunities that may be fleeting. Diesel prices, for example, are at a two-year low. Can you turn what might be a temporary windfall into a long-term benefit? Perhaps your volume of fuel consumption gives you the leverage to lock in today’s prices. If not, you might pool your demand with that of several other fleets to achieve the necessary volume.
Also, be conservative. How many times have you heard analysts predict that the loss of capacity in trucking will position the survivors to command premium rates? Don’t believe it. And if you do, don’t count on it. We are now officially in a recession. If the supply of trucks has dropped, so has the demand. Yes, there may be a brief shortage once manufacturing rebounds. But there are tens of thousands of idled trucks ready to hit the road at a moment’s notice.
More than anything, preparing a business plan is an occasion to spend a few days just thinking. When was the last time you did that?
Avery Vise is editorial director of Commercial Carrier Journal. E-mail avise@eTrucker.com.