2008 is officially over and now we’re starting a brand new year with a newly elected President.  Let’s hope and pray that 2009 is better to car dealers than the last two have been.  But instead of just hoping and praying this year that business will turn around, take matters into your own hands and aggressively storm the market with a positive mental attitude, focused actions and a strategic plan of attack.

Do you think Tony Dungy or Bill Belichick would ever start a football game without a sound game plan?  Do you think General Schwarzkoph would have led the invasion of Kuwait without an Operations Plan?  The answer is no.  Effective leaders execute well planned strategies.  And, the best way to lay out a sound business strategy is to write a thorough plan.  That’s Plan with a capital “P” for Business Plan, and if you haven’t written one yet, you are making one of the most costly and often fatal mistakes in running a business.

According to the Small Business Administration (SBA) “two-thirds of new establishments survive at least two years, and 44 percent survive at least four years.”  As a general rule of thumb, most businesses have a 50/50 chance of surviving for five years or more, and that’s under normal economic conditions.  During the past six months we’ve seen an average of 2 franchise auto dealers per day close their doors or sell out to larger organizations and there are many expert opinions about why and what went wrong.  But one thing is for certain – closing the doors to the business was not in part of the plan five years ago. 

There are many things an owner should and shouldn’t do to keep a business afloat in the perilous waters of the entrepreneurial sea. There are, however, key factors that — if not avoided — will be certain to weigh down any business and possibly sink it forevermore.  Among the top five reasons that most businesses fails is a lack of planning.

The most basic purpose of any business plan is not to obtain financing or investors, it is to identify and evaluate the external opportunities and threats to the business.  Writing a business plan forces you to review everything at once: your “value proposition” (why people should pay you money), marketing assumptions, advertising, operations, financial planning and staffing.  It ties together all the disciplines of business – Operations, Management, Accounting, Finance, Marketing and Economics.  When you write a plan you end up spotting connections you otherwise would have missed; it allows you to evaluate every aspect of your business before you ever spend a dime. 

A Business Plan is how you drive the future. Whenever you write, “We expect 500 customers and 100 sales per month by the end of year one”, it is not a passive prediction where you open the doors and just wait for customers to show up.  It is an educated and factual prediction based on the market that challenges your sales force to reach a specific, targeted goal with allocated resources.  The plan lays out targets in all major areas of your business: sales, expense items, hiring positions and financing goals.

Once laid out, these targets become performance goals for your team.  Plus, the written record of your goals coupled with a track record of delivering against those goals sends the message loud and clear that you understand your business and your team can deliver the results you promise. Employees, banks, and investors will all respond to that message favorably and you will separate your business from the 75% of dealers who have no plan. 

A business plan is no guarantee for success.  It is however a prerequisite.  And a business plan on the back of a napkin is better than no business plan at all.  Below are the Ten Fundamentals of a Business Plan and a brief description of each:

1. Vision – The Executive Summary.  Every team needs a vision of what the future will be like when you reach your goals and are operating successfully.  The executive summary is an abbreviated summary of that vision.  It dictates who you are, what you do, why you do it and how you are going to achieve your goals.  It contains a vision statement, a mission statement, and validated comments about our market and the business opportunity.
2. History – A brief account of the company’s roots and how it began.  Remember, history can be boring for many readers so keep this section short and sweet.  It’s relevant because it illustrates the foundation of the company and gives an insight to the direction of the future.
3. Goals and Objectives – Every organization or team needs goals to accomplish that are SMART (Specific, Measurable, Achievable, Realistic, and Time-Phased).  Goals provide a target on which the team can focus their thoughts, actions and energy.  Every goal needs objectives that serve as the stepping stones that pave the way to its attainment.  Goals and Objectives give the team clarity for its vision.  They provide joint direction that helps guide the team and build momentum.
4. The Team – Biographies of the Key Players.  Every team has all stars.  These are the players in key roles that are charged with executing the business plan.  No matter how good the plan is, its ultimate success depends on the talent and drive of the key players.  The best laid plans will ultimately fail without a focused and talented team just like the best teams and best players will ultimately lose without a game plan.  Don’t hold back either.  This is your opportunity to sell your team to the world – be loud and be proud. 
5. The Product or Service – This is what you do, why people pay you money.  This section describes in detail the product(s) or service(s) that you offer.  Be specific.  Be different.  This is the “secret sauce” about your business that you’re selling.  You have to sell it to yourself, to employees, to investors, to banks, and ultimately, to customers.  As a car dealer you must be able to answer the most basic of questions:  Why should I buy a vehicle from you?

6.    The Market - Consumer market research is a form of applied sociology that concentrates on understanding the behaviors, whims and preferences, of consumers and aims to understand the effects of comparative advertising.  The marketing section of your plan has a distinct and important purpose of describing the market demographics of your business and their associated buying habits in reference to your product or service.  This is where you describe your niche in detail to illustrate your understanding of your customer and why they choose you.

1. Strategy - The strategic section of your plan is the nuts and bolts of your business idea.  This is where you describe in full detail your game plan for winning.  This is where you describe “How” you’re going to achieve your goals and objectives.  This section is the framework that holds together the entire plan by laying out a detailed strategic plan of action and allows for tactical reactions to any contingency that may arise.
2. Financial Projections – The financial projections section of a business plan typically account for a five year period of time - two years of historical and comparative data and three years of informed projections based on the demand of the market and they company’s ability to meet a percentage of that demand.
3. Exit Strategy – Most businesses have a specific life cycle.  They start up, they grow, they change hands, they go public, etc.  The exit strategy depicts the projected life cycle of the business and the long range plans of the owners.  It also lays out a detailed exit plan for any investors as a way to specify and minimize the financial risk of their investment in your company.
4. SWOT Analysis – The final section of the business plan candidly highlights four strategic factors of influence that are used to evaluate the Strengths, Weaknesses, Opportunities, and Threats of a business. The first two factors highlight the key strengths and weaknesses of the organization while the second two illustrate the current opportunities for expansion and threats to the existing business model.  The purpose of the SWOT Analysis is to identify the internal and external factors that will affect the ability of the organization to achieve their stated goals.