Growing a Business

A blog for businesses with 20 or fewer employees or for people planning on starting one. There are two threads. One for Starting a Business and a second for Growing a Business. Author: Henry McCabe.

Goals- An example of a strategic plan

In my last few blogs  I have written about creating Someday Goals for your business. These have been part of planned series on goal setting. So far I have demonstrated ways to collect data useful in setting goals.  This blog presents Someday Goals, aka a Strategic Plan, for a fictional women's clothing store. Refer back to earlier blogs for the research that underpinned setting of the goals. Such a plan for a small business need not be complicated and long.  The one presented here is only one page. It consists of a tabular presentation of some SMART goals and a summary of the expected results.

Achieve the primary goal of increasing owner's draw from $18,000 to $125,000 by:
Increasing Sales from $251,000 to $750,000 by:
	Growing  sales 11.5% year over year, by:
		Increasing sales per square foot  to at least $400 from the present $209 and
		Increasing sales per Full Time Equivalent Employee to $125,000, by
			Increasing the lines of clothing offered by one each year, net
			Increasing customer visits by 11.5% year over year, by:
				Increasing advertising as a percent of sales from 1.5% of sales to 2.5%, immediately
		Relocating to a larger better located space in 5 years  at the end of the current lease.
Improve net cash flow from operations as a percent of sales from 12% to 20% by:
		Reducing cost of sales 0.4% year over year to attain an improvement  from 54% to 50%, by:
			Replacing present lines with higher margin lines while still increasing by one line a year
			Reducing inventory wastage from 3.5% to 2.0%, by:
				Tightening return policies gradually over the next three years
				Installing at least one security camera to intimidate thieves, immediately
				Asking each vendor for better return allowances when placing orders
				Selling overstock via consignment shops four times annually
		Reducing Expenses from 34% of sales to 30% of sales, by:
			Reducing labor cost from 7% to 5% of sales by employing mostly part timers,
			Reducing in bound freight costs by minimizing overnight shipping. immediately
			Reducing heating and cooling expense by  1° changes in thermostat settings, now
			Reducing lighting cost by keeping lights off in work areas when not in use, now
			Replacing the current credit card service with Square , now
Achieve a second goal by reducing the owner's work hours, by:
	Hiring a full time store manager once sales rebound to $300 per sq ft after the move

Ten Year Plan
Item	Present		Goal		Industry Benchmarks
Revenue	100%	$251,000	100%	$750,000	100%	$750,000
Cost of Sales	54%	$135,540	50%	$375,000	53%	$397,500
Gross Profit	46%	$115,460	50%	$375,000	47%	$352,500
Expenses Net of Depreciation	34%	$85,340	30%	$225,000	32%	$240,000
Net Cash Flow	12%	$30,120	20%	$150,000	15%	$112,500
Debt Service & Working Capital	22%	$12,120	10%	$75,000	-	-
Owner's Draw	7%	$18,000	17%	$125,000	-	<$112,500
Owner's Weekly Work Hours	-	70	-	40	-	-
Sales per Square Foot	1,200	$209	1,800	$417	-	$400
Sales per Square Foot	1.5	$90,360	6.0	$125,000	-	$116,000
Inventory Turnover / Inventory	3.5	$38,500	4.0	$93,750	3.9	$101,923
Inventory Wastage % sales	3.5%	$8,785	2.0%	$15,000	1.8%	$13,500

In the next blog I will begin a thread on Starting a new business.In the meantime checkout SCORE's free services.

Planning. The only thing we know for sure about any plan we make is that actual events will turn out to be different. We must not let the attempt to create a perfect plan get in the way of completing one. An imperfect plan is better than none at all.