Sample

Business
Plan

Tradesmen

1st Floor, 6-8 Wilson Street, Brunswick 3056

Phone 9387 2086 Fax 9387 9473

Email admin@lindamcgowan.com.au

Website www.lindamcgowan.com.au
Business Plans for Trades People
As the title implies, a business plan is a road map for the future of a business. It is
designed to help you plan for the future, allocate resources and identify finance
requirements, likely problems and opportunities.

Many people identify business plans with business start ups and loan applications,
however, they are important for the ongoing management of the business and let
you set goals and targets that you can measure and monitor.

What is a Business Start-Up Plan?

A simple startup plan includes sections including a:

• Summary
• Mission Statement
• Market Analysis
• Break-Even Analysis
• Cash Flow Budget

This kind of plan is ideal to assess the viability of a business venture but is
insufficient to use when running the business.

General Business Plans

A general business plan includes a common set of elements (see below) and while
the format can certainly vary, the plan will include components such as
descriptions of the business, product or service, market, forecasts, management
team and financial analysis.

Your plan will depend on your specific situation. For example, description of the
management team is very important for investors while financial history is
mandatory for the banks and financiers. However, if you’re developing a plan for
internal use, you may not need to include all the background details of the
management team. Your plan should match its purpose.

The Most Important Components

It obviously depends on each case, but fundamentally it is the cash flows and
specific implementation details.

• Cash flow is the life blood of a business and also the most unpredictable,
particularly for start ups. Cash is often misunderstood as profit but profits
don’t guarantee cash in the bank. Lots of profitable businesses fail because
of poor cash flow.
• Your strategies and plans are just theory unless you assign responsibilities,
with dates and budgets, follow up with those responsible and track results.
Ideas without action amounts to nothing.
Standard Content

If you have the main ingredients, the order isn’t that important but here’s a guide :

1. Executive Summary - Write this last and it’s really just a page or two of
highlights.
2. Company Description - Legal structure, history, start-up plans, etc.
3. Product or Service - Describe them and focus on customer benefits.
4. Market Analysis - You need to know your market, demographics, customer
needs, location and how to reach them.
5. Marketing Plan- Be specific and include management responsibilities with
dates and budget.
6. Management Team - Include the background of key team members.
7. Financial Plan- Includes cash flow projections, profit and loss forecasts,
balance sheet, break-even analysis, assumptions, key business ratios, etc.

Don’t develop the plan in the same order you present it as a finished document.
For example, although the Executive Summary comes as the first section of a
business plan, we recommend writing it after everything else is done.

Business Plan Outline

• 1.0 Marketing Vision

• 2.0 Ideal Customer
• 3.0 Point of Difference
• 4.0 Product/Service Innovation
• 5.0 Lead Generation Plan
• 6.0 Lead Conversion Plan
• 7.0 Service Experience
• 8.0 Critical Numbers
• Appendix

1.0 Marketing Vision

We want to be seen by our customers as plumbing experts who can help them
achieve a higher level of energy savings. A win for the client, our business and the
planet.
1.1 Gap Dashboard

We have made some optimistic forecasts in the following ‘Gap Dashboard’ table. As
the year progresses we can compare actual performance against the projections.

Gap Dashboard

Year 1 Year 2 Year 3

Business Goals

New Diamond Customers 154 160 170

New Construction Installations 51 60 75

Tactical Goals

Update Website 1 1 1

Actively Solicit Testimonials 50 50 50

Strategic Goals

Develop long-term relationship with

3 2 2
local real estate developers

Ideal Customer

We are looking for clients who want a long-term

relationship with a plumbing contractor they can trust.

We know we have an ideal client when they join our

Diamond Club which is an annual service agreement that
gives them discounts on service, priority scheduling and an
annual plumbing inspection. When they sign up for the
Diamond Club they are ‘partnering’ with us, trust us and value quality service.

They desire peace of mind and a company that guarantees satisfaction in the work
performed.

Point Of Difference

Our plumbers are courteous and customer focussed. Their skills are outstanding
and they receive ongoing training to improve their workmanship. When we hire, we
look for personable people. We spend nearly as much time training our team in
customer service as we do in training them on improving their technical skills.
Product/Service Innovation

• Prospects: Free Report and Tips. Visit our showroom to ask questions or
come to our "Client Appreciation/Open House Night"
• Clients: $200-500 Plumbing Repair. $300 Showroom Fixture Purchase (they
install themselves).
• Premium Clients: $1,000s in revenue from these clients. They belong to our
Diamond Club and refer their friends and family to us.
• Champions: Real Estate Agents who refer their office, other agents and
clients to our business.

Lead Generation Plan

Direct Mail cards that offer a free report and discount are sent to local
homeowners who have never used our service. We have a small ‘branding’ weekly
ad in the local newspaper that keeps our name in front of prospects and clients.

We also have a small Yellow Page print campaign.

We send out a printed client Newsletter twice a year and have several ways people
can find us online and we track these results closely. We cross-promote our
services and send out personal notes, e-mails and cards to clients who have used us
for service X but have never used us for service Y. These clients already know, like
and trust us which makes it easier to sell them additional services.

Lead Conversion Plan

We have a post service system that requires each technician to complete a

marketing sheet that includes:

• Did you sell a Diamond Club membership? If not, why not.

• Did you tell the customer about the other services we offer?
• Did you offer to talk to the customer about any add-on sales or leave any
product literature? What was their response? What was their interest level?
• Anything else we should record about this customer? (i.e. What type of home
is it? Need a new system? Do they have a CO2 detector? Old water heater or
laundry hoses?)

Depending on the data recorded on the sheet, the customer receives a follow-up e-
mail on a specific product/service, gets put on a long-term ‘stay-in-touch’ program
or a variety of other options. For example, if a customer has an older water heater
but was not interested in changing it now, we send them a letter that says:

"When our technician was out last month, he noted you had a water heater that
was over 10 years old. Did you know that newer models can save up to 40% on
energy costs?" Three months later they receive information on the water heater
line we carry. Four months later they receive an e-mail with information on water
heater safety. The process is virtually automated.
Service Experience

7.1 Loyalty Product/Service Offerings

Diamond Club Members receive discounts, specials and member-only offers.

Critical Numbers

We will track our financials and the results of our marketing efforts. The sales
forecast and marketing expense budget tables also allow us to enter our actual
revenue and expenditures after each month closes. The variance between these
two will show us where we are succeeding and where we are falling short. From
this information we will determine if and how we will adjust our marketing efforts
for the remainder of the year.

8.1 Sales Forecast

Our Sales Forecast focuses on

three main categories. The
Diamond Club annual
maintenance program will bring
in the least revenue, but will
grow at a steady rate. Plumbing
repairs provide a stable monthly
revenue while Real Estate
Referrals and new Installations
account for the largest portion of
revenue, but they are cyclical.
Sales Forecast

Year 1 Year 2 Year 3

Unit Sales

Diamond Club Annual Maintenance 372 409 450

Plumbing Repairs 480 528 581

Real Estate Referrals/Installations 91 109 131

Total Unit Sales 943 1,046 1,162

Unit Prices Year 1 Year 2 Year 3

Diamond Club Annual Maintenance $85.00 $85.00 $85.00

Plumbing Repairs $350.00 $350.00 $350.00

Real Estate Referrals/Installations $3,247.25 $3,247.25 $3,247.25

Sales

Diamond Club Annual Maintenance $31,620 $34,782 $38,260

Plumbing Repairs $168,000 $184,800 $203,280

Real Estate Referrals/Installations $295,500 $354,600 $425,520

Total Sales $495,120 $574,182 $667,060

Direct Unit Costs Year 1 Year 2 Year 3

Diamond Club Annual Maintenance $21.37 $21.25 $21.25

Plumbing Repairs $87.50 $87.50 $87.50

Real Estate Referrals/Installations $811.81 $811.81 $811.81

Direct Cost of Sales

Diamond Club Annual Maintenance $7,949 $8,696 $9,565

Plumbing Repairs $42,000 $46,200 $50,820

Real Estate Referrals/Installations $73,875 $88,650 $106,380

Subtotal Direct Cost of Sales $123,824 $143,546 $166,765

8.2 Marketing Expense Budget

We are budgeting $8,500 for marketing expenses in year one, with increases of
about 10% in years 2 and 3. The bulk of our expenses will be for print media
marketing such as newspaper ads, yellow pages lists, brochures and direct
marketing pieces. The largest recurring expense will be for Google AdWords
placement and tracking.

The following table lays out the individual expenses and timeline.
Marketing Expense Budget

Year 1 Year 2 Year 3

Direct Mail Postcards $360 $396 $436

Weekly 'branding' ad in local newspaper $600 $660 $726

Yellow Page Print Campaign $480 $528 $581

Online AdWords $1,200 $1,320 $1,452

Printed Company Newsletter (twice a

$500 $550 $605
year)

Client Appreciation/Open House

$5,000 $5,500 $6,050
(annual)

Free Report/Prospects $240 $264 $290

Free 'Tips' Handout/Prospects $120 $132 $145

Other $0 $0 $0

------------ ------------ ------------

Total Sales and Marketing Expenses $8,500 $9,350 $10,285

Percentage of Sales 1.72% 1.63% 1.54%

8.3 Key Marketing Metrics

We are building a larger and a returning clientele. Plumbing, by its nature is a

business where neither we, nor our clients, wish to have repeat business each
month. Rather, we look for our customers to return once a year for maintanence,
and perhaps one other time for a remodel project or a repair or upgrade.

Key Marketing Metrics

Year 1 Year 2 Year 3

Revenue $495,120 $574,182 $667,060

Leads 159 250 400

Leads Converted 40.00% 40.00% 40.00%

Avg.
1 1 1
Transactions/Customer

Avg. $/Customer $2,000 $2,750 $3,500

Referrals 36 3 3

Testimonials 24 2 2