Bus and Motor Coach Library

The Importance of a Business Plan

Author – Sheryl Miller (2002)

Operating a business in the motorcoach industry has certainly become a far more challenging and more demanding effort over the past few years.  Many motorcoach companies are wondering how to react to this most unfortunate downturn in the industry.  Waiting for this difficult time to "pass" and your business to "recover" is not a viable option. 

This is the time to focus on and analyze the ways in which you can strengthen your business.  According to the economic experts, as companies look for tools to help them navigate economic turbulence, most often they turn to strategic planning.

What is "strategic planning"?  It can be answered in two words: a Business Plan.
The number one recommendation, across the board, is to re-examine your business plan. Have you strayed from it in any way?  Does it need to be revised?  Should you be considering whole new avenues that were not considered when the plan was first developed?

And if you don't have an existing plan, then you should immediately sit down and begin developing one.  Your business plan should be the working blueprint of your company.  A business without a plan is like a driver lost, without directions or a map.

What is a business plan?  It is usually a fairly comprehensive document describing your company.  It is made up of several components beginning with the business description - your vision of who you are, what you offer, what market needs you should address, what makes your business unique, and why your business idea is viable.  Another section usually covers an over view of the management team and staff that exist and are needed within your organization, as well as the location of plant, equipment and resources of the business.  Business Plans generally include a marketing plan - covering the overall market, competition, and describing how your products and services fulfill a market need.  It also includes pricing, target market, and methods by which your company markets and sells its services.  And no business plan would be complete without the financial plan of the business, the capital required, how it will be used, and business projections. 

To determine the viability of your business plan, sit down and read it from the perspective of someone about to invest in your business.  Ask yourself whether you would invest in this company?  When you buy stock in a company, you do so by researching what the company plans to do, how it plans to do it, and when it will be accomplished. 

When you approach lending sources, vendors, or partners, they will invariably look at your business from this perspective.  They will make a determination whether your business has a decisive plan for growth, profit, and stability.  If your plan doesn't address the what, how, and when of it, make the appropriate revisions to answer these questions.  During this process you may even identify additional information you need to research in order to make decisions about the future of your company.

A business plan should be the basis of your operations, and it should be able to accomplish the following:

- Act as the roadmap, the benchmark to compare against future operations 
-  Create a process to react to opportunities and difficulties as they arise over time.
-  Assist in communicating with financial partners.  Informing then what the business is about, and how the capital will be used and paid back.
-   Allow management to evaluate ideas

When you have established the general concepts of your business plan you need to turn them into a financial plan.  Your financial plan will demonstrate when and how revenue will come into the business, as well as the costs of running the business, and overall profit or loss.  Then you need to compare actual results to the plan.  This will provide you direct feedback on your efforts.  This comparison to plan will help you prove to others that you have met your goals, or have made the appropriate changes to meet your goals.  It is the proof and the credibility needed to have others 'invest' in your company.

Creating and measuring against your financial plan is an on-going process that is vital to the business, and this applies to businesses of every size - from the very largest, to the smallest one-man, one coach fleet operator.

Financial management and record keeping systems are frequently the bane of an entrepreneur's existence.  Perhaps the problem is that the creative side of being an entrepreneur is often at odds with the accounting side.  Taking time to organize a good system can be tedious and time consuming, but done well, it can be the backbone of your business.  In addition, once the setup is done, the system frequently saves you time and effort.  "A stitch in time saves nine."  It only takes one visit by a tax auditor or a turndown for a loan by a bank to convince any business owner that an organized system would be useful.

Financial management systems are the embodiment of your financial plan.  They monitor the profitability, growth, and stability that we spoke of before, continually and automatically.  They can generate your financial statements, which are an up to date picture of your company's financial health.  Financial statements are the evidence that you submit to government agencies, banks, and financial partners; necessary to prove your business is performing as planned. 

Financial statements are a way to track your progress towards your goals and provide you with the information needed to make decisions as you go along. 

Unfortunately the American and Canadian economies, as well as most other industrialized economies, is in a current recessionary period.  The most obvious decisions that many companies take in such times are down-sizing measures in an effort to:
1)         Cut costs?
2)         Cut staff as well?
3)         Cut capital spending?

However, by cutting costs, staff and capital spending, we actually create the downturn we feared - it often becomes a self-fulfilling prophecy.  We might save money, but if we lose the talent and the investment we need to remain a viable business in the long term, then we are left with a demoralized, weaker organization with which to ride out the economic crisis.

The recent results of a survey conducted by Gantz Wiley Research for a national consulting firm, found that during this time when many companies are dealing with massive cost cutting, significantly many companies are actively hiring consultants and other outside professionals to support the implementation and integration of business solutions, in readiness for a rebounding economy.

These companies recognize that the best way to monitor their business plan is to automate their financial plan, using a financial management system.

There are many types of business management tools in the market.  The key to success is finding tools that are completely integrated, so that when you update one aspect of your business plan it flows right to your financial statements.  Once these integrated business systems are in place you will have the ability to make informed decisions about where and how to cut costs or invest in your business and the effect those changes will have on the rest of the organization. 

This is the time to evaluate and implement technology within your business.  Those who are embracing new technology within their organizations are discovering new opportunities, and will likely be more successful in the future. Armed with a Business Plan - a Business Road Map if you will, one will more easily negotiate the future hurdles and pitfalls of a changing marketplace, and more accurately recognize new opportunities as they unfold.

Sheryl Miller is a recognized financial management system expert.  With an MBA in finance, she has worked with many organizations nationwide to improve their financial performance.  In her capacity as a financial manager with VERSYSS/DAWSON, an industry leader in integrated financial management systems for the motorcoach industry, Sheryl works with motorcoach fleets throughout North America, evaluating their needs and providing the tools they need to improve their business. 
            Given the downturn that our industry is now experiencing, and the beginning of what we hope will be a better year, it is timely to have Sheryl Miller share her thoughts on the Importance of a Business Plan in improving the financial health of your business, and to take advantage of the opportunities in a rebounding market.