The bridge plan for forecasting growth –
How are we going to get there?
When my partners and I bought Ford’s auto recycling
subsidiary, it was losing huge buckets of money.
As we prepared our financial forecast on the turnaround,
the asset based lender and venture capital firm
that were our stakeholders wanted to understand
exactly how we were going to increase sales and
The stakeholders required us to produce a credible
plan. For each line in our forecast, when we said
we would raise sales or lower expenses, we prepared
a bridge plan. How exactly would we achieve the
numbers we were forecasting? What resources would
be needed to meet the forecast? How would our initiatives
affect each month’s numbers going forward? How
many months would the initiative take? Our bridge
plan spelled out answers to each of these questions
To make a good bridge plan requires recognizing
that some initiatives take longer to execute than
others and that some initiatives bleed through
the financials more than others. If we were forecasting
a 10 percent increase in parts sales (or cash flow),
how would it be achieved? Increased turns? Raising
prices? Better close rates? Bringing in more customers
for that product or service?
We had to document each tiny step – including the
resources needed and the person accountable for
planning, executing, and measuring of results.
Though simple in principle, making a bridge plan
is a daunting task in practice.
Does your plan forecast a 10 percent increase in
sales? Build a bridge with each component of sales
you will need to reach the goal. A good bridge
plan to achieve a 10 percent increase has more
than one sales component and a total forecasted
bridge that delivers at least a 20 percent increase.
Some components won’t hit their goal, so build
in some wiggle room.
Get your whole team bought in by making them a
part of creating the bridge plan, knowing they
will be held accountable for the results they forecast.
If you’re competitive and your team wants to deliver,
creating bridge plans gives you an exciting opportunity
to lead and inspire.
Participants in our Peer Benchmarking Review Groups
(PBRGs) from all industries learn and use business
building techniques like this one. Business owners
from the same industry share what works, vet and
sharpen one another’s ideas on growing their small
businesses and achieving maximum success.
Don’t forget to subscribe to Ron's
free monthly auto recycling e-newsletter, with
news and tips, register at www.autosalvageconsultant.com.
Remember, only you can make BUSINESS
Ron Sturgeon is past owner of AAA
Small Car World. In 1999, he sold his six Texas
locations, with 140 employees, to Greenleaf. In
2001, he founded North Texas Insurance Auction,
which he sold to Copart in 2002. In 2002, his book “Salvaging
Millions” was published to help small business
owners achieve significant success, and was recently
reprinted. In June 2003, he joined the new ownership
and management team of GreenLeaf. He also manages
his real estate holdings and investments. You can
learn more about him at WWW.autosalvageconsultant.com
He can be reached at 5940 Eden, Haltom City, TX
76117, email@example.com or
817-834-3625 ext 6#.