American Recycler, February 2010

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 reduce expenses.

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 in detail.

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.

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, rons@rdsinvestments.com or 817-834-3625 ext 6#.