Planning: The Key to Growth
Is your company reactive to everything that happens or proactive, seeking your preferred destiny? Most contractors are operations-driven and are just plain busy trying to accomplish the work right in front of them. Very few actually sit down to plan out where they want to be over the next year or two. When the bumps in the road come, most firms are not prepared. There are no contingency plans in place, no extra opportunities in the pipeline, and no plan B as a fallback position.
We have observed that the best way to control your firm’s growth and to function as a healthy management team is to do regular planning. It is not that you will be unable to make money if you don’t. Of course, many firms never do the planning and still do just fine. However, there is a difference in professionalism and leadership in the progressive companies that take the time to hash out and strategically think through their future direction. It is now a known statistic that over 80% of the Best of Class Contractors do regular and consistent planning.
Begin with Strategic Planning
The unique process of projecting your firm’s growth and changes in upcoming years is called strategic planning. It is both a current assessment of where you are and a future vision of where you would like to be in the future. To get from where you are (Point A) to your desired goal (Point B) is easier said than done. Therefore the strategic planning process addresses the issues, risks, and action items needed to navigate these uncertain waters. It focuses on the inherent strengths of an organization and attempts to remove the barriers, hindrances, and impediments to growth.
The S.W.O.T Assessment
If you have hired an outside consultant, chances are good that you know the SWOT acronym. It stands for Strengths, Weaknesses, Opportunities, and Threats. Even if two firms had very similar strengths and weaknesses, the particular position and the makeup of each firm’s people will have a big impact on the differences between the two.
Another interesting observation is that the vast majority of contractors do not know their own SWOT very well. There is a simple test to verify this. If you brought the five key managers into a room separately and had them tell the company story, would it, in fact, sound like the same company from each person? This is something to consider. The best-positioned companies are those that know themselves and where they are positioned in their markets.
The Greatest Strength
Another interesting exercise is to flesh out all the strengths that the staff can think of concerning your company and to narrow them down to just one. It should be an overriding strength that is true and a positive differentiator. I call this a firm’s greatest strength. Very few know their greatest strength and even fewer actually market themselves based on it. It is like an iceberg in the ocean. It is only what is above the surface that can be seen. This is what every firm should major on in their promotional efforts. There are other strengths that are foundational and supportive of the greatest strength, and when you share the company story, these other strengths can be brought in as part of your story.
Every contractor in the construction industry has competitors in their respective markets that nip at their heels and take work out off the table from them. Part of the assessment should indicate who your competitors are, how they compete, and the best approach to minimize this competition. This part of the plan does not need to be content heavy, but it needs to detail specific commentary on the players that affect your world.
There are general industry trends along with vertical niche trends that affect your overall strategic direction. Attempt to capture in succinct form, those trends that have a direct impact on your business. For example, if you are in the public arena, your trends will be affected by public policy, budgets already allocated and approved, etc. However, if you are in the private markets, you look at residential housing, consumer spending and the like will be major factors.
In the door industry, it is important to look at the macro and micro trends that affect the overall economy and drilling right down to where your product and service lives.
Chess Illustrates the Importance of Strategy
If you have not yet learned to play chess, I would encourage you to begin now. It is the most strategic game on planet earth. A motivator for you may be to watch a well-done movie based on a true story entitled “Searching for Bobby Fisher”, where a young New York City chess prodigy develops into a force to be reckoned with.
One thing I have learned (although still a beginner) is that there are always reasons to make certain moves on the chess board at certain times. The game develops based on strategy to capture the opponent’s king. Certain strategies work well and others will bring the wrong result quickly. This is how it is regarding our contracting businesses. There are only so many moves in the contracting game that are the right and powerful strategic moves. We must practice and eventually master this if we are to make progress toward our future vision.
Strategic planning helps contractors evaluate their need to pursue niche markets and ideal client relationships, where issues and risks get critically discussed. Every year this planning should reveal fresh and new potential opportunities, threats to weigh, and significant changes to implement in your firm.
Hire a Facilitator
The first step to doing strategic planning is to hire an experienced facilitator who can draw out a current assessment of the firm’s strengths, weaknesses, opportunities, and threats. They will also help to identify the issues and risks and lead the planning process to a clear path of implementation. This can normally be done in 30 to 45 days before year end.
The Strategic Planning Retreat
If the facilitator does a good job of assessing and identifying the issues/risks facing the business, then it is time to take the management team on a Strategic Planning Retreat. This is best done over a two day period away from the workplace. The agenda must be followed jealously as the time will go faster than imaginable. The first day should clearly confirm the assessment without going into great detail.
I like to see the staff agree on the firm’s greatest strength and regroup how best to promote this greatest strength at the retreat. It is necessary to also focus on weaknesses, opportunities, and threats. The balance of the first day should concentrate on the four or five major issues facing the company in the short term.
The second day should be a time to select champions and discuss implementation goals to secure the needed changes.
Monitoring the Strategic Planning Process
As a follow-up to the strategic planning retreat, it should be mandatory for the champions to confer at least monthly on the progress of the plan. I encourage that the facilitator stays in the loop to bring some outside accountability to bear on the initially zealous retreat plans.
How Does Your Firm Rate?
Contractor Marketing Inc. (my firm) has developed the “Strategic Planning Grade” as a diagnostic tool to assist contractors to rate themselves and to show areas to improve planning. The ten categories are interrelated and have weighted point values.
- Written Strategic Plan (15 points) – It is wonderful if the President has the plan in their head, but that hard drive can crash and leave everyone else in the dark as to the future direction of the company. It must be written succinctly and practically.
- Champions to Oversee Key Issues (15 points) – Each major objective stated in the strategic plan should have at least one champion to lead the charge to positive change. This champion agrees on a reasonable timeframe to carry out the needed change and will be held accountable by the management team running the company.
- Implementation Ability (15 points) – How well does the firm/champions carry out the objectives jointly decided by the team? Many firms have learned the importance of planning. but very few do a good job implementing these plans. Only the progressive, innovative and empowering firms do a superb job moving forward with relative ease.
- Healthy Human Resource Function (10 points) – The key issue that we observe in planning is the people issues. The ability to select, train, retain, motivate, lead, compensate and change is rare, especially in the construction industry. We are more competent in building structures than we are people.
- Leadership Development/Training (10 points) – The leaders of a company determine the culture, the values, the business approach and philosophy. They set the tone for the rest of the staff to calibrate to.
- Target Market Focus (10 points) – It is wise to consider new opportunities and target markets every time that you meet. Which market segments make the most sense to pursue with your firm’s experience and capability?
- Clear Vision, Mission and Goals (10 points) – I know that these items seem soft to the reader, but perhaps they direct much like a small rudder does a huge ship. They need to be clear, distinct and relevant so that the staff is all pulling in the same direction.
- Internal Communication/Morale (5 points) – How well do your employees communicate with one another? Do the office and field stay in sync? Does upper management let the troops know what the key issues are? This factor impacts the overall morale of the company and creates energy for the client to be serviced and satisfied.
- Monitoring Mechanisms (5 points) – Do we know when our plan or projects go off track or is it too late by the time we realize it? How well do we keep score on the foundational basics?
- Marketplace Position (5 points) – Where do you stand in light of your competitors? What differentiates you from every other contractor in your market area claiming to be quality-oriented, on time, and within budget?