J. Miller and Company Blog

December 28, 2002

Strategize & Plan, Then Execute

The owner of the successful remodeling company called to cancel our luncheon. He had been adamant about the importance of our meeting as soon as possible when he made the appointment. Now he was just as adamant about re-scheduling some 2 months in the future. The reason for the change – he realized that his new commitment to business planning required that he, together with everyone else in the company, work together to develop the working plan for the New Year fast approaching. 

Planning to this company was, however, more demanding than simply calculating the gross sales, estimating the produced gross profit margin and outlining likely overhead expenses. Planning was the second step of a three part process, developing a working strategy was the first, execution the third. 

Strategic plans typically articulate the company’s vision over a 2 to 3 year time frame. This focus defines the major markets to be addressed, the anticipated revenue growth, and any modifications to the delivery system, such as moving to a greater subcontractor base. Strategic planning articulates the broad brush strokes of the company model. After the key goals are formulated, methodologies for reaching those goals are developed. 

Annual plans provide a detailed blueprint for meeting the targets defined by the strategic plan. If the goals and assumptions remain as defined in the strategic plan, this annual plan can be “updated” rather than re-written. 

Broadly speaking an annual business plan should include financial goals for: 

  • Construction income
  • Gross profit
  • Overhead expenses
  • Net profit
  • Owner salary equivalent
  • Capital expenses

 Additionally marketing goals must be set for:

  • Average job size
  • Leads to bids to sales
  • Market penetration
  • Customer satisfaction
  • Marketing expenses

And capacity goals must be determined for producing the work, as follows:

  • Volume per employee
  • Employee / subcontract mix

Other goals, such as training expenses and areas of focus provide the means to leverage the knowledge of current employees. Often a good evaluation of current employees’ strengths and weaknesses will highlight training needs. A series of specific sessions with your employees can increase their productivity, thereby negating the need to hire new people, or incur greater subcontract expense.

After completing the detailed business plan, it is essential that all team members understand and commit to its assumptions. Without this essential component of planning, the resulting document becomes nothing more than a paperweight.

Execution is the last step of the planning process. Action plans based on the company organizational chart define responsibilities clearly enough that execution easily follows. Failures to execute properly, or to meet the goals defined in the plan, can result from multiple causes. Often action plans lack clarity; many time employees buy-in is incomplete; other times ownership follow-up and follow through is inconsistent, thus sending “mixed messages”.

Even if 2003 has begun without a well-considered strategic plan, or without a detailed annual plan, or monthly and quarterly action plans to meet the goals defined in both the annual and the strategic plan, start now to prepare your company to meet the challenges of the New Year. It’s never too late.

monthly column