Brad, don't we have to completely rethink, maybe even start over, on the three- to five-year business plan we completed last fall?"
This question is a good one, and one I personally received from several of my contractor clients. In today's economic conditions, shouldn't every contractor essentially forget what he or she planned for and rethink their strategies to grow their businesses? While the answer may at first appear to be "yes," I am not so sure a contractor should be too hasty in tossing out his or her entire effort.
Before you consider all your past planning efforts invalid, consider the following insights.
1. Revisit your existing business plan.
If you spent the proper time thinking through your strategies for the current business plan, don't toss out everything and begin at "ground zero." In your current plan there are probably some very solid points of growth and considerations for needed resources that continue to be critical and applicable moving forward. Renew your focus of the plan and recapture the spirit of your intentions when you first developed the plan.
2. Identify critical growth initiatives.
What were your strategies for growth or expansion? Were you considering adding another service to your existing business or looking to expand geographically? If these were central to your growth initiatives they may still be valid; in fact, they may be more promising in this tough business climate.
Consider that some of your competitors have not worked from a solid and clear business plan and may be facing extinction. You should be prepared to take over that available work when competitors drop out of the market.
3. Specify your available resources for growth.
Looking at your current and projected cash flow, do you have the money to support the growth plans? Banks, more than ever, will be tightening up their lending practices. The ability to show your cash position will be more critical than ever to get needed capital to support growth initiatives.
4. 'Lean-size' without crippling your business.
This business climate demands that you run as lean as possible. However, be careful not to become so lean that you eliminate the needed human resources to execute your plan. This is a tough balancing act. You obviously have to have booked work to keep workers. You may need to walk the tightrope in keeping some of your very best workers while you are trying to get the business to keep them busy. Run lean but don't over cut the number of important individuals needed.
5. Re-align the budget to increase your marketing effort.
Part of your reassessment of the business plan should be to consider what it would take to gain new clients and increase work with existing or past clients. You don't have your business if you don't have the work; so in tough times you may need to spend more money on your business development efforts through marketing, public relations and selling.
Adding another estimator may be warranted. Increasing the number of sales calls you make personally may be needed. Changing the type of sales literature you provide or expanding your Internet presence may be needed to get more exposure. You may need to consider doing a few "lunch and learns" with a section of your commercial business. If you are hurting for new work remember that spending a dollar on business development will always yield greater short-term results.
6. Review your business plan every 60 to 90 days.
Many contractors who have a business plan simply let it collect dust. Once you have done a thorough reassessment of the current plan and made your adjustments due to current business conditions, commit to review your "new" plan every few months. This regularly scheduled review will increase your own confidence in your efforts, motivate you to be assertive in your marketing and sales efforts, and provide you with more knowledge than you've had in quite a while.
This article is obviously focused on contractors who have a business plan. It's hard to believe, but there is still a majority of contractors who do not have a well thought-out plan for growth. I find it unbelievable. While some of these ill-prepared contractors will weather the economic storm, many more will not; and in fact, many have already gone out of business. This does not have to happen to you!
Take a deep look at your business plan. Don't look to criticize past thoughts and decisions but rather be open to improving it for your market. This kind of preparation can also keep you one to two steps ahead of those competitors who do not plan, giving you a competitive advantage.
Brad Humphrey is president of Pinnacle Development Group, a consulting and training firm that specializes in the construction industry. For more information about Brad and his firm, please visit www.pinnacledg.com. For books and CDs that Brad has produced go to www.gangboxinc.com.