It's time to start thinking about that annual winter activity of Strategic Planning. You do plan your strategies for the upcoming year, right?
Let's review several reasons why setting aside time to plan your 2009 improvement projects may be in your best interest.
- Competition has increased
- Your financial position has deteriorated
- You have suffered significant turnover
- You didn't suffer turnover (time to expand?)
- You have noticed new opportunities and are interested in capitalizing on them
- Your business has grown significantly in the last couple of years
- And last but not lease - you are not satisfied with the current state of your business
Got it? Nearly every contractor should invest the day or three it takes to put together a thorough strategic plan.
Let's make sure you are clear on what the term strategic plan means.
When you have finished your strategic planning process you should have in hand a set of ACTION PLANS for your highest priority improvement projects. Those plans should lay out, step-by-step the who, what, and when details of the project tasks.
There are a few significant challenges to the strategic planning process that you need to be aware of.
First off, you probably do not have the resources to pull off every improvement project that you'd like to improve.
Second, how are you going to identify which projects are high priority and which aren't?
Third, how are you going to make sure you don't overlook an important project?
Here are the short answers. We will explain each part in greater detail further down.
- Perform a SWOT on your company
- Translate the SWOT into Strategic Initiatives
- Prioritize the Strategic Initiatives
- Turn the highest priority Strategic Initiatives into Action Plans
SWOT: Strengths, Weaknesses, Opportunities, & Threats
The purpose of working through a SWOT analysis is to get all of the business' cards out on the table. It is best to use a no-holds-barred brainstorming session with your management team.
The Strengths and Weaknesses lists relate to the internal parts of your business. Typically these revolve around the skills of your people, company image, and financial position.
The Opportunities and Threats lists generally relate to the market, your competition, and the economy. Opportunities refer to unmet client needs and threats refer to anything that could cut into your margins and sales.
Before wrapping up the SWOT, take time to check the assumptions behind each item you've listed, especially for the strengths you've listed. A strength isn't really a strength until your clients have verified it in some manner (e.g. with testimonials).
You will find that identifying your strategic initiatives correctly is the hardest task of the planning process. A story will demonstrate my point.
My partner (Guy Gruenberg) and I had walked our client through the SWOT. Guy and I knew exactly which strategic initiatives should be worked on. Since we view our role to be that of teachers (that's why we call ourselves coaches), Guy and I asked the husband and wife team to identify their Strategic Initiatives.
The two were in instantaneous agreement...with each other - but not with us. They had identified only one of the five initiatives Guy and I felt to be the right ones. Four of the initiatives they picked were things they already did very well and ones that needed minimal fine tuning.
Not only had they hit only one of the five, they left off the two most important initiatives. These were two issues we had talked about extensively and had identified as the single biggest threats to their long term success.
As the story shows, identifying the right set of strategic initiatives is tough.
If you do a thorough job with your SWOT and compare it against your long term goals, vision, and mission, the gap between where you are and where you want to be should be obvious. List every initiative needed to close the gap.
Hopefully by the time your team has reached this point, the top two priorities have become abundantly clear. If not, brace yourself for a long discussion.
In all fairness, the larger your management team, the more difficult reaching consensus on the priorities. Of course, if your team is big you should have the resources (people) to take on several projects (initiatives), not just the two or three that small contractors are limited to. With a large team, you may not have to prune your list.
Since the first goal of most business owners is to ensure they don't go backwards financially, I recommend giving priority to initiatives that eliminate major threats.
For example, if you struggle with cash flow, your best solution for improving cash flow should receive a high priority.
Once you have your business protected against serious threats, focus on initiatives that offer the best risk to reward trade-off.
Few important projects get completed successfully without a plan. For strategic initiatives, I recommend a formal process that includes the sequencing of essential tasks, identification of the person(s) responsible for performing the task, a deadline for task completion, and the identification of the person responsible for managing the project (often called the Champion).
Good planning takes time. Develop detailed plans only for the strategic priorities your team has identified as worth doing. If time is freed up, your team can always plan out the next few projects.
Don't underestimate the value of strategic planning. All successful businesses do it.
Ron Roberts, The Contractor's Business Coach, teaches contractors how to turn their business into a profit spewing machine. To receive Ron's FREE Contractor Best Practices Newsletter visit www.FilthyRichContractor.com.