Do you have a strategic plan for your business?
“Measure twice, cut once” is a common saying among construction professionals. You know the value of looking before you leap, of thinking ahead and of taking extra care. You know it saves you time, money and mistakes.
Strategic planning is another way of measuring twice before cutting once. It’s a way of considering factors that can affect outcomes. Yet, many people in construction (and in business overall) fail to take the time to practice good strategic planning. They’ll say, “We’re too small,” or “So many factors are uncontrollable, so what’s the point?”
In any business, there are uncontrollable factors, but that doesn’t mean they’re unpredictable. If we can’t control them, we should at least make an attempt to try to control their impact on our businesses. That’s what strategic planning can help you do.
So, how do you develop a strategic plan? Here are a few keys to get you started.
Take a look at your blueprint: What are you trying to build? Do you want to be a big player in the market or a strong niche player? Do you want to be seen as a premium product or a bargain product? There aren’t necessarily right or wrong answers here. It simply helps to acknowledge what you’d like to be before you start planning how to get there.
Understand the competition: Once you know the market you want to play in, think about who else goes after the same business you do. How do they set themselves apart? When you lose bids to other contractors, why do you lose them? Is it strictly price, or do they have a reputation for something special that gets them in the door? You don’t necessarily want to try to copy your competitors. You simply want to be able to differentiate yourself and to target opportunities based on that differentiation.
Understand the market: This is the part that takes a little prognosticating, and it’s the step that causes many people to throw up their hands and say “never mind.” You can’t know for sure what your market is going to do in the next one to three years, so you have to make some educated guesses. What are the “leading indicators” for activity in your particular market area? Are they related to your local chamber of commerce recruiting companies to relocate to your area? Is legislation requiring changes in buildings for “green” compliance? What factors could drive customers to request your services? Stay tuned to the economic climate in your area – it will help you identify opportunities that may come your way.
Review your outreach: How do you get the word out about your company? Are you targeting the right people for the type of work you want to get? Look at the jobs you’ve gone after in the past year. How did you learn about the opportunity? How did the opportunity learn about you? What about those opportunities you didn’t know about until it was too late? Who did you miss? Target a few new areas or people to “court” over the next one to three years to open up new opportunities for your company. Then develop a plan to get and keep your name in front of those people.
Look inside: What factors within your company are impeding your progress? Do you need better systems in place to assure quality? Do you need more efficient processes to reduce costs? Do you need better reporting to help you manage schedules and budgets? Many times, it’s not the external market that causes us to lose opportunities. It’s our own shortcomings. Use industry statistics to gauge how you perform compared to similar companies. Most industry associations collect data on various key performance indicators. These can help you determine areas that need the most work.
Commit to action: Spending time developing a strategic plan won’t accomplish anything if you don’t commit to doing something different as a result. Involve your team in the planning process and get commitments from team members on actions they will take. Set up reporting and measurement systems to track progress.
“Measure twice, cut once” doesn’t work unless you actually make the required cuts. It’s not just strategic planning – you need some strategic doing. Your CPAs, along with other advisors will be able to help you in drawing this “blueprint” to your future. MKS&H will help you through this.
Article Contributed by Wayne E. Baldwin, CPA