As a kitchen and bath dealer, your continued success depends upon your ability to pay attention to the past, the future and what’s taking place in the present. It’s easy to focus almost entirely on one of these – usually the things happening around you today, often referred to as “the tyranny of the urgent.” But understanding and focusing on all three of these time frames is critical to a successful business platform.
Obviously, much can be learned by looking into the results and experiences that we’ve had in the past. We can do this in several ways, one being the simple act of thinking about and discussing with your staff which projects have gone well and which have had problems. Analyzing what factors caused things to go as planned or why plans fell apart with a particular project will give you and your staff a feel for how to better approach projects and client relations in the future.
Other things to look back at are financial results and records. At the very minimum, your accounting system should provide you with basic financial statements (balance sheet and income statement), but, just as importantly, they should be able to track costs on a job-by-job basis.
This job costing should provide a feedback loop for the person(s) responsible for estimating. This can be accomplished by having that person review the job cost reports each month, comparing the accumulated cost to the budgeted amounts. Another valuable practice is to have your estimators review and approve billings in order to establish a knowledge of current costs for labor and materials that will go into future projects.
Another aspect of looking back is to obtain feedback from prior clients. One approach to this is the use of a client survey, which gives you a clear look at your clients’ view of their experience. This should take the form of a numeric evaluation of the full range of the client’s relationship with your firm. Allow clients to rate your showroom, designers, project management, sub-contractors and overall satisfaction. Make sure that the people who are being evaluated receive this feedback, good or bad.
Another aspect of looking back is the nurturing of the good will and traditions of your business and its reputation. It’s important for your employees and clients to know how your business has evolved and the lengths to which it has gone to satisfy customers and take care of its employees.
It can be difficult to avoid getting so caught up in the day-to-day responsibilities of running jobs, responding to clients and dealing with employee and subcontractor issues, that we don’t take the time to look ahead at what may be coming. A good practice to develop is setting aside a specific time each day for planning. Perhaps you can also set aside some time – weekly or monthly – to do some longer-range overall planning.
At the job level, planning should really begin during the design phase of working with a client. If decisions are made and all products specified, as opposed to relying on allowances, the project manager can get materials ordered and prepare a time line for the work to be done. This, in turn, will allow subcontractors to be scheduled and conflicts avoided with other projects.
If your project managers are responsible for several jobs, they will need to develop a process of segregating planning and ordering for each project. It’s necessary to focus on each job every day and worry about what’s going to be happening with that project tomorrow, next week and next month. They need to make sure that the necessary orders have been placed so that materials will arrive when they are needed. If problems have arisen or unexpected complications are encountered, they must be dealt with immediately.
You, as a business manager, must constantly be looking further ahead, making sure that the big picture issues are not ignored. Some of the issues that should be on this agenda are marketing, financial planning, personnel and equipment, among others.
Marketing in the remodeling business is one of the grayest areas with which we have to deal. For the most part, the time horizon we are dealing with is several months to years in the future. A remodeling project is certainly not an impulse purchase, so marketing should be targeted at keeping your firm’s name in the public’s mind. Thinking about what can be done to enhance word-of-mouth awareness of your business is important. Developing a plan to encourage former clients as a referral base is another important aspect of any marketing plan.
The most critical area of financial planning to look ahead at is cash flow. It is absolutely essential to be able to project what payments must be made and what revenue we have coming in to cover them. Knowing how cash flow will play out over the coming months allows you to time equipment purchases, delay discretionary purchases when necessary and/or arrange for bank financing if needed without having to go into crisis mode.
Finally, the longest range planning you must do involves your firm’s staffing. While some positions can be filled and brought up to speed fairly quickly, others, such as your designers and project managers, will normally take months or even years to become fully effective. While it’s difficult to project what staffing needs you will have in the future, it is entirely possible to make some judgments based on your company’s growth rate and employee circumstances. Good and open communication with your staff can provide you with future plans that employees may have in mind.
Financial monitoring and planning is also something that’s easy to put off, but paying attention to income statements, job-cost results and cash-flow projections is essential to a successful business plan. It is imperative that you make sure your accounting system provides you with all of this information on a timely basis.
Pay attention to your gut when it comes to what’s happening with your clients, your employees and your subcontractors. If you’ve been in business through a business cycle or two, you will develop a sense for how things are going. If you’re getting calls from upset clients or your employee morale seems to be off, don’t ignore it.
Worrying is an important part of managing a business. Make sure you employ this tactic to its fullest.
Read past columns on Business Management by Bruce Kelleran, and send us your comments about this story and others by logging onto Kitchen & Bath Design News’ Website at www.kitchenbathdesign.com.