Strategic Planning and Your Business Model

The Decorative Plumbing & Hardware Association (DPHA) has experienced many successes during its tenure, but the association’s track record of accomplishment only mirrors the successes enjoyed by many entrepreneurs involved in the decorative plumbing and hardware industry.

Success, however, can be fleeting. Stated another way, once a business has been established, it’s only natural to rely on routines. It’s easy to posture that if something isn’t broke, don’t fix it. However, that’s dangerous for any business because there are times when you don’t know if something is broken.

Retail icons of yesteryear Sears and Montgomery Ward struggled tremendously because they lost sight of who their customer was and what that customer wanted. Montgomery Ward is out of business and Sears is battling to reinvent itself. Even the current retail darling Starbucks is regrouping, focusing on what it does best.

The world of decorative plumbing and hardware is changing. The independent channel faces new competitive challenges from the Internet and from buying clubs such as Direct Buy (with nearly 150 locations throughout the U.S.) that sell decorative product at prices similar or to that paid by showrooms. Our industry’s dynamic is constantly changing. Resting on past laurels is asking for disaster. Nonetheless, as entrepreneurs running small businesses, it’s extremely difficult to find the time to look toward the future and develop a strategic plan that charts a course for where you want to go.

CHARTING A COURSE

The primary reasons a showroom, or an organization such as DPHA, develops a strategic plan are to identify and meet specific goals, improve performance, make better decisions and improve teamwork – all of which work to create a desired future. Studies by renowned management consultants have found that businesses that have formed a strategic plan are more successful than those that have not.

There are many approaches to strategic planning that make it appear to be as much an art as a science – with a little bit of voodoo thrown in for good measure. Without all the jargon, it means mapping out the route and steering your company through. You must understand the geography and the terrain. You must envision destinations. You must chart a course to get there.

In general, the strategic planning process involves answering the following three questions:

• Where are you now?
• Where do you want to go?
• How do you get from where you are now to where you want to go in the future?

To help determine where you are now, most strategic plans begin by identifying company strengths, weaknesses, opportunities and threats. In planning jargon, this is called a “SWOT” analysis.

On a piece of paper, create four columns and under each heading, list all the items you can identify that are your businesses’ strengths, weaknesses, opportunities or threats. Be brutally honest with your assessments, particularly your weaknesses.

Your strengths and weaknesses are variables you have control over. These are known as “internals.” They may include resources, programs and organization in key business functions such as sales and marketing, IT, human resource capabilities, capitalization, productivity, inventory, purchasing and cost centers, among others.

Opportunities and threats are “external” influences. In the decorative plumbing and hardware industry, these may include the proliferation of me-too and lesser-designed, lower-quality products; vendor fulfillment capabilities; Internet sales; designer sales; design-build sales; hospitality remodeling; new construction and maintenance; the “Echo Boom” generation; competitors and economic fluctuations, among other factors.

The SWOT analysis helps identify weaknesses that can be corrected or eliminated, strengths to be built upon, opportunities to reach for and threats to dodge, parry or counter.