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.

A SWOT analysis alone is a valuable process for your business. But the SWOT is not the end of strategic planning. Step two is the process of visioning. This is sometimes called “envisioning” your end or ideal state.

Remember how, in your youth, you used to think about what you wanted to be when you grew up? Do it again – but this time do it with the benefit of experience. It may not be so easy; life experience can stifle imagination, so be patient and allow yourself to dream. Napoleon Bonaparte said, “Imagination rules the world.” Force yourself to dream.

ENVISION YOUR FUTURE

“Where do you want to go?” is an obvious question to ask, but it’s an extraordinarily difficult one to answer. Jeff Burton, of The Bath and Beyond in San Francisco, constantly challenges his peers in the industry to assess their performances.
Sit in your showroom after hours when no one is around. Ask yourself: “Is this what I envisioned when I opened my doors or assumed control of operations?” Strategic planning compels you to look around and dream of where you’d like your business to be in the next five years.

Visioning should not be the exclusive province of the company owner or senior management team. Companies of all sizes – ranging from a single showroom to corporate giants such Hewlett-Packard, IBM and General Electric – organize task teams of employees to establish visions for the future. In fact, democratizing and incorporating more voices into the strategic planning process helps to ensure that different perspectives are obtained and that the visions that are developed reach “outside the box,” but remain grounded in reality. Many companies also include key customers and suppliers to assist in their strategic planning efforts because their involvement can help to pinpoint products and services they want and may need in the future.

The visioning process identifies a shared vision of the future among staff, suppliers and customers. For a plan to be successful, everyone involved has to have a common view of what the organization should be like. There needs to be a definition of success and how to measure success for each objective. Effective planning requires identifying programs and activities that are critical to achieving goals. The final element is accountability. It’s one thing to develop a plan. It’s another to hold people accountable for their performance in implementing it.

Answering the question “Where do you want to go?” is extremely difficult. When evaluating his Chicago showrooms, C.J. Schnakenberg determined that Chicago Brass was best positioned to cater exclusively to the trades.

“We determined that becoming a trade-only operation provided the greatest long-term opportunity for success,” Schnakenberg explains.

“We are well positioned to better serve and capture that business because designers and architects that specify decorative plumbing and hardware are most comfortable working with an exclusive showroom because exclusivity is part of the sale to their clients.

“We made the decision based on the upside that the trades will come to us because of our ability to meet and exceed their expectations from both merchandising and service quality perspectives.

“The initial response has exceeded our highest hopes. We are now dealing with designers who previously were reluctant to use us. It will take six months to a year to produce the returns we expect, but the initial reaction seems to indicate our decision was appropriate,” he adds.

In some cases, strategic planning is not a choice at all, but mandatory for the survival of the business. For example, Debbie Miller, of Millers Decorative Hardware, in Dania, FL, found it forced upon her after Hurricane Wilma destroyed her showroom.

“In determining whether or not to rebuild,” Miller says, “I remembered the reasons why I built the showroom that I had.
“My goal was to create a destination that was the essence of a decorative plumbing and hardware showroom. Once established, I had plans to open other locations that served growing markets. Wilma put a wrench in our plans and forced us to start over,” she adds.

Mother Nature forced Miller to analyze the resources she had at her disposal and whether they were sufficient to rebuild. She needed to determine if she had the support of the staff and the ability to maintain them.

Furthermore, she had to assess if her customer base would tolerate delays and the rebuilding process she’d have to go through. She also had to evaluate if her capitalization would allow her to go from where she was to where she wanted to be.

Passion no longer was sufficient to fuel the showroom’s motor. Miller recognized that the process was not one she could do alone. She brought in and relied upon outside consultants to help her create a new business plan and establish a measurement system that would constantly be evaluating her processes. Then she created a time line to accomplish certain objectives and milestones that needed to be achieved.

Eighteen months after losing everything, she celebrated the grand reopening of her showroom in mid-March, with the rest of the story yet to be told.

Where are you now? Where do you want to go? How do you get from where you are to where you want to go?
Answering these three simple strategic planning questions will put you on the road to increased profitability and enhanced performance.

Bill Fiddler is the president of Fiddler’s in Honolulu, HI. He is a past president of the Decorative Plumbing & Hardware Association and continues to serve as a director on the DPHA’s Board of Directors. Most recently, he served as the co-chair of the DPHA Strategic Planning Committee.

“DPH Perspectives” is published in Kitchen & Bath Design News under the terms of an exclusive industry alliance between KBDN and the Bethesda, MD-based DPHA.

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