Do you find yourself to be "too busy" to work on your business?
When asked about attending an upcoming seminar, conference, industry show or NKBA Chapter meeting, do you hear yourself saying "I'm too busy?" Is your response typically the same when asked if you have a written strategic plan for your business?
To be sure, this is an industry dominated by detail, and, yes, managing detail during the design, ordering and installation phases is a time-consuming process. But, until small business owners regularly step away from their businesses to gain perspective, learn something new and take action, very little is going to change. One might even erroneously conclude that kitchen and bath dealers are just "too busy" to take the time to improve their operations and quality of life.
The Essence of Leadership
The very essence of leadership is peering into the future and thinking about what could, should or would happen if certain events took place or key decisions were made. It's all about setting a direction for your company and establishing goals and strategies, complete with staff participation, forecasting and evaluations of performance. These are activities that take time, too. And, you owe it to yourself, your staff and your family to make the time. After all, all of these people are looking to you for effective leadership.
A good portion of your time needs to involve exposure to new ideas, building knowledge, networking with industry colleagues, and reading a lot on a whole host of topics. This kind of ongoing stimulation is a prerequisite for the next investment of time: creating a vision. The third chunk of time is developing the strategic plan and budget to fulfill your vision for the business.
While most companies planning for 2005 began this process in the third quarter of 2004 and will finish it in the fourth quarter, it's not too late to start to exercise some leadership right now. Take the time to make the time!
Taking the right steps
There are several steps that kitchen and bath dealers can take to put the whole process in place for the future. Heeding the following instructions will get you on your way.
- Step 1: The Vision Statement. Have you ever wondered what your business wants to look like when it's all grown up? That's what a vision statement accomplishes. The idea of creating a vision statement is to put down, in writing, a specific description of a completed operation based upon both your business and life goals. This will form the foundation for your strategic plan and should not change much over time. Some parts of it may remain confidential.
Following is an example of such a vision statement:
"Signature Kitchen & Bath is a design studio that furnishes turnkey remodeling services with an upscale-looking showroom that functions like an educational center. Support staff personnel are highly trained in their respective specialties, deliver great attention to detail, and pledge 'total project satisfaction' to the delight of our clients. The business operates at higher gross profit margins than the industry norm, generates $200,000 in cash compensation for the owner, and will command a $1,000,000+ sale price if the owner chooses to retire in 10 years."
- Step 2: Operational Definitions. The next step in developing a strategic plan is breaking down the vision into a series of short statements called operational definitions. Think of these statements as a "working definition" of your vision that provides extra clarity. They are a way of ensuring your vision is, indeed, what you want.
Table 1 indicates the operational definitions that flow from the sample vision statement.
- Step 3: Gap Analysis. Gap analysis is a tool to help you
determine how close or how far away your business is from achieving
your overall vision. It is used when you develop your first plan,
and then every year thereafter to measure progress and direct plan
updates. It is also the first time to involve your staff in the
planning process. As a group, you evaluate each operational
definition from 0-10, with 10 indicating a fulfillment for that
piece of your vision. As an example, perhaps your team rates
educational center a 2, great attention to detail a 4, and higher
gross profit margins a 5. These are the three areas to be focused
on for improvement in the first year of your strategic plan.
- Step 4: Strategic Plan Development. A strategic plan is made up of three separate elements: (a) Critical Success Factors; (b) Strategies; and (c) Action Steps. The "gaps" that must be closed to achieve your vision are called Critical Success Factors (CSFs). You probably should not attempt to work on more than two or three CSFs in a year. Strategies are broad statements of how you achieve the CSF, and there may be several per CSF. They also will make an impact on your budget.
Action Steps are then taken to forward the Strategy, spelling out who has assumed the responsibility for getting it done, target dates for completion and cost implications. Once the plan is developed, it is critical to regularly schedule plan review meetings with your staff to go over things. Refer to Table 2 for what a strategic plan might look for just one Critical Success Factor.
- Step 5: Budget Development. Once the vision and strategic plan are in place, it's time to develop a budget. When I work with dealers, I insist on doing it for three years. It helps business owners to crystallize their thinking about future priorities such as staffing, marketing needs, display changes, equipment purchases, etc. which might create a few slight revisions in the strategic plan. And, it usually takes only two 2-hour teleconferences to produce one interactively. As a result of this budgeting process, dealers will determine the correct price formula to finance market-rate salaries for themselves and their staff as well as a desirable net profit for the company.
Planning for the future in this fashion creates a lot of immediate positives. First, it gives a business owner confidence that the firm is not only heading in the right direction, but has a road map to get there. Second, and just as important, it builds the staff's trust in your leadership and fosters a greater sense of loyalty and self-worth because they will have key roles in achieving your vision. Third, it will eliminate a lot of the costly shoot-from-the-hip, trial-and-error decision making that can easily sidetrack an operation to years of marginal profitability and mediocre owner income. Fourth, it will enable you to avoid "burn-out" from the day-to-day grind of business because you have a road map to a bright future. And fifth, with greater income and stress-free time available, you will enjoy a better quality of life with your family.
Surely now you couldn't be "too busy" to start earning these benefits today?
Note: Mark R. Ergmann of Coastal Kitchen & Bath Designs, located in York, Maine, and a valued SEN Member, furnished key strategic planning information from his previous corporate career for this column.