Publication Date:
Thu, 2003-11-20 18:00
Article Image:
| Steve Maltzman [1] |
|
|
Planning is vital for success at any great company, and there are many ways to do it, no one way necessarily better than another. However, any plan needs several key ingredients:
- A long-term plan
- A business plan
- A strategic plan
We call this the planning circle because all three components are equally important and the process is a continuous interaction between the three areas.
The long-term plan helps the owner set long-term direction, personally and for the business. During the long-term planning process, a custom builder needs to ask questions such as:
- What is the company's long-term direction?
- In what year will I reach the end of the race?
- What will I do at the end of the race?
The business plan can cover a single year or several years and describes what the business expects to do. During the business planning process, a custom builder needs to ask:
- What do I want the business to accomplish?
- What are the company's midrange goals?
- What factors will the company face?
The strategic plan addresses when and how the goals set in the long-term and business plans will be accomplished and who will accomplish them. During the strategic planning process, a custom builder needs to ask:
- Who will accomplish my company's goals?
- By when do they need to accomplish specific goals?
- How will they accomplish these goals?
Long-Term Plan
Whenever I start working with a new client, my first question is, "What do you want to be when you grow up?" I am surprised by the answers, ranging from "I don't know" to "being able to travel around the world" to "I never plan on growing up." What I try to achieve with my question is an understanding of the individual's goals for the future. Understanding the owner's goals enables me to work with the company to assist the owner in achieving these personal goals. Your custom building business is simply a tool for achieving your personal goals and objectives.
I challenge you to ask yourself the following hard questions:
- What do I want to be when I grow up?
- What do I want my life to look like?
- How do I want people to think about me?
- What does success mean to me?
- How much money will I need to do the things I want to do?
It is also important to ask yourself this very important question: How much is enough? What will you and your family need for you to retire -- or at least be able to retire (with financial independence) -- if you choose? I strongly suggest working with a financial expert, preferably a certified financial planner, who can help you determine what you will need. Make sure you interview several people and select the best person to help you map out a solid plan.
Once you've determined how much you will need in the end, the rest of the plan becomes much easier to put into place. You'll know how much money to set aside each year to reach your goal, and you can begin to develop your business around that.
Another benefit of starting with the end in mind is that you gain the power to say no. I've seen so many builders take any work that comes down the pike, and the No. 1 reason is that they aren't sure how much money they actually need. They're trapped in a cycle of long hours and high stress because they never took the time to define the rules of the game.
When you have a long-term plan, you can determine exactly how many homes you'll need to build or remodel because you'll know how much money you need to make. If you fall short of your goal, you can adjust your plan. If you exceed your plan and extra opportunities come your way, you'll control your decisions. You can take the extra work -- potentially reducing the time until retirement -- or you can say no because you don't want to spend the extra time. If you're right on track with your plan, you can feel much more confident when turning down work.
Next column: Business plan
Steve Maltzman is president of SMA Consulting, one of the leading providers of financial and business management services for builders and remodelers. He is a CPA with more than 17 years of experience working within the construction industry as both a controller and chief financial officer for various building and remodeling firms.
