We know what you’re thinking: “Oh no! There he goes again talking about business planning!” The fact is that strategic planning is the best tool you have to improve your contracting business. If there was a bigger, better business solution than robust strategic planning, by gosh we'd write about it! Think about why it works; you put your best brains together and focus on the constituent components of your business in a structured way. You think about people, opportunities, weaknesses, threats, strengths, resources, finances, and needs for the future, and you focus on what your business can become in all its potential.
And consider this: When you're trying to attract new people, if your company can show them a written, documented plan containing your vision, mission, values, and culture definition and outlines where you’re going to be in five years along with your financial plan to get there, don't you think that's a competitive advantage? If the applicant goes to a rival company down the street that doesn't explicitly have those items, who do you think will prevail in that competition for talent? All these things and more are present in a well-executed business plan.
Here are the seven benefits as laid out by Family Business Institute’s John Stump in his Contractor Business Boot Camp Strategic Planning class:
1. Defined values. During the process of strategic planning, you'll define (or refine if you already have some) the sacred core values of your company that guide behaviors, rewards, and hiring. Values help define your culture – a critical component for hiring in today’s incredibly competitive construction landscape.
2. Clarity. How important are clarity and direction? Having clarity around a mission, shared vision, and purpose is something that employees crave. If employees can see how their personal missions, most likely informal and unwritten, align with the company mission, that resonates in their hearts. Having missions aligned is the foundation for a beautiful business marriage.
3. Differentiation. Planning provides you with a plan to differentiate your company from others. At the risk of stepping on toes, without differentiation, your construction firm is merely a commodity, and you're competing on price and luck. Strategic planning gives you an opportunity to differentiate so that price and luck won’t be your default market position.
4. Measurable and manageable objectives. If you don't have things that you can measure, how can you manage? Zig Ziglar illustrated this point with a great story. There was a world champion archer in his day, and Ziglar said he could defeat the champ anytime he wanted - provided you blindfolded him and spun him around in circles to get him dizzy and disoriented. With those conditions in place, Zig was confident he could outscore him. The point he made was this: "How can you hit what you can't see?" A contractor needs measurable targets and manageable objectives.
5. Action steps. Your plan should outline all the decisions and actions the company must take to achieve those objectives. If you're going to grow, you're going to need, for example, more computers, more trucks, and more people. Action plans document who undertakes the responsibility for a given initiative, what resources they’ll need, and what deadlines they must meet.
6. Alignment. One of the keys to success for progressive contractors is that they have alignment among their people. The entire team is on board, living the values, communicating with a common vocabulary about the overarching plan and how they can contribute to the company’s success. The plan is the tool that yokes all employees together in a common cause.
7. The ability to measure where you are in the execution of your plan. Not only will you have the ability to measure, but you'll also have an advantage when it comes to the inevitable course corrections.
Goals are an important part of any plan, and this was made crystal clear to me when I was a young man. Around 1988, I was lucky to sit next to a legendary insurance man at dinner. Jim was renowned for setting and achieving stratospheric goals. During our meal, I asked him what his top goal for that year was, and he said it was to earn $1.5 million. That's a lot of money now, and three decades ago it was a fortune! I was so intimidated. My thinking was different back then, and I asked him a fear-based question, "What if you don't hit your goal?" I'll never forget his response as long as I live: He reared his head back and with a huge belly laugh said, "I'm laughing all the way to the bank!”
Strategic Planning is much more about goal setting than money, and that's the beauty of it. You put together your team, you analyze every piece of your business, you determine how you're going to differentiate, you know what your goals are, and your mission, vision and values are crystal clear in writing for the benefit of everybody on your team for leaders to evangelize. If you put together a solid strategic plan, you're going to be laughing all the way to the bank too, and you're going to have a better, more balanced life along the way.