Masonry Magazine June 1997 Page. 9
Business Planning
The typical contractor says, "We need to complete it on time and on budget so that we have a satisfied customer for the future." This makes sense, especially from a short-term perspective.
But what is the ultimate goal of the typical contractor? For most, the primary objective is to build and maintain a successful business. Completing individual projects is important but only in that each successful project contributes to the maintenance of the company. It is the company (i.e., the business as a whole) that is important. And yet the contractor who so diligently prepares all the details associated with a project often ignores this crucial element of planning.
Why is strategic planning so important? It is important for a number of reasons but these can be summed up in the phrase:
If you don't know where you are going.... you aren't very likely to get there
Stimulates you to analyze your organization. Planning makes you identify the strengths and weaknesses of your company.
Gives you a reason to systematically evaluate the external environment. The planning process provides a reason to sit back and look at not only the opportunities but also the threats to the future growth and development of the company (i.e., what could go badly wrong?).
Facilitates team building. Planning is an ideal opportunity to bring all the key personnel together as a team. Their success, after all, will be determined by the success (or otherwise) of the company.
Gives the ownership control of company's future. When a contractor begins a project, he/she tries to have everything under control. The same is true of planning for the company.
If you don't know where you are going, you aren't very likely to get there!
Without a plan of action (i.e., a road map), you will certainly get somewhere ... but it will not necessarily be where you want to go. More specifically, business planning is important because it:
Makes you think. Planning forces you to take the time to think about the key functional elements of your business (i.e., accounting, finance, marketing, project management, etc.).
Requires that you focus on the allocation of resources. Most firms have limited financial and personnel resources, and it is important to determine the optimal strategy for their utilization.
Those who fail to plan... plan to fail
In fact, we have all heard the phrase: Those who fail to plan, plan to fail! Why planning is so important can best be illustrated in a couple of examples: Hayes & Parker and H.K. Walden Company.
Hayes & Parker
The company was established in 1988 and, after struggling for two or three years, had really done extremely well. Most of the planning was done in Bob Hayes' head. Then, back in 1992 when Tom Parker's son, Jim, joined the company, it was decided that the key people should sit down and review where the organization was going.
The six key players met on a Saturday morning in January and everything went well until somebody mentioned one recently begun project. It immediately became clear that there was a lot of opposition to the project. "We should never have taken that one on," Jim Parker stated emphatically. "I really doubt if we are going to make any money on it and, more importantly, it has limited our ability to pick up business in the southern part of the state which I think is where we should be putting most of our effort and emphasis."
After much discussion, the issue was resolved. Bob Hayes agreed to spend much more of his time making sure the existing project was successful and Jim Parker was given the green light to hire somebody to help develop and manage projects in the area he saw as offering a major opportunity.
"That was the turning point for the company," Jim (who became president in 1995) commented. "For the first time, it gave all the key players an opportunity to say their piece.