MC Magazine

Planning for Success

Business planning strategies for companies of all sizes and stages.

By Bridget McCrea

Bridget McCrea is a freelance writer who has covered manufacturing, industry and technology for more than 11 years.

Every August the management team, owners and stockholders at Fort Worth-based Speed Fab-Crete Corp. take a few days away from the office to attend an off-site strategic business planning session. With the company’s new fiscal year just around the corner, the group pores over its progress during the prior 11 months. They evaluate their five-state marketplace, look at their costs of doing business, project sales and assess income.

“We go through everything very thoroughly,” says David Bloxom, president of the 150-employee firm, which has been making structural precast concrete wall panels, architectural precast panels, highway retaining walls, bridge components and related products since 1950. “Then we come up with a ‘good, better, best’ budget for the coming fiscal year, based on the prior years’ sales and expenses.”

Working from a 15-section, hardbound book that includes the firm’s mission statement, business definition and overall philosophies and goals, the team steps outside of the financial realm and assesses the viability of new products and services. “We look at diversifying into other products that our production facility already lends itself to,” says Bloxom. “That’s how we took on the bridge component and highway retaining wall businesses.”

Through the annual business planning session, the team will also reject new ideas. “We’ve looked at products and then decided not to take them on, because their profit margins were too thin for the work involved, or because they just didn’t complement what we were already doing,” says Bloxom.

Calling the planning session an “organizational review,” Bloxom says the company has been holding the meetings ever since the current employee management group purchased the company from his father in 1998. Through the exercise, key changes have been made within the company. After the most recent meeting, for example, a safety and policy handbook was revised – printed in both English and Spanish – and handed out to all employees.

With fuel costs fluctuating wildly, the team also revised its related budgets for the upcoming year. The group then assessed the condition and productivity of more than 300 pieces of equipment, assessing which were costing the firm money in an attempt to dispose of the nonproductive ones.

“We also looked at our banking relationship, financing agreement and letter of credit, and at our site investments,” recalls Bloxom, who advises a similar exercise for any new or existing precast company that it is looking to continue growing and thriving in today’s competitive business environment. “It’s a must-do for any successful company.”

Not just lip service
For startup or existing companies and even large corporations, a business plan can serve as a valuable roadmap for success. Business plans come in different variations, sizes and formats, but they all are developed with a common goal in mind: to get all interested parties on the same page in terms of a company’s mission, philosophies, operational strategies and overall goals.

So why aren’t more companies using them? It’s a question that stumps Tim Berry, president at Eugene, Ore.-based Palo Alto Software, maker of Business Plan PRO Software. “As soon as the word ‘plan’ is mentioned, business owners tend to lose interest,” says Berry. “It’s like diet and exercise. They know they should run every day, but they get busy.”

Instead, most companies work on a reactive basis, putting out fires as they come up and solving key problems when they rear their ugly heads. Through good planning, precasters can create proactive, forward-thinking organizations that grow in an orderly, planned fashion.

“It’s about setting your direction and long-term objectives, and then following them through the chaos of your everyday business,” says Berry, who sees the planning process as being particularly vital to middle-market firms (somewhere between the startup and large, established firm) that have made it through the first few critical years of business, and are now in need of a long-term growth strategy.

For all types
Business planning isn’t just for startups and mid-sized firms. It’s also beneficial for the established firm that doesn’t want to backpedal, says Daniel McGilvery, managing director at the Business Planning Institute in West Palm Beach, Fla., a provider of business plan writing and consulting services. “Where a growth business plan should focus on avoiding mistakes, capitalizing and taking advantage of opportunities, and managing cash,” says McGilvery, “an established business should be looking at creating brand identity and top-of-mind positioning, potential acquisitions and strategic alliances, and other avenues of growth that haven’t been pursued previously.”

To get there, McGilvery says precasters should look at where they want their company to be in five years and then at whether the current management team is the right group to take the company to that next level. Ask yourself the following questions: Am I in the right place at the right time? Do I have the right products in place? Have I taken advantage of opportunities that have presented themselves?

The next step is to line up a board of advisors to provide outside advice about your company’s operational and financial strategies. Unlike a board of directors, this “loosely knit” group may include an attorney, bank representative or other trusted individuals who will give insight, guidance and perspective on key decisions. Be sure to document all such advice, says McGilvery, and integrate the applicable information into the business plan, which should also be either written down or retained in digital format.

“Unless you write it down, the plan will lose value,” says McGilvery, “and you won’t be able to share it with key management personnel.”

Not a stagnant document, the business plan should be reviewed and revised annually and reviewed regularly throughout the year as a way to keep the ship on course. In return, Berry says precasters will gain a much better grip on where their companies are right now and where they’re headed in the future.

“When you plan, you control your company’s destiny rather than reactively letting events bounce your company around from one place to another,” says Berry. “The idea is to pull back regularly, take a fresh look, set your focus and then follow and implement your plan.”

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