With all of the talk about the economy, it has become apparent short-term plans and goals were derailed several years ago. That ultimately detoured long-term growth strategies. Short-term plans had to be urgently addressed and revised more often than normal during this prolonged contraction, producing a ship navigating very rough seas without a rudder.
As you rethink your strategies, both short- and long-term, pay particular attention to what the hardwood flooring market is telling you. Look beyond housing starts, interest rates, building permits and consumer confidence reports. There are always new opportunities out there, but difficult times require more research, planning, and managing risk. To reinstall the rudder on your hardwood business and set a new course for growth, here are seven ways to keep your short-term goals from messing up your long-term strategy.
1. Develop your long-term strategy before setting your short-term goals.Everything you do in your wood flooring business should be a stepping- stone to achieving long-term success. Unplanned capital expenditures, personnel changes, customer demands, new unforeseen opportunities, various business setbacks – they all seem to get in the way of staying the course. So what do you do? Take a step back and ask yourself: Is this really what I should be doing right now, or is this counter-productive to what is best for the business over the long haul?
2. Set your short-term goals.You must quantify your short-term goals with specific time frame targets that are necessary to meeting your longer-term objectives. There are always long-term cause and effect relationships when you adjust your short-term plans. Don’t do something rash now that will scuttle your overall long-term growth objective.
3. Listen to the market.Don’t excessively contract (or conversely expand) without doing your homework. Look at the research and become familiar with the leading economic indicators that impact your business. Talk to your peers. Use them as a sounding board. Find out what other successful companies are doing and when. Hardwood market prices can be volatile at times, and can vary by region. Make sure you are up-to-date on the current trends. The same is true for strip flooring prices.
4. Set reasonable, attainable and measureable goals.Don’t set pie in the sky goals that are simply unattainable. “You can’t hit a three-run homer with nobody on base!” Conversely, don’t fall into the trap of setting goals that are too easily attained. They should be a stretch, but attainable within reason.
If goals and objectives are not attainable and realistic, your team will lose its edge and not work in unison to reach something they perceive to be out of reach. In this business, having the right volume of air dried lumber on the yard sufficient to carry you through the winter months is a critical aspect to manufacturers. It also ties up a good amount of working capital.
Too much inventory can hurt cash flow, and conversely too little inventory could limit your production schedules. Start with your financial resources. Quantify short-term what you need to run the business, and then address what you require to grow the business. Have your measurement devices in place so you can pinpoint your financial position at any given moment in time.
Look at your order backlog, your flooring contracts, and your prospective order opportunities. Chart the historical trends, forecast the future trends, and take appropriate action now. But be mindful when setting your short-term goals to keep a sharp eye on your long-range objectives.
6. Be mindful that a plan has a life of its own.Anticipate that no matter what you forecast, it will require adjustments along the way; some positive, some negative. Many owners/managers feel they have to stay the course even when an ill wind is blowing. Plans, both short- and long-term, must have contingencies.
There are many instances when businesses fail for not making adjustments in a timely manner. If you are developing a new engineered hardwood product for a certain launch date, don’t cancel the program. Just delay it or reduce the amount of colors, thicknesses, or widths offered at the onset. You can always increase the product offering once you see sales are off and running. A good plan in place helps you see when you get off course and that changes are necessary. Just make certain that you are headed in the right direction for the best long-term results.
7. Make planning a priority.The hardest thing for business owners and managers to do is to sit down each year and make time for planning. Don’t let this important task get pushed back because it somehow gets in the way of selling more hardwood flooring. It takes discipline to hold everyone’s feet to the fire to get the plan done each year, and on time.
Use one of your productivity tools, i.e. Outlook, to set a reminder for your planning schedule. If planning is not your bag, get help from a trusted advisor. But above all, make it a priority to update your plan annually. Take into account the seasonality of the construction market. Keep in mind that hardwood flooring is one of the last products to be installed in a home or commercial location.
Set aside time for business planning when your sales seasonality is at a low ebb, not necessarily because it’s the end of your fiscal year. When you delve into the plan be sure to get input from your key people. They are a necessary and integral part of the planning process. If it’s only your plan (entirely), chances are there won’t be a buy-in by the people that are vital to making the plan work.
The old cliché is really true…Failing to plan means planning to fail. Don’t let it happen to you. Plan your way to business success by making adjustments to your short-term goals while keeping your long-term strategy in full sight.