Darlington On Showrooms: Plan Now For 2004
Can you believe it? Another year is just about over! As I look back and reflect on 2003, I can honestly say it's been one of my best ever. I've enjoyed a great mix of business and personal activities - seeing a lot of old friends and making some wonderful new ones. I hope you can also say 2003 has been a great year.
And, as I do every year in November and December, I'm making plans for the new year. When I owned my showroom business I always loved finding some quiet time and reflecting on the ending year. How close did I come to my financial projections? Did I meet my marketing goals? Was I able to strengthen my relationships with my vendor partners? Did I improve my No. 1 asset: my employees? Did I earn a reasonable return on my investment? Was it worth the risk and hard work?
Once I'd spent four to six hours reviewing past results I'd go to work on the forthcoming year. Many years ago a friend of mine told me that no one plans to fail, but a whole lot of people fail to plan! The advice I was given early in my professional career has always stuck with me: have a plan! I believe you should have a plan for both your business and your personal life. Set goals, build in incentives and rewards. Track the results.
To many folks a long-range plan means, where am I going to have lunch tomorrow? This doesn't get it! So for those of you who need some assistance, I'm going to lay out an outline to help you plan for 2004 and a bit beyond.
Some of you already do a great job in this all-important area. But unfortunately, there are a great number of you in the showroom business who don't. Most wholesalers will do some long-range planning; most will have financial budgets for the new year. But most will not break out the showroom results and treat it as a separate profit center. Let's make 2004 the year to finally do it!
Whether your showroom business involves multiple locations and several millions of dollars in business or it's a 1200-sq.-ft. operation with one person doing $500,000 a year, make this the year to put a plan in writing. Involve as many people as possible. Get as much input as possible. Become a believer that it's a very important exercise. Make it fun!
I always looked forward to dragging out the old crystal ball and forecasting the next year's numbers. I enjoyed sitting back and putting the creative juices to work on what new marketing ideas, advertising, and promotions we could do. Is it time to grow another location or change location? Should I add new products or services? What's my competition doing and what do I need to do to stay ahead of them? All fun, exciting questions. Doing budgets, setting goals, having definitive plans always helped keep me on track and it eliminated surprises (usually unpleasant surprises) during the course of the year.
A budget and plans are like a road map. They tell you how to get from one place to another. They are not cast in stone. They can be changed as you move along - just like taking a trip. You get out the map and decide whether to take the direct, fast route or the more scenic, leisurely route. But you always have a map.
Okay, here are some specific suggestions: Start with a three-year business plan. Where are we? Where do we want to go? How do we want to get there? Pretend you are going to start a new business and you will need to borrow some money from the bank. Put together a presentation that will “sell” the bank on you, your business idea, and the fiscal rewards of doing the business. Here are some sections that should be part of your plan:
Executive Summary. A one-page resume on the company and you.
Mission Statement. As clearly and concisely as possible, describe what your company is all about.
Company Profile. Describe the history of your company - the showroom part of the business. How many locations; the sales revenues; what products and services you offer; who are your target customers; a little about your main competition.
Business Profile. Tell how the business operates; name the professional trade organization affiliations; is there a Web site; have you received any awards or recognition; what type of computer system do you use; how do you train people, etc.
Marketing. How big is your market; what percent do you hope to capture (talk in terms of marketplace demographics and dollar potential); what niche do you market to; include your growth projections; detail your marketing plan and strategy; spell out how you will do your advertising, promotions and public relations.
Competitive Analysis. Detail who and where your competitors are in your marketplace; specifically describe what you do different or better.
Business Opportunities and Risks. Outline opportunities that you visualize; what would happen if high-end home construction and remodels were to slow down significantly; recite all the opportunities to grow, expand, change, and refine your business. (Hopefully when you're done the opportunities will substantially outweigh the risks.)
Itemize the Capital Requirements. How much money will you need to do what: expand and change showroom displays, inventory computers and software; other equipment needs.
Develop your own format. Make it as detailed as possible. Use the last two to three years' historical data to help you develop trends. Obviously, you will have to be able to break out all related showroom dollars to accomplish this.
Now you're ready to get more specific for the new year. Start to list everything you can think of that you want to change, add or eliminate in the next 12 months. Examples: change location; expand or reduce the size of the showroom; change out displays; install new carpet; create new sales consultant work areas; produce new signage; grow or reduce inventory; grow or reduce products, vendors, services, etc.
Once you've done this, put a pencil to the costs and time frames. Then go to work building a 2004 budget.
Get input from your salespeople, the vendor reps and any other source that will help you come as close as possible to the correct projections. The first time is the hardest. However, once you develop a format and a system, you'll find subsequent yearly planning will be easier.
For 2004 you should:
-- Prepare the monthly/annual budget (revenues and expenses)
-- Set sales and gross profit goals for each salesperson and location
-- Do cash flow projections
-- Determine the people factor (Work with the same number, add or reduce; show when this would happen)
-- Do a marketing plan with each major vendor. Identify where you are, where you want to go and how you will get there. Be specific with dollars and time frame.
-- Do a detailed advertising, promotion and public relations plan. Again, be specific with who, what, when, where and how much.
-- Identify what training will need to be accomplished. Pinpoint the dollars and timing.
Yes, this is a big project! It may require 12 to 16 hours of quiet time work! It will require you to be creative, to analyze the past and look ahead. But when you're done, you'll have a plan - some direction - some guidance. You will have eliminated the “seat of the pants” management style that too many folks use to run their business. You will have taken a giant step towards a more sophisticated, professional management style. You will have helped ensure your business' success in the future. Wouldn't you agree that the time and energy would be more than justified? I certainly believe so!
If you want some help on this project, I have written a book “The Complete Business Management Guide for Kitchen and Bath Professionals.” It has all the outlines and forms you need for planning and projecting and much, much more. It sells for $29.95, plus $4.95 shipping and handling. If you would like a copy, send a check to Darlington Consulting (address below) and advise to whom and where the book should be sent.