Volume 11, Issue 4 - July/August 2007
Plan and Re-Plan For Action
Before I started my company, East End Window Film Inc., I spent almost a full year putting together a strategic business plan. Being an MBA student at the time, I knew the essential elements to any sound business plan: a mission statement stating the who, what, where and how; an environmental analysis discussing competition, technology, market and economic trends; an organizational self-assessment, where you discover what resources and management systems are or will be in place; goals and objectives created to help keep focus; and, finally, the overall strategy of how all this will work in the marketplace.
The plan was created to serve a variety of functions. First, it was designed to ensure that starting a window film company in my market was a viable business option. By conducting an environmental analysis, I gained an in-depth knowledge of the local population, including basic demographic information, as well as specific income data pertaining to the primary market area.
In my area, I found a large number of architects, contractors, interior designers, furniture stores and other vendors that would become purveyors for my product. Because the market area is seasonal (many homeowners only taking residence from May through September) security film, and thus security companies, arose as another product distributor (adding an extra measure of security while the homeowners are away).
I became aware of the competition already serving my marketing area. I discovered many companies offering window film products, but few in my distinct area, as I had chosen to focus on a small market.
Do the Math
The plan also was to act as a road map, with goals, objectives and benchmarks set along the way to make sure I was always on the right track. The research and analysis I conducted indicated that I could start this company and be successful. I created a number of sales and financial projections, so that, when I sold X square feet this week and Y square feet next week, I would always be cognizant of what my income statement should look like at the end of the year. I took a mathematical and economic approach to determining the overall demand that might exist for my product and services. By looking at the overall market and determining the number of homes that would likely be interested in purchasing my products, I was able to understand how much actual potential existed on a yearly and ongoing basis. This analysis gave me an idea of how much I could spend on advertising, equipment, salaries, etc., and how much would be left over for me based on myriad sales figures. This way nothing would ever be a surprise, or so I thought.
Most importantly the business plan created a strategy of how I was going to reach the goals and objectives established therein. What market would I be focusing on? What outlets should I use to reach them? What function will each employee serve? How will sales and installations be handled? What is expected of the company as a whole?
So there it was—a year of diligence all packaged up nicely in a 20-page outline of the perfect business plan. Now there was nothing left to do, but go out and make it happen.
Well, that year of work creating a business plan was a piece of cake compared to actually getting the company off the ground. Knowing that I can make X amount if I sell Y square feet is great, but first I actually have to sell Y.
Time to Hit the Concrete
I hit the streets, just like my business plan told me to do and I stopped by every office with blinds covering its windows. “Sorry, this is our slow season. Come back in the spring.”
“Not right now.”
“Thanks, we’ll look over your material and get back to you.”
Those, of course, are the all-too-familiar cries of the Crested North American Business Owner (Cheapis Owneris). I cannot blame them. It is the slow season, after all. The population of my main market grows two to three times in size between Memorial Day and Labor Day, so that is the only time of year these businesses are willing, or able, to spend money. I kept knocking and kept hearing the same song. This was bound to make me a better salesperson (I said to myself after each rejection). With a huge margin between “no’s” and “yes’s” (many more no’s to be sure) I fortunately was able to pick up a few interior designers and furniture stores along the way that were excited about offering a new product.
November came and the phone began to ring. It was one of those new furniture store vendors I picked up during my seemingly unsuccessful blitz of businesses. “Yes,” I thought, “a nice big sale,” for an entire house under new construction. The house wouldn’t be finished until sometime in late winter I was told. There was one problem; there will be no film installation until early spring, since winter in the Northeast means temperatures rarely make it over 40 degrees. But at least now I could look at how this sale would affect my projected finances.
One Man Band
This line of questions made me ponder even further. If I was only installing one job every two weeks, how could I possibly hire someone skilled enough to do the installs with the earning potential being so hit-and-miss? I might have had fifteen hours of work that week and no work for the next two. It seemed the only person fit to work this schedule was me. But how long could I install before it started to hurt the overall business, because new jobs weren’t being sold?
I frantically rifled through my 20-page “game plan” and found no section that could help me answer this question. Then it hit me and I thought, “What was all that planning for?”
Nothing in business, or in life, turns out the way we expect. You wake up to take a nice hot shower and there is only cold water left. You leave your house fifteen minutes ahead of time, only to get there just in time, because there is an accident along the way. You order a Philly cheese steak from Subway, but you get roast beef and Cheese Whiz. In terms of business, I suppose the saying: “expect the unexpected” is quite relevant. My original business plan was created with that motto in mind, or so I thought at first. I created a variety of financial scenarios that were likely to play out over the course of the business. Each depiction and the business plan as a whole, however, was made with rose-colored glasses. Because I was creating a plan for success, I subconsciously (and perhaps consciously as well) created scenarios that would benefit the company and myself the most. After all, if I was ever going to need to go to the bank for a loan, having a business plan highlighting the possible positives would certainly have a better impact than a business plan portraying the possible (or likely) negatives. And why spend months hounding on something that will never materialize into the success I had envisioned for myself?
This leads to the ultimate question: How much planning is needed to be successful in business? Can you plan too little … or too much?
What my experience has taught me is that planning is essential to business success, but relying too heavily on planning can be dangerous.
Remember, because I took the time to do in-depth research I gained a lot of useful information about my primary marketing area: I researched my competition and became aware of threats and opportunities occurring on industry, market and economic levels; I looked inside my own organization to gain a better understanding of my company’s internal strengths and weaknesses; I created visions of financial success through lofty sales projections; and, ultimately, I shaped a strategy for success through all my diligence.
This is not to say that everything I studied and envisioned was exactly what occurred. In fact, it was quite the contrary. Still, in terms of having a solid grasp on the strengths and weaknesses of my organization as well as the threats and opportunities posed by competition and other external factors, the knowledge helped me maintain a level of comfort through periods of uncertainty. Seeing my company’s success through those financial projections also helps me maintain the desire for achievement at a steady glow.
With all that good, how can planning be bad? The trap I found myself in is one of hesitation, when reality was not in line with the overall plan. My plan was rigid and more of a singular snapshot of what might happen. When the business actually started, I never revisited the plan to update it with what was actually happening. This difference between vision and reality caused anxiety and uncertainty. I would say, “Well, this is what the plan says so I need to follow it.” But the market was telling me, “You need to change your strategy because you did not account for this.”
Thankfully, I learned my lesson early on and made it through the cold and dreary winter doldrums relatively unscathed. Because of the mistakes I made, I wanted to share my experience so that others might not repeat the same blunders.
Planning is essential to business success. Do it. Create a mission statement and follow it. Learn about your competition and your own organization and see the strengths, weaknesses, opportunities and threats therein. Create immediate, short-term and long-term goals. And, ultimately, create a strategy for success.
Do not rely too heavily on the vision you had when you first created the plan. Go back and change the plan as reality occurs. Just because you thought something in 2005 does not mean you need to stick with that thought in 2007. Think about companies on September 10, 2001, and how their business plans changed the very next day. You must be willing and able to shift with the dynamics of the marketplace. Look at your plan often and keep it up to date with a current vision of your company. Do not let the activities and realities of the current marketplace impede a strategy for success, just because it does not fit with your original plan.
Create a plan, execute that plan, change the plan … repeat.
Patrick Dempsey is president and owner of East End Window Film Inc. in Cutchogue, N.Y.