Posts Tagged 'business growth'

Day/Month/Quarter at a time!

Catching up on the ever-growing pile of reading to do,  I was struck by the number of articles across publications which point to the need for flexibility, the need to be nimble and the great deal of uncertainty which still exists in the US economy and across the globe.

Yesterday I received a periodic e-mail blast from Kraig Kramers, author of CEO Tools – a great book by which to manage – who said [I quote the article in its entirety]:

“Twelve Seasons at mid-year:  it’s a good time to re-evaluate economic trends and what they mean for our businesses.

“What many are seeing is the downturn slowing; some are citing hope as the harbinger.  My own view is that some economic indicators are degrading more slowly, yet there are still so many indicators that overwhelmingly say we’re still sliding into this recession headlong.  And, “hope” is not a good business strategy, so please don’t heed the “hopeful” rhetoric from Government and the parroting by media as hope tries to lull you into running your business as if things are on the mend.  They aren’t (yet), except in a few very rare sectors, geographies and industries.

“Unemployment has become the leading key indicator since it has consumers scared to death and continues to cause curtailment of their spending severely.  Many people who were not going to lose their homes now are, and the commercial real estate sector is now showing strong signs of decline, with deterioration not far behind.

“What this implies to me is that we can only see about three months out right now.  The stimulus packages (trillions of our tax dollars) are not being spent, certainly not coherently, and are going virtually nowhere…at least so far.  Less than $200 million of the original $800 billion has actually been spent.  It’s just not happening…yet…and probably not real soon.  Plus, it’s not aimed at most industries, just some.

“The economy continues downward, and some are saying bankruptcies will be even greater in 2010, while they’re already up in 2009 by 240% over 2006.  Again, we can only see with some certainty about 3 months into the future right now.

“So, my thought would be to set your goals and do your plans only 3 months out, and re-assess each month.  As we’re able to see somewhat clearly further out, then open up your range to 6 months and start implementing your growth and recovery plans.  There are some recovery things you can start to do now, but do continue to deal with the downturn while planning for growth.  The really savvy economists are saying we’ll bottom by the end of this year, but have a slow, very drawn-out sectoral recovery (meaning each industry will start recovery at different times and at different rates of speed).  So, watch carefully, frequently, and adjust accordingly.

“Really hope I’m wrong about the economic observations made above and that it’s much better than it looks.  As always, hope this makes sense for you and your business.” [END QUOTE]

That makes perfect sense to me, plan for the next 3 months at max.  Set monthly goals, weekly to do lists and work on a daily basis to make the plan a reality.

Good luck, to all of us!

Business Decline of 33% – How’s Yours?

I’ve been speculating for the past few months — not with stocks or bonds, not with gold or guns but with a projection for the remodeling industry.  Make that “my remodeling industry”.  There are many remodelers who fly ‘under the radar’ and with whom I have little or no contact – they don’t join the groups I join: Remodelers Advantage, NARI, NAHB, NKBA or the much-loved Splinter Group in Berkeley, CA.  They don’t attend the trade shows I speak at or attend:  JLC, The Remodeling Show.  And except for the remarkably active blogs on The Journal of Light Construction website, they don’t comment much on the blogs I write – either this one or that of Remodeling Magazine.  In a word, we don’t know one another.  So these aren’t members of “my remodeling industry”.

Members of “my remodeling industry” (and remember this is an industry made up of many, many members each of which – even the largest – accounts for a very small % of total overall remodeling $ spent in their marketplace) tend to be interested in running a full-blown stage 3 (at least) business as opposed to a craftsman shop, they’re primarily selling and managing the company, they know their numbers pretty well and they usually have an office outside the home.  Many of them have been quoted in Remodeling Magazine and a goodly number have been well-photographed on the magazine’s cover.

And many of these great people are in trouble, trouble I don’t even know about because we haven’t talked for a few months.  But I can tell you this, they’re not spending money with me.  My business has declined 33% for the first three months of this year over the same time last year.  If the recession began in December 2007, most of us didn’t even start to take it seriously till, at best, late spring of 2008.   And it wasn’t until September and October of 2008 that many people I know began making the first cuts in personnel.   And then we all began to draw up new year budgets with significant cuts in overhead.

When I told my good friend and remodeling consultant, David Gerstel (author of the great book “Running a Successful Construction Company” published by Taunton Press in 2002) that I was hard at work on an A/B/C budget accounting for a 20%/30% and 40% decline in revenue, he asked if I had prepared the “H” budget – “H” for “when hell freezes over.”

I hadn’t at that time but I have now.  If my business has declined 33% already, I don’t know where it’s going for the rest of the year and I am hard at work on that “H” budget.

This is what it means for me:

  1. My already minimal overhead can be decreased a few % points;
  2. My personal spending can be decreased by 10% relatively easily and by 20% with some attention (I’m planning a ‘stay’ vacation this year exploring my own beautiful backyard of Seattle rather than traveling somewhere exotic – like Mexico).

Add this to an increase in marketing energy   I’ve written and will send 12 letters to high-end remodelers in the Seattle area who I don’t yet know but who work in my neighborhood indicating my interest and availability in helping them get through this recession.  I’m also sending out letters to CPA firms asking for full-time, part-time work in construction accounting, client work-ups and budgeting.  In short, I’m turning up the dirt in new areas of my new city looking for new introductions, new conversations and the ability to help new people.

So I’m feeling better about the next 6 months. However, I’m not/we’re not out of the woods yet – no matter what happened last week in the stock market.

So make that budget, that “H” budget, then put it in a drawer but know you’ve faced the tougest test – what will I do if the unthinkable happens — if my business drops significantly more than originally anticipated.  I haven’t yet hit that 40% drop but because 33% is not that far away from 40%, now is the time to exert extra energy, focused attention to the task.

Good luck to us all.

PS:  I’d be very interested in how your business is faring.  I’d be glad to start a chart tracking the changes in volume of anonymous remodeling companies for 2009, Quarter by Quarter.  Please send yours to jfmiller@remodelservices.com.  I promise confidentiality.  Thanks.

5 Stage of Business Growth

Every business, whether a remodeler or General Motors, proceeds through the same predictable 5 stages of business growth.

Many remodelers find great success at Stage 3 – I call it the “sweet spot” because at this stage the owner sells, does a bit of estimating and generally enjoys a relatively stable business life and somewhat predictable net profit – unless of course he/she buys a bigger boat or too many color copiers (my great pet peeve).

However selling and estimating tends to lose the attention and interest of many owners after a few years and they attempt the jump from a Stage 3 company to Stage 4: this is where the owner sells less than 25% of total volume and spends the majority of his/her time coaching, mentoring and planning.

See the slides below for an understanding of this phenomenon.

5-stages