Be prepared!
In our travels around the country, it has been pretty much the same story – new construction is way down, services however, shows some stability. Unemployment in construction hovers around 24%, upper end residential, public works (stimulus driven), and institutional markets remain active even though prices are estimated to be off 2008’s high by from 10 to 15%.
Certainly not what we wanted to hear, but there is activity and where there is activity there is opportunity. This puts the ball squarely in our court – we are in control – our ability to plan and to execute will prove to be the linchpin of our success.
If we haven’t already, now is an opportune time to put our planning hats on - mid
summer when from a strategic standpoint you will be addressing two important issues on our plates:
1. Updating and revising the plans for the current year
2. Creating the strategic initiatives for the coming year
First to the issue of revising this year’s operating plans. We have a rolling budget which looks at the twelve months of this year by month. We are at mid-year, so we should have 6 months actual performance plus the remaining 6 months projection, updated for how we see the year completing. Take a hard look at the second six months – make sure that the results we expect are reasonably achievable and not only possible in heaven. This updated picture is probably the best ‘early return’ of the year end results we can generate.
Reason why? If we are maintenance, we know what is renewed, what is sold, what is likely in the pipeline for starts in the next 4 to 5 months – we also know the enhancement activity which is likely to finish the year. If we are installation, we have our backlog and our pipeline for what is likely to be signed for job starts in the near term. Follow the same process for revising our direct cost and overhead expectations. If our information is solid, we can anticipate our year end results to within a surprising degree of accuracy. Now how good is that?
If we do not like where we are slated to end up, change course! We have 5 to 6 months to make a difference. If we like where we are headed, make sure everyone on the management team is plugged in and make it happen. Oh, and now is also a terrific time to take the first look at year end tax planning.
Our second responsibility is to take our first pass at the game plan for next year. Now this is not so much a detailed numeric preparation, but rather a strategic session where with our management team we will want to address more weighty issues such as targeted growth (sales goals), pricing adjustments, organizational changes, capital wish lists, policies governing payroll – wage and benefit adjustments, cash flow and banking and major calls on capital such as debt reduction, expansion of or to new facilities or perhaps even an acquisition.
Get your heads around the 50,000 foot view of next year. Key to that is establishing the pricing structure for 2011 for its selling season is about to start if not already. Sometime around the September / October time frame, we will want to document those strategic plans we made with a more detailed picture in numbers.
The message here is plan, plan, plan. Look at every eventuality and get prepared for the 50 year flood. Be a Boy Scout (Be Prepared) and make sure there are no surprises.
