Most remodelers are familiar with business plans: written documents that describe a company's objectives, strategies, market, and financial forecast. Richard Steven of Fulcra Consulting (www.fulcraconsulting.com), in St. Paul, Minn., says that although this plan is useful to introduce a company to a bank or a potential partner, it does not address day-to-day management issues.
For this, company owners should create a management plan: an internal document with guidelines for running the business. “It's an integrated system of goals and tracking systems to measure progress toward those goals,” Steven says. It's especially important for companies that want to grow in volume, efficiency, or profitability, or prepare for a change in ownership. Also important is that the plan be flexible and can be modified.
The management plan should include a summary of overall goals, with specific plans for each area, and the whole company should be involved in creating it. “Start with the core ... the whole picture,” Steven advises. “Then show how the financial fits with production, fits with marketing, fits with sales. It's a good vehicle of communication between key staff — and it provides accountability.”
The management plan forms the basis for regular review with key staff to refine processes and determine how the company is doing. As consultant, Steven meets with the owner and key staff to analyze tracked data. For example, he says, if you track the number of hours spent developing each contract, staff can set a goal of decreasing the number of hours per contract without affecting quality. The next step is to then set specific goals for each employee involved in the transaction.
Steven says one specific area of resistance is in tracking time — especially for owners. “Remodeling company owners value their freedom and independence. For many, tracking how they spend time feels like restriction. But it yields wonderful information about who to hire next,” he says.
The structure of a management plan can be liberating for the owner because it helps in the creation of a management team and in gaining their support. “You create structure for them to operate within,” he says. “If you're just operating by intuition or whim, it feels chaotic to employees.”
Also, though business owners may set goals, they often fail to follow up or are not held accountable for meeting them. This, Steven says, is where a consultant is valuable. For although a peer review group or accountant or lawyer is helpful, they usually are not familiar with all aspects of the company — financial statements, personnel issues, and market — or with ensuring follow-through.