Keep It Simple: Tips for Effective Business Planning - Modern Distribution Management

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Keep It Simple: Tips for Effective Business Planning

Focus on progress, not a perfect plan.
Paul-Byrnes
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In today’s challenging climate, many distributors remain reactionary. Many of us don’t like to plan, and some of us are hesitant to do so because we believe our plans need to be perfect. But as we’ve all heard, if you fail to plan, you plan to fail. 

In the distribution business, reacting to your customers is natural. But you must have an idea of where you want to go and how you want to get there. Businesses that establish clear objectives have a much better chance of achieving their goals than those that constantly react to things and hope they’ll reach their goal.

Progress, Not Perfection

Some leaders can become paralyzed by the decision-making process because they think they've got to have every "I" dotted and "T" crossed before they can start to move forward. The most successful business owners I've seen during my career are people who put a plan in place, as simple as it is, and make whatever adjustments are needed along the way. Sometimes they abandon everything and revise. But they focus on progress instead of a perfect plan. 

There is a distinct advantage in setting a goal and then working to meet that goal. If you feel you don’t have enough time to plan, take a break. Executives make decisions all day long and need time, space and quiet to think clearly about future goals and dreams. Shut your office door, turn off your phone, or schedule a day at the library or work from home to refocus on the future. 

Effective Planning for Your Company

An effective plan includes short-, medium- and long-term goals. Because things seldom change overnight, it's important to be able to roll your plan out over time. Logistically, there are many benefits to planning beyond just one year. Where do you want to be in a year? What about three years? Five years? 

There's not one magic formula for business planning, but taking a thorough look at your business will provide direction. Start with a traditional SWOT analysis to understand your company’s strengths, weaknesses, opportunities and threats. It’s a very simple, time-proven and productive way to review your business.

For each of the four categories, write down what you know and then ask your key people for suggestions so you gain perspective from their positions. As an owner on the operational side of the business, you may miss some flaws in the purchasing or sales side of business. Writing them down allows you to home in on them. You don't have to address all of them, but you need to understand what you're good at and where your threats are coming from. Be sure to consider what is happening in your business. Maybe you hired a new employee that knows a product category that is not your company’s strength. Maybe you added a professional operations manager who could improve efficiencies.

When examining opportunities, don’t overlook simple product categories that you may not be currently offering. Is there a product category your company is not selling that your customer is buying from a competitor? If you can sell more to your existing customers, you can improve efficiencies and revenue; taking more to the same customer increases order size and profitability. What are your customers requesting? If you’re selling into manufacturing plants, could you try to sell them some brooms? Look at what is happening in your region in terms of opportunities for growth. I’m from Pittsburgh, and when I graduated high school, the steel mills were going away. Now we’re known for medicine and higher education. How are shifts like this affecting your market?

When it comes to threats, consider what your competition is doing. If they've changed their game or taken a customer away from you, you need to understand why. What do they offer that you don’t? Could they use the same strategy to acquire more of your customers? Networking and understanding general industry trends are both important drivers in building your plan. Understanding what’s going on in the industry will help you define reality. Growing 3 percent is great unless the industry grew by 10 percent. That’s a wake-up call.

Thinking through each of the four areas of the SWOT analysis for your business will get you on the right path to understanding where you might want to invest or shift resources. 

A lot of leaders of medium- and small-sized businesses – and even some larger ones – have a difficult time setting time aside to strategize, form a plan and then adjust as needed. It’s difficult, but critical to find time to work on your business, rather than just in your business – something we encourage our distributor members to do. 

Paul Byrnes has been in the industrial distribution industry for more than 20 years. He is the vice president of distributor development for NetPlus Alliance, a buying group for industrial and contractor supplies distributors. Contact Paul at paul.byrnes@netplusalliance.com or visit netplusalliance.com.

 

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