Building Business

The Self Taught MBA: Business and Strategic Planning, Part 1 - Best Laid Plans

comments (4) April 18th, 2012 in Blogs

Fernando Pages Ruiz, contributor

My business plan focused on affordable housing. Whenever I followed suite, my efforts paid off and projects were successful, such as this groundbreaking with HUD dignitaries in Omaha, NE. When I didn't follow the plan, well, that's another story without a happy ending. In the very effort made when creating a business plan lie the seeds of success-you thought it though.

Photo: Larry Douglas

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If you're a builder, chances are you didn't start your business with a formal plan. Most of us start with a few years in the trade, some tools, a truck, and maybe a box of business cards. I didn't have cards. I made up flyers and ran around town slipping them into mailboxes. By the time I got back home, the phone was ringing and thirty-five years later I'm here writing this blog, having made my living for a lifetime in construction and real estate development. Along the way, I have written three, large and very formal business plans with paid consultants, and countless small, project-specific business plans. They all had one common purpose; it was to entice a bank or investor. Much later I realized the internal value of a business plan-and it is nothing short of a pause in the business routine to appraise where you are, and where you're headed.

Many books describe the classic business plan, but most are geared for manufacturing, technology or retail startups seeking investors or a loan. You may not be looking for capital, but the planning process itself and the feedback you will elicit by showing your plan to trusted colleagues will help you to refine and focus your efforts. The most useful plans are drawn up as dispassionate self-analyses. It's too easy to spin a business plan into such a good sales presentation that you convince yourself in the process. Better to approach your business plan as if you were the disinterested third party, a skeptical investor trying to decide if your venture is a good risk. What would you want to know about the business, the manager and the market?

To start, you'd want to know the basic service offered by the business. If it's a very general service, such as "remodeling and construction, no job to big or small," you may question the viability of such an approach, given an oversupply of contractors in a recessionary environment. If, on the other hand, the business plan offered a tight focus, such as "basement waterproofing," or "residential energy efficiency upgrades," you may have a concern about how many potential customers need or want this exclusive service in your market area. Neither approach is bad, but each raises its own set of questions.

It's in the asking and then answering of these questions that you can look intently and analytically at what you're doing to form realistic expectations. Someone recently commented on this blog, saying he hope to hear, "…advice on how to scale up the business so I can have a life away from the day to day operations, yet maintain customer satisfaction and profitability in a seasonal business." Well, a business plan can answer this question, but it may not be the answer you were hoping for.

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Comments (4)

DanMorrison writes: A key piece of my business plan as a small-volume remodeler was to take a close look at my strengths and weaknesses each year, usually around Jan 1.

Strengths were things to focus in on, weaknesses were either opportunities for improvement or anchors that needed to be replaced with sails.

The other thing I did was compare my actual salary to my projected salary and re-adjust my rates for the coming year.

David Gerstel's book was very helpful to me.
Posted: 5:48 pm on July 20th

DancingDan writes: Fernando - Edit FYI - I went searching for Business Planning - you've got Benshoof's name spelled wrong here. Ordered it from Builder Books - I'm a terrible planner and it's something I know I've needed to do for years. Thanks for the kick in pants.
Posted: 2:37 pm on May 18th

FPR writes: Yes indeed, user-256540, you're correct, and stay tuned, because this is precisely the direction we will follow in the next three chapters of the business plan discussion. Please do add your comments, as it is obvious you are knowledgeable and will have valuable advice. Thank you!
Posted: 12:30 pm on April 21st

user-256540 writes: Your advice focuses on one specific type of business plan, which is the formal presentation offered to a prospective investor. It would be advisable to make your readers aware of the distinction among the various types of financial plans that can be utilized not only to secure investors, but also to manage a business. For example, of much more benefit to the average builder would be the creation of an annual financial plan detailing business operations. This annual plan would then be adjusted to create either monthly or quarterly business forecasts. In this way a builder could better manage his expenses and increase his profitability. The final process (perhaps a bit much for the average builder) would be the creation of monthly or quarterly demand forecasts whereby the builder could forecast demand for his particular services throughout the year and adjust his forcast expenses according to the projected rise and fall of various economic indicators for the construction industry. I think your series of articles will be well received and the message should be that the business of construction involves more than swinging a hammer.

Posted: 2:19 pm on April 20th

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