The planning meeting (2)

The setting for the 2008-2009 planning meeting, a secluded lake chalet. We held this year's meeting at a dining room table at consultant Bill Caswell's Ottawa residence. The result: A strenuous and somewhat tiring day -- but we got (most of) the job done, and began to shape the picture for a much better year in 2010. Planning is essential, even if sometimes it can be painful in hard times.

The planning meeting yesterday proved to be long, tiring, and somewhat strenuous -- and as the clock ticked and our minds started frying with fatigue -- we concluded it without working through a key element of the planning process, the 2010 expense projections. Our consultants, led by Bill Caswell of Caswell Corporate Coaching Company, realizing that we lacked time to do this during the meeting, promised to pull together the numbers and prepare them in the overall report.

Several new employees attended, and two participated remotely. Designer Ray Levielle joined us by video link and Bob Kruhm in North Carolina spent all day on the phone. Unlike previous meetings, while I had a camera with me, I failed to capture a picture of the gathering.

The numbers this year showed the reality, horrendous losses earlier this year, some degree of stability and even gains this summer, and another bout of losses in the months immediately before the meeting (relating in part to the departure of a couple of sales representatives). The year-end looks okay, and -- at least on the revenue side -- the next year appears promising.

We "resolved" several key issues by agreeing to assign employees to co-ordinate ideas/answers. Of course, this reflects the reality that you cannot solve all problems in a single meeting.

Were there flashes of insights, magical answers, and clear resolutions of issues? The answer, I'm afraid, is "no".

In reality, the meeting couldn't achieve its full potential in part because of the necessary restraints. We were trying to force two days of intensive business decision-making into one, and we needed to operate in a setting/environment which, while functional, didn't allow the fullest natural environment for creativity and innovation.

These are the realities of operating in austerity. (Of course, spending the full cost of a complete meeting like we had last year, would have drained our budgets by $10,000 or more -- and I shudder to think about what that type of expense would do to our operating numbers.)

Nevertheless, I'm convinced the planning meeting/process is an essential for any business which wishes to grow beyond the tiny stage. You can, if necessary, hold the costs down, but it is not something to forgo. So, even though I am writing a less-than-enthusiastic review of my own meeting, I still consider it to be a success.

The annual planning meeting

Today is our annual planning meeting. Things are a far cry from last year, when we rented a Quebec chalet for $1,000, and employees flew in from North Carolina, Sault Ste. Marie and Toronto. I shudder to think about the overall budget for the event, including consulting fees, travel, and time.

The recession had just started hitting, and we spent a fair bit of time discussing whether it would hit us. In fact, we made some strategic decisions to bolster our position including a rather creative one to raise our prices. (This actually proved to be wise; sales certainly dropped, but I don't think it was the price increase that caused the decline -- and the yield on sales we achieved obviously was better.)

But I didn't realize how much I had allowed costs to rise, and the thinness of the ground. Sales for the December issue were fine, but dropped through the floor in Jan 09, to create the worst monthly loss in years.

Initially, I didn't worry -- sales seemed on track for February, and the team had a cohesive, positive outlook. Besides, the business plan and projections seemed overall to be healthy.

But things started going very wrong in late January. As cash dried up, key bills could not be paid in a timely manner. Worse, we were preparing to add two new employees and expand the business. Then the February sales figures arrived. They were good, as expected, but with rising costs, the break-even point had increased to the point that even with the good sales we were treading water.

We lost money in March.

Now I knew we had a crisis, and pulled out all the stops. Things became really messy as the business suddenly went into survival mode. Sheesh, where did the business plan go?

We fought through the crisis, and things look much better now. Lots of cuts, lots of painful changes, and the real world of the business now is nowhere near what I thought it would be a year ago.

Does this suggest business planning is folly? You can argue that you can't control the variables and circumstances can change rapidly; as they did this year. In fact, the business plan fell off its tracks right at the beginning of the year.

But the plan also provides a cohesive benchmark, and clear indications of where we thought we should be, and when we weren't heading in that direction, gave me enough insight to do what needed to be done.

So we have simplified things and cut costs, but will still spend an intensive day planning the future. Some out of town employees will join by teleconference, and our venue will be comfortable but not the big chalet we used last year. We'll get the job done.

Business planning and the real construction marketing world

Tomorrow we are holding our bi-annual plan review meeting. It will be an interesting session. Much has happened since our last get-together for the annual planning session in late October last year.

Much has also (thankfully) remained the same. People have come, people have gone, but the core employees are still with us -- though we had some painful lessons (and stresses) along the way.

One important note about planning, and planning meetings. If we had just sailed along and not modified our plan based on rapidly changing circumstances this winter, the business challenges we are dealing with now (and will discuss on Monday) would have been much greater (maybe graver).

Planning is not a once or twice-a-year process. You need to be able to respond, react, and innovate quickly -- and change course where required.

However the planning exercise is always useful: We could all see when things weren't working according to the original plan, so when we needed to make hard decisions along the way, we could do what we needed to do, and quickly.

Keeping things fresh: The strategic plan

This image is from our strategic planning meeting in October. During the Christmas Break, I received a challenging request to change a proposal that would impact on key business decision-making options. The answer: Bring the alternatives -- and decision -- to the company's staff at our regular weekly meeting.

Reader's question:

Happy New Year! Just a question for the blog, I would love your thoughts:

How do you keep your annual strategic planning and quarterly goal setting sessions from getting stale. After three years of strategic planning and goal setting the fresh ideas are fading. How do you get back the rejuvenation and excitement that these activities have brought in the past?

Tim Klabunde,
Director of Marketing
William H. Gordon Associates
Chantilly, VA

Since we've only been holding our strategic meetings for the past 2.5 years, (in fact using the weekly co-ordinating system for that time), I decided to defer the question to consultant Bill Caswell, who advised us on the meeting system. Here is his response.

Why would they get stale? Do your weekly meetings get stale? As long as there is new information to exchange, new employees to indoctrinate, new goals to pursue, new problems to resolve, new challenges to deal with, how can it get stale? Perhaps a ’stale’ planning meeting is one that was not being executed properly. Perhaps not all staff members feel enfranchised enough to participate! I can only speculate because after 20 years of doing this, I’ve never run into that problem (and this includes conducting our own internal planning meetings).

Bill's response brings to the surface the best possible solution for another challenge that emerged during the Christmas break. One of our contractors, a former employee, had proposed working with us on terms within our business structure and risk model -- and, after consulting with everyone in the organization, we decided to accept the proposal. We started work on the initiative, and early signs are the project will work; the question is sustainability.

During the holiday break, the contractor advised me that his compensation is not sufficient, and proposed two alternatives which (using our baseline ratios) could be interpreted in different ways, some of which exceed the operating ratios which we rely on in making our go no-go decisions. A decision to go over these limits has implications throughout the company; both for the deployment of capital, and in respect of fairness and equity with others. (Giving him what he asks, unilaterally, might invite expectations of similar entitlement levels from others.)

The solution: Bring the discussion, with all of its implications, to everyone in the company, and allow the group to decide.

I have authority and responsibility as this business's owner, but I regard my shares as being in trust for everyone working with the company (ultimately, the shares will be owned by this business's employees) and must be thoughtful of the implications and consequences of major business decisions. The project we are discussing only arose after the October planning meeting, but the direction things are heading needs to be reviewed in the context of our shared business values and responsibility for key decisions.

Marketing: Question and answer

The question:

Hi Mark,

I'm a big fan of your writing. It has proved invaluable as a resource to me and the company I work for. Thing is, I'm kind of at a standstill right now. I work for a company that fabricates steel framing - floors, walls and trusses, and we've been pretty prevalent in the industry to the point where we are now considered one of the (if not the) market leaders in Ontario.

When I joined the company two years ago, we were running at about $2.5mil turnover, which now has been increased to over $5mil through E-mail newsletters, improved product literature, architect/engineer visits, press releases and trade shows among other efforts. I have literally had no budget for this - it was approved on a case-by-case basis. My boss does not agree with print marketing, nor does he feel that trade shows bring us much in terms of exposure to new potential clients, so we've ceased those.

I'm constantly racking my brains for promotional ideas that are cost-free (or at least minimal cost) and give us maximum exposure, but as sales coordinator too, I have to balance my time. Should I just demand a budget from my boss, or plough on? I'm obviously doing something right, but I feel that forward momentum will be finite if we carry on under these circumstances. I also feel that my own progress is being hampered somewhat. We've just moved into a new facility which has obviously compromised working capital to a degree, but the resources are there, I'm sure of it. Is my boss being cheap? What can I do?

Thanks for any help, feel free to publish (minus the name) if you think there is any mileage in it.

My answer:

You are doing much right here, and so is your boss. At this scale of business, however, a marketing plan and budget are appropriate and rational. You may wish to draw up your own budget/plan. Keep it simple -- one or two pages max, with target objectives, (lead conversion etc) and reasoning. Does your business have an organized planning/meeting cycle? If so, you can rationally include this into that process. (If it doesn't and you are flying by the seat of your pants, I wish I could offer more support but that it is outside of my power/mandate!)

Your boss is probably right about print media, even though my business continues to earn 99 per cent of its revenue from print advertising! The reason we succeed is because of our relationship-centric approach. Your business, based in Ontario, may be highly suitable for a special supplier-supported feature. It won't cost you (or your boss) a cent, and while we will encourage your suppliers to support the initiative, they will be treated with respect. As you may know, this blog in fact started as a client service initiative. the resulting feature becomes a really useful link off your website, and attachment to relevant emails -- in these contexts, print converted to online is both effective and economical. And you won't need budget approvals.

Nevertheless, print media and trade shows can be very expensive. One manufacturer told me a couple of years ago, that he couldn't measure any lead generation from expensive glossy architectural magazines, and his cost per lead for trade shows was about $75.00. He said he was shocked when he tried online lead generation methods, such as AEC Daily, and discovered his true cost per lead dropped by an order of magnitude, to $7.50. He got these results b doing some sponsored advertising/section referrals from that website -- I'm not pushing it or recommending it to you carelessly; I've not used this site/service myself, nor have I validated these numbers with more recent results. But you can see that some of the verticals for AEC marketing online may be helpful and useful, and, yes, you will need a small budget to develop them.

Finally, check with your boss and which trade associations you belong to. Most of them have some marketing resources and services, and you may be able to connect with (non competitive) peers to gather ideas and insights. While it may be a budget stretcher to attend relevant conferences, I've found some relationships developed this way have been exceptionally profitable for my business. But you can also connect by phone and video link if necessary and that is less expensive. I hope as a marketer you are also engaged with trade associations at your client level; I know of few ways to more effectively develop relationships and widen your influence. Again, you'll need some budget resources here and your boss will need some patience; it can take a while for the relationships to fully mature into business trust -- but when things happen and go right, the payback is immense. (I'm still amazed how much business I've received in the past few months either by receiving or sending a few phone calls or emails from these association connections).

If you have construction marketing questions, please feel free to email me at buckshon@cnrgp.com or phone 888-432-3555 ext 224.

The annual planning meeting

Our planning meeting is at a chalet in Lac Heney, Quebec.

This afternoon, after heading to the airport to pick up Leslie Greenwood (flying in from Sault. Ste. Marie) and Bob Kruhm (from North Carolina), we head on a two or so hour drive to a chalet in a remote, rural West Quebec area. Other employees and key contractors from Ottawa, Petawawa and St. Catharines will also make their way to the meeting, which starts tonight and ends Tuesday afternoon. (We have a soft agenda tonight, a full scale all day planning meeting tomorrow, and salespeople stay on for an additional day to discuss and co-ordinate specific sales objectives relating to the plans devised on Monday.)

The meeting's cost, of course, is not insignificant -- we pay our facilitators Bill Caswell and Upkar Bikhu from Caswell Corporate Coaching Company significant fees, transportation, per-diems and hourly pay for non-salaried employees, food, and accommodations for everyone. Bu the meeting process, and resulting plan, is as important to the business as any expense, and is really important to your organization once you have six to eight or more employees and key contractors.

Why? Structured and co-ordinated planning meetings allow you to combine big picture awareness with practical decision-making; involving all your employees and key contractors in the process results in the power of shared ownership, direction, and creativity. You get your rules to work with, your structure, your vision, and your objectors realigned and reset, and you are then ready to move forward with the year ahead. And you can see where things didn't quite work as planned, and then fix these problems.

Planning meetings cannot predict or solve every problem, of course. The world 'outside' changes -- and this year has been tumultuous in the economy (something we must consider in the plans ahead). And people change. Some leave and others join the business; and their visions differ. Finally, practical opportunities and realities occur -- you learn new things, you discover new market possibilities, and people through the year present thoughts and concepts to you worthy of consideration.

All of these points could lead you to rationalize that planning meetings are a waste of time and money, because the plan can never follow exactly as proposed. But that misses the point. Without a plan, you will just travel rudderless, allowing your emotions, strong-willed people, and individual self-interest to rule and define your decisions. You will get lost in the woods (hopefully we won't, this afternoon, as we find our way to the site.)

At the planning meeting, we'll have limited Internet access -- so there may be a gap in entries for a few days here.

Your unbalanced (marketing) life

This posting describes one of the most frustrating and rewarding challenges of marketing and entrepreneurship. You just can't know, from one day to the next, what to expect. Often business life is a roller coast of emotions and surprises -- you start your day with certain expectations only to find that at the end, you are living a different experience.

This time next week we'll be starting our annual planning meeting. Employees and contractors from North Carolina, and northern and Western Ontario will join local staff at a chalet in West Quebec. The entire process will cost close to $10,000 when all the expenses are added up, and the plan we implement will, within days, be changed in the world of real life experiences.

There is no secret that I previously thought this type of planning meeting reflected a colossal waste of time and money -- shucks, $10K can purchase some pretty cool toys -- and in any case, how can you plan the imponderable; when you think you know where you are going, but you never quite get there . . .

I now know differently -- the business plan is, in fact, the vital counterweight to the essential and real daily instability in business. The plan sets out rules for the chaos -- and guides us back to a safer place when we sometimes are tempted to let things flow with the wind, if only because things seem so chaotic in the first place.

The plan doesn't answer all the inconsistencies, but helps in defining the right choices to take.
For example, here is a question that arises from my visit to Nashville. The business plan makes clear that we can grow if we find the right people who who pass our standards for recruitment and selection -- and it doesn't much matter where they are. The unanswered question is: How do we find these talented individuals?

I have some but not all the answers to that question -- so, I expect, it will be raised at the planning meeting and we'll find an answer, or a way to solve the problem.

One thing is clear, the plan (2008) doesn't have a budget to pay for third-party recruiting support. Maybe it is a good idea, but if it isn't in the plan, how can we pay for it? That is where the plan helps with discipline, thinking and choices -- because otherwise, we might play with seat-of-the-pants responses. We might decide to put this recruiting expense into the budget, of course, for 2009, perhaps with other methods.

Most small businesses don't think planning is important and they make the same mistakes I made for years. Now, with challenging economic conditions, you need more than ever to build the annual planning process into your systems (and ensure you have systems for the important routines of your business). You can't afford to fly by the seat of your pants -- though, no matter what you do, you will find that things never work out the way you plan.

Business Planning: Remembering the basics

The above graphic is from the Caswell Corporate Coaching Company, which facilitates our planning meetings. You could use their services -- or other qualified consultants, to co-ordinate your own planning meetings. You probably should not try to do this sort of thing without outside expert assistance.

In a few weeks, our employees and some key contractors will gather in West Quebec for the annual planning meeting. This is the time when everyone involved in the business participates in setting the course for the next year. The business plan guides our objectives, sets 'limits' on exuberance, and allows for realistic and challenging achievements.

Planning meetings like this are relevant and important from the start, though you may only formalize the process when you have five or six employees. By then, however, you should be ready to implement regular meeting and planning systems into your operations, no matter how busy you are, or how strapped you may be for time and cash to pay the costs. By engaging your employees in the planning system -- ensuring they truly participate, contribute (often lead) and 'own' the plan, your chances of success are magnified, and you will see growth and creativity in your organization you couldn't have imagined otherwise.

Without a plan, you'll find you tend to fall into traps and bad decisions when you go with the flow and follow the short term path of least resistance.

So, what happens if things don't go according to plan, or an exciting opportunity arises outside the plan? (And you can expect both to happen.)

On the former, you can look at your plan, the failure, and determine what adjustments you need to make and what to change.

On the latter, you can either defer a decision until the next planning meeting while doing some preparatory research (not a bad approach for something requiring significant capital or a major change in focus), or you can structure the alternative or additional venture within the plan's guidelines. As an example, recently a significant and exciting business opportunity landed in our laps, but it is one that is outside the business focus and core mission. So I invited joint venture partners to co-ordinate the initiative; freeing our staff resources and time to work on projects within the business plan, while allowing for the revenue and learning from the new business to be adapted into the picture -- and possibly included in future business plans.

You should not rush to conduct these business planning meetings on your own -- competent outside facilitators and consultants can help you with thee mechanics and also ensure the planning process stays on track. You may need to spend $3,000 to $10,000 or more to manage this process -- but if you do, you will set the course for your business future, avoid some of the pitfalls common to many small businesses which don't look beyond short term survival.

The planning meeting

Staff and contractors at our bi-annual planning meeting include: Ken Lancastle (editor), Daniel Smith (Ottawa publisher), Chase (GTA and Ontario), Amanda Arthurs (Administration), Leslie Greenwood (Northern Ontario), Sherri Herriot (accounting), Raymond Levielle (design and production) and Bob Kruhm (North Carolina). Bill Caswell and Upkar Bikhu of Caswell Corporate Coaching Company facilitated the meeting.

We gathered for three hours in the morning, and the sales team reconvened for another couple of hours in the afternoon, to review business progress and learn where we are heading. The bi-annual planning and review meetings are now essential elements in our business agenda; they are costly (both in time and cash, to bring in out-of-town employees) but are worth every cent.

When we first started these meetings, my business was in acute crisis and decline. The first meeting brought some ideas forward that led to a temporary reprieve, but the underlying issues and problems were simply too great -- we would have to go through further, painful, retrenchment, reaching the 'bottom' (as I've reported here earlier) just as I started writing this blog. You can see the story of how things started turning by tracking back to the first entries in the archives here.

Today, without a crisis -- the business is profitable and revenues and costs are in line with projections and our plans -- the major challenge is the need to take a break from expansion, to consolidate our resources, and most importantly, improve the state of the company's balance sheet -- hit hard of course by the years of losses and problems. I gave a briefing about the business circumstances; as I expected, most employees don't totally appreciate the underlying principals of business and financial numbers -- concepts like cash flow, retained earnings, "goodwill", asset valuation, return on equity, depreciation, and operating versus capital expenses, and shareholding and capital gains are probably not top of their minds.

Jack Stack's The Great Game of Business advocates employee ownership -- or at least, employee involvement in the numbers -- and this requires both openness about the numbers (not individual salaries) and the employees' ability to understand and appreciate underlying business concepts. We aren't going to have a full-scale business school in a three hour planning session, but I started the process.

Why? It may be symbolic, but it may represent reality, that only three people (outside the consultants) of the 11 in the room yesterday worked with the business during its decline -- and all three have self-employment status. They of course 'get it' -- the various issues that a business owner must face and resolve, and they accepted conditions which no employee would tolerate -- delayed payments, instability, chaos, and disorder. I of course never want the business to hit this bottom again; but know that if we are to avoid that fate, we need to empower the employees to work to fix the problems before they get so bad -- and, in thinking about growth, to appreciate the longer-range implications of short-term decisions.

We made progress, but have a long ways to go. Fortunately, we are also heading in the right direction.

The planning meeting

In about an hour, I 'll drive to the hotel to pick up the three out-of-town employees to drive them downtown for our bi-annual planning meeting. The agenda is set; but everyone at the meeting (not me!) will define the business direction going forward. Of course I have some ideas about what is right and what will work, and won't, and clearly have final authority, but realize that using this purported power arbitrarily will not really work.
In some respects, today's meeting troubles my sensitivities -- we should as a business, i think, be focused much more on our clients and marketplace than internal reviews. It is expensive to bring everyone here -- and today, without back up support employees, the phones will not be answered in a timely manner, and our clients will receive less-than-ideal service.
Nevertheless, I appreciate more than ever before that most truly successful businesses, especially organizations which seek to empower employees, consider these planning meetings and strategic sessions vital for their growth, and in challenging times, survival.
The planning meeting will only last three hours; after lunch, our sales team will focus on more practical issues; we will really look into what is essential for an essential construction industry marketing program.