Despite the disruptions and uncertainty of an election year, 2016 turned out to be solid. Most of the better remodeling companies saw growth in average project size and margins, with not much change in close rates or overhead expenses.
Now it’s a new year. The Harvard Joint Center for Housing forecast, which was pretty accurate for 2016, is for 5 percent to 10 percent growth in remodeling in 2017. Does that agree with your thinking? How prepared is your business? Are you well-positioned, with a solid plan in place and the talent needed to get the job done? Are key team members aligned with your vision and goals and gung ho about 2017?
Planning processes vary, but one constant among the owners of the best-performing companies is that they all invest time to plan, usually beginning in the late third or early fourth quarter of the previous year. They also memorialize the plan and focus on a successful rollout and buy-in. Here is a checklist to help you see how ready you are for 2017.
1] Evaluate the environment. Nationally, 2017 is predicted to be a strong year for remodeling, but you should evaluate your local market. Use commonly available indicators, such as home-price appreciation, unemployment rates, housing demand, and consumer confidence to validate your goals and to plan. This is important because your sales growth should be more aggressive in a “make hay” environment than in a “hunker down” period. Businesses differ, but I believe this is a time to target aggressive but realistic growth (+10 percent to 20 percent); otherwise your brand and market share may slip backward.
2] Write down the plan. A plan that is not written down is just a wish. A written plan needs to be in sync with the mission and vision of the owner and the business. It needs to establish written goals and objectives and show clear accountability for accomplishing those goals. The plan should describe the proper cadence and timeline for the year, broken down in months or quarters.
3] Build the budget. This, too, should be written down and take into account actual performance in 2016. Some like to create two budgets, an aggressive one and a conservative one. I prefer to make one budget that is fully thought through, then adjust it quarterly as the year unfolds.
4] Get buy-in. Business is a team sport. There is a leader and there are lieutenants, but without buy-in, most plans are irrelevant and will fail. When I ask owners about this, they generally think there is buy-in when in fact there is not. The best way to get buy-in is to ensure that the leadership team is part of the process that determines goals and forecasts.
5] Celebrate the launch. While there is often a seamless transition from one year to the next, I encourage a big splash to kick off the New Year. Bring everyone together to take inventory of the previous year and share with them the company’s vision and goals for 2017. Make sure everyone understands the “why” behind the plan, and also the “how” of accomplishing the plan together. Break the plan into bite-size pieces so it’s easier to understand and communicate. Also try to build incentives and celebration into the launch message.
Finally, while it’s not a totally democratic process, it’s always good practice to listen to feedback to make sure the buy-in
There are many different ways to approach annual planning, but the likelihood for success is greater if you follow a basic format. Take the five elements above and ask how your process measures up. Ask your team to do the same. If you’ve missed a step or have a weak link, addressing it before too much time passes will ensure that you have a truly happy new year.