Plan the work for 2019 and…
You know the next line which is THEN WORK THE PLAN. It is a proven fact. If you follow the plan you set for yourself, you have a better than average chance of reaching them. Sounds reasonable, does it not?
It is reasonable if you focus on the proper plan and have the resources, which include systems, processes and personnel to execute the plan.
I guess you would start the planning process assessing your markets, cost of products, cost of personnel as well as the needs of current and potential customers. And you can throw in the expected economy you will be working in, taking into account the trade wars as well as the cost of financing.
Next, I would consider two or three scenarios changing the variables around depending what you feel the market will be like in 2019. Each scenario could require minor or major changes to each of your major revenue silos, forcing management to select which areas to focus on to manage profits and cash flow. In short, you will be required to examine every part of your business with a goal of prioritizing each revenue stream to maximize profits and cash flow to meet the goals for the scenario under examination.
The data you needed to complete your analysis can be found in various industry journals, at conventions, OEM meetings and discussions with other leaders in your industry. A perfect example of this are the 20 groups many lift truck dealers attend with 10-15 of their peers, where they can discuss what each expects for 2019 and why. But once all the data is in and documented YOUR MANAGEMENT TEAM has to make the final call for 2019 on which scenario to plan for.
In the past we have discussed the benefit of an outside Board to assist with these decisions. Getting input from CEO’s working in other or similar industries can offer additional perspectives to the discussion. If your Board members manage successful companies it pays to listen to what they have to say about your plan for 2019.
Now we get to the important part. It is fun to sit around and kick ideas around, but somehow that does not mean the results are guaranteed. Unless you document your plan and options therein, and also assign execution to individual management team members with regular meetings to see how the process in flowing, you may wind up at the end of the year just where you started. And let’s not forget that ACCOUNTABILITY is a core part of this plan and process.
Accountability to:
- Implement the written plan
- Document new systems and procedures.
- Educate employees about the new plan of attack
- Update job descriptions along with accountability profiles
- Update technology as necessary.
- Outline methods to measure performance
- Change the plan as necessary throughout the year.
Each revenue silo will go through this process. New and used sales, short and long-term rentals, parts, service, all other. Each having a different role depending on what scenario you selected for the year.
Many companies find that isolating your management team for a day or two is the best way to get agreement on a plan of attack, decide on the goals for each revenue silo and finally get the plan documented. Invite the management team, employees with expertise in areas under discussion, trusted advisers and outsiders with skills not available internally.
Not only is management trying to pick a direction to work in for the coming year but also looking for ways to innovate new ways of doing business because all managers know that business as we know it is changing on a daily basis.
For example, think about this example as an area of concern for the future. I pick up one of the financial newsletters I read, and the headline is “FOLLOW AMAZON INTO A NEW RETAIL BOOM FOR TRIPLE DIGIT GAINS. The report is from Jeff Yastine’s Total Wealth Adviser, which I consider to be an above average financial publication, with the main point for the current issue being that e-commence is driving the need for more and bigger warehouses.
Getting further into the issue to find out who I should be “following for triple digit gains” and lo and behold it is none other than Hyster-Yale Material Handling (HY) because of their focus on delivering all the tools that warehouse operators need to make them as efficient as possible. They will do this by disrupting the industry by 1. Switching to fuel cells and getting out of the battery business and 2. developing dual mode lift trucks that can be operated with or without a driver. Both programs are sure to reduce warehouse operating costs with short cost recovery periods, thus driving HY profits to new highs.
Can you imagine what took place in these planning meetings? Must have been interesting since they were discussing the disruption of their own business and diverting capital to do it. But when you stop and think about it using batteries is costly and space consuming, and if you could eliminate most of the costs and use the space for profit producing units they may be on to something. And with the new warehouse systems being installed the use of driver-less lift trucks will fit right in. Time will tell.
So just from reading the HY article I would have to stop and think about the future use of batteries, as well as how to keep the large warehouse customers you currently service. That should take you a day or two to plan around.
There are obviously many, many issues and programs to discuss in terms both growing your profits and cash flow (notice I didn’t mention sales) which if you don’t consider could leave your company in a bind.
Get your 2019 plan in place pronto.
Garry Bartecki is a CPA MBA with GB Financial Services LLC. E-mail [email protected] to contact Garry.
