BEHIND THE NUMBERS: Building a Plan
Knowing up-to-date information about your market is a critical part of a solid business plan.
BY: AL SHERMAN
Last month, I was embarrassed to mention that, in spite of all my years of preaching about the importance of business planning, my partners and I—in another industry—had gone way too long without revisiting and updating our own plan. We knew this was a mistake, but there was always something more pressing to do.
Real planning is time consuming. So while I can’t condone it, I acknowledge that sometimes people are going to shortcut the planning process. And since I’m here to help, not lecture, let’s talk about shortcutting.
We’ve all done it. You fill in a few blanks; update a few items. Up 5% here; down 3% there. Done. You feel good about having gotten through the task and you’ve produced a deliverable—a revised and updated plan.
But, what exactly have you accomplished? Dwight Eisenhower said, “Plans are useless, but planning is indispensable.” I think what he meant is that if you don’t go through the entire planning process, what you have isn’t a plan—it’s a document—and probably not a very useful one.
But, since many of you won’t go through the planning process that generals and obsessive planners suggest, at least don’t skip the part about gathering up-to-date critical information. So let’s talk about what information is available and how to get it.
As you go through this list, think about how having these facts impacts your decision-making process in specific situations.
Here are some of the basics:
• What is the history of new residential construction in your market—by county or by permit-issuing place? I like to go back far enough to capture a couple of business cycles, giving me a feel for the range of permits over time and a very good idea of where we are in the cycle. I suspect that most of you already have a graph of this on your wall.
• What is the employment situation in your market—and which way is it trending? Try to get some annual history plus monthly comparisons of this year versus last.
• What is the breakdown of employment in the market? Is the local economy heavily dependent on a single industry? In what direction is each class of employment going?
• What are the demographics? How does your market compare with the national numbers? Among other things:
• Population and growth rates
– Population density
– Households and growth rates
– Number of housing units
– Percent owner-occupancy
– and lots of so ons.