TECH TALK 2: STRATEGIC PLANNING
By Bill Allen
This is the second article of the nine-part
"Tech Talk"series.
Many builders use spreadsheets to establish
business plans and budget models. There's
nothing wrong with that as long as the
spreadsheet represents your business plan and
isn't a copy of someone else's from a
different market or industry. Spreadsheets
are popular tools, but they aren't the only
option.
There's a wealth of business planning and
modeling resources out there. These include
technology options like shareware you can
obtain on the Web and sophisticated tools
like Cognos CPM for Finance and CheckMATE
Strategic Planning software. In addition, the
home building industry offers tools and
publications like those from
BuilderBooks.com; NAHB's Business Management
Department and the NAHB Research Center,
which produce various books and articles, and
maintain online information databases; and
professional articles in Builder and
Professional Builder magazines, to name a
few. Consultants are a good bet, too;
accounting firms can provide builders with
business planning tools and resources.
Despite their variety and range of
applications, strategic planning tools won't
do the work for you. You need to bone up on
the basics of strategic planning before you
undertake it. Whether you use a planning
template from your accountant or a community
college, or you base your plan on the NAHB
Chart of Accounts, you must understand each
item you set up as a budget item. You should
also have a good idea of the variables
associated with each of those items. The plan
must be your own.
Some software products allow a builder to set
up multiple business planning and modeling
scenarios on both a corporate and project
basis. If you go this route, it's
particularly important to look at best
case/worst case pro formas. Market research
is also more important than ever. Market
indices from the Meyers Group and residential
surveys from Metro/Study are two resources
for builders who need demographic studies and
market potential.
Strategic planning should take into account
how far and wide you plan to work with the
market. Does your planning encompass land
approval to property management, or will you
confine yourself to vertical construction?
How diverse a market can you handle? Some
builders do very well in geographically
confined areas but build to wide market
shares.
In the old days, technology needs were much
simpler. Most builders generally purchased
computers with just enough disk space and
memory to run the handful of applications
they used. Today, we demand networking
platforms that allow single- and multi-user
applications to run simultaneously. We tap
into these systems from internal intranets
and the Internet, office workstations,
personal digital assistants, home computers,
and even our vehicles. Although their
versatility is attractive, such "open ended"
systems require lots of technological
know-how, maintenance, and surveillance to
keep them working properly and to protect
sensitive information from hackers.
Stand-alone software products are some of the
most flexible and easiest options to use for
strategic planning. Aforementioned spread
sheets head the list, partly because there's
no restrictive standard template tied to the
application. However, a spreadsheet's
integrity is only as good as its design, and
the data is only as good as the person
entering it. Integrated software products are
safer because they tend to be more
restrictive and proprietary. They guard the
integrity of live financial data and ensure
tie out between different reports.
No matter which strategic planning tool(s)you
use, make sure they are flexible enough for
your company's needs and aren't cumbersome to
operate. Test-drive systems before you buy
and ask others what they think of them. Be
sure to spell out your needs before you look
for a solution. That's as vital for strategic
planning as it is for land development and
project planning, which I'll discuss in the
next Tech Talk article.
Note: Various software products are mentioned
throughout the Tech Talk series. The intent
is not to recommend these products as being
right for you, but to identify some fairly
known players and to note a few new ones. My
apologies to vendors who aren't mentioned -
the omission was not intentional.
Bill Allen is a member of NAHB's Business
Management & Information Technology Committee
and is president of W.A. Allen Consulting
(www.waallenconsulting.com). The Redmond,
Washington, company provides information
technology consulting services and process
management assistance to the home building
industry. Contact Bill at 425-885-4489 or via
e-mail at skagit@foxinternet.net.
For more information about this item, please
contact William Heslop at 800-368-5242 x8472
or via e-mail at wheslop@nahb.com.
