Working Your Plan

What would you want your business to look like if you floated off in a hot air balloon and landed seven years later?

Working Your PlanThis is the question Capitol Welders Supply in Baton Rouge, Louisiana, asked itself last year. Obviously, it was not an easy question to answer. For years, the company’s owners—Betty Root and her sons Terry and Kelly—held an annual meeting to talk amongst themselves about what they wanted to do within the business. Kelly Root, vice president-sales, explains, “We never seemed to finish what we started. We’d get hot on something and then peter out, and with no formal checks and balances as to where we were, any plans we had became redundant. Here we go, another year, some more plans. It’s like New Year’s resolutions. You mean well, but you stop working on them as the year progresses.”

In this regard, Capitol Welders Supply was not unlike many other businesses. Owners usually develop a plan when they start the company. Investors and banks require one. Delta Gases in Maryland Heights, Missouri, had one. Todd Linnenbringer, vice president, says his father set up a plan when he started the company in 1995. That plan outlined sales projections and what the profit percentages would be across a ten-year timeline. “He hit all of his numbers and his goals,” Linnenbringer says, “but now 17 years later, that plan is nowhere to be found. We know how the business runs, and every year, we try to grow it.”

When the initial, required plan is completed, it’s easy to move forward without the formal push a strategic plan can provide. Often, the plan is revisited only when necessary, perhaps during an acquisition, an expansion, an investment in growth, or a visit with a funding source.

Last year, the Roots of Capitol Welders Supply decided it was time to include their employees and develop a strategic plan and formal process to accomplish it. Teams of stakeholders were assembled and all had to answer that question: What do we want Capitol Welders Supply to look like seven years from now? Once they had the vision, they worked backwards, discussing what they wanted and needed to bring their vision to reality.

When finished, Capitol Welders Supply had a seven-year plan complete with an annual agenda broken down month by month with objectives, goals and a review process with built-in accountability.

Abbott Welding Supply in Olean, New York, is just getting started on the development of a five-year plan. Mike Higgins, president, says his goal is to continue to improve the business. “I spend so much time trying to chop down trees when I should be looking at the forest.” Higgins wants to get a broader view of the business and how he should be focusing his time. Without a board of directors, he hopes a plan will bring some external guidance. “A five-year plan will help us see trends and things we want to be prepared for.” Higgins is working with his accountant and comptroller and may bring in some outside consultants to help with the process.

What’s In the Plan
The Capitol Welders Strategic Plan covers many facets of the business: facility, employees, training, growth opportunities, distribution issues, vehicle turnover and much more. Discussion included where the business would migrate philosophically and what it would take to get it to that point. Says Root, “Our main ambition was to be as independent as we could be, like a speedy boat going down the river, rather than a large ship that could not turn back if we make a mistake or the economy changes. For example, we determined that we wanted to do more accounting in-house. We wanted to be lean and mean, and that became part of the plan.”

Does Your Company Have a Business Plan?Atlas Welding Supply Co. in Tuscaloosa, Alabama, has a business plan that Bill Visintainer, president, describes as covering everything from the ground up. The plan’s major goal is to increase sales, so it encompasses the opportunities that are available. After the opportunities are uncovered, the numbers and specific objectives to reach those numbers are added in. However, Visintainer points out, “The numbers are the last thing we do, not the first.”

Each year of Capitol Welders’ plan is broken down into 12 sections. The sections contain specific goals all aimed toward painting the picture of what the company will look like in the future. For example, in January 2012, the company investigated automated credit card processing. Root explains, “With more customers paying by credit card, we want to make the process of getting the number and authorization easier.” The plan keeps everyone focused on the goal, and thus has a better chance of completion.

Perry Johnson, president of Hohenschild Welders Supply Co. in Kansas City, Missouri, decided to develop a business plan after hearing of the benefits at a Spring Management Conference several years ago. He describes developing one as a very worthwhile exercise to go through, “like getting 11 football players on the same page.” His plan identifies company capabilities, current and potential markets, how to get to them and grow from them. When writing the plan, Johnson looked at what worked and what hasn’t, and received input from a variety of people. “It was surprising to learn that we weren’t all on the same page. You think you know what you’re doing and where you’re going, but if you don’t document it, then maybe you don’t.” Johnson keeps a copy of the plan on the front page of his accounting book and looks at it often. He points out that the plan keeps everyone on the same road. “I think it’s a good way to march forward.”

Review and Accountability
An interesting thing happened when Capitol Welders brought employees into the planning process. Says Root, “Employees wanted to know if their future was bright at the company and what management would do to contribute to that future.” As a result of these conversations, the review process took on a whole new dimension. Deadlines for meeting objectives became paramount, not just individual deadlines, but deadlines for departments. “We meet to find out how we are doing,” Root says, “and sometimes things have to be moved to the next month if we’re not quite finished, or they have to be changed and even removed, but at least we know the process is working and what everyone
is accomplishing.”

The Atlas Welding Supply plan is revised annually, though adjustments are made when needed throughout the year. From the overall company plan, an individual performance plan with five objectives is developed for every employee in the company. Says Visintainer, “Every time I have seen a problem in an organization, it’s because people were given subjective measures.” Visintainer stresses the importance of laying out the expectations at the beginning of the year and getting buy-in. “At the end of the year, there is no argument. You either do or you don’t.”

The End Result
Since being interviewed for this article, Delta Gases’ Todd Linnenbringer has been thinking about strategic plans. “I now think it’s something smart to do,” he says. “It’s good to write down goals and projections. When you look back on them and you’ve hit those numbers, it confirms that you’re doing something right. If you didn’t hit them, something may be broken and needs to be fixed.” Linnenbringer will develop a strategic plan that will include “where we are today, where we want to be, and how we plan to get there.”

Is a business plan necessary beyond an investor’s requirement? Some company owners would say yes, as it keeps everyone focused on the goal. It’s hard work too. Root says it’s easy to develop the first two or three years of a plan, but it’s hard to go past that. “Looking past the initial years and really focused on where you want your company to be is where the real work comes in.” Vendor relationships, financial relationships, economic speculations all play a part. Root adds, “The real benefit to any planning may not come from achieving the goals, but building teamwork and confidence among employees that the company’s future is going to be bright because they can help make it bright. They can make it bright by being part of something special, by doing something to make our company better.”

The Supplier Connection
Strategic Business Planning is so important that GAWDA’s Industry Partnering Committee has formed a subcommittee to address the topic. Whether the planning is done by and for an individual company, or it is done as a joint endeavor between a distributor and a supplier, the end result is the same—better working relationships, better marketing initiatives, better sales.

Hypertherm partners with its distributors on a support program called the HyProfit Alliance, a program that serves as the basis for business planning and the growth of both distributor and supplier sales. A year-end rebate is paid to channel partners based on sales goals and commitments. Hypertherm matches a portion of this rebate amount with cooperative marketing funds that can be used during the following year to support a variety of sales and marketing activities.

Central and Southeast Regional Sales Manager David Taylor describes the steps of this annual process: “Hypertherm management first determines the goals required for success. Based on these goals, regional managers determine where resources and time will best be used. A lot of effort is spent on the front end with channel partners determining target markets and collaboration, then a plan is developed for individual channel partners. By the second week in January, Hypertherm’s district sales managers sit down with key decision makers at the distribution level. By the last week of February, the plan is signed and ready to go.”  The plan includes target markets, products, numbers, marketing, training, merchandising and more. “Sales numbers are the biggest component, because there has to be a target to go after,” Taylor says. Progress is reported each quarter. “The goal for both sides is to hit the numbers and ultimately grow market share. We keep each other accountable toward that goal.”

Strategic Planning Is More Than A Dusty Three-Ring Binder!
A distributor recounts his experience developing a strategic plan for leadership succession.

Jim Appledorn, U.S. distributor sales manager for The Lincoln Electric Company, indicates that the Annual Distributor Sales Planner, a plan Lincoln creates with distributors, is a requirement for keeping their premier distributor contract active. Every year, a formal plan is created between Lincoln’s sales personnel and its distributors. “First we define our commitment to our channel partners, which includes our continued investment in Welding & Cutting Technology and Business Process Improvement designed to meet the needs of both distributors and end-users of our products,” says Appledorn. In addition to Lincoln’s statement of commitment to the distributor, this document also defines Lincoln’s expectations of the distributor. Those expectations include the identification of target accounts, marketing initiatives, training, sharing of market data and more. The document is a mutual process crafted between the two parties. “If it’s done cooperatively,” says Appledorn, “there’s more ownership from both parties.” Specific objectives are listed, along with measurements and dates for things like open house events, training—both local and factory, marketing opportunities and more. “Working cooperatively on the planning process with our distribution channel is a win-win for both parties.”

Gases and Welding Distributors Association