a few. Consultants are a good bet, too. Accounting firms can provide builders with business planning tools and resources.
Bone Up on Basic Planning, Know Your Market Niche
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 forma. 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.
Choose Planning Software That Meets Your Needs
Stand-alone software products are some of the most flexible and easiest options to use for strategic planning. Aforementioned spreadsheets 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-ins 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.
Earlier Articles in This Series
To read, “Know Your Technology Needs Before You Invest,” Part 1 of this series, published April 14, click here.
Next: project planning
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 well-known players and to note a few new ones. My apologies to vendors who are not mentioned — the omission was not intentional.
Bill Allen is president of W.A. Allen Consulting and a member of NAHB’s Business Management & Information Technology Committee. His company, headquartered in Redmond, WA, provides information technology consulting services and process management assistance to the home building industry. Allen can be reached at 425-885-4489 or via e-mail. Or isit the W.A. Allen Consulting Web site.
Want more information about using technology in your business? Check out the online resources available from NAHB’s Business Management Department: Tools for Running Your Business. There are also articles about human resources, financial management, sales, production, customer service and other business-related topics. In addition, visit the NAHB Software Users Network Discussion Forum (SUN) to ask technology consultants and other builders what they think of various software packages and applications.
BuilderBooks.com also offers a variety of publications about strategic planning and business management. To view or purchase these publications online, click here.
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