At any company, some of these issues will be more significant than others. If, for example, sales are topping out in existing markets, then diversification is key; if changes in existing markets will broaden sales possibilities, then it's not essential to look for new products and markets.
At Dura-Line, some clear answers presented themselves during Shoffner's conversations with Quinn. The company expected two of its newest geographic markets, the United Kingdom and the West Coast, to grow dramatically. Since both men agreed that further growth was desirable, they recognized a need to broaden Dura-Line's product line and customer base beyond the already crowded and competitive business of potable-water piping.
That led to some pretty specific operational questions: would it be best for the company to buy or build production facilities in the United Kingdom and California? What kind of staffing increases would be necessary and cost-justified? Was the company's sales team adequate to meet its growth goals? Shoffner already ran a tight operation with good control of his bottom line, so Quinn skipped some of his other, standard questions: was tax planning adequate? Was cash flow at its maximum? If so, could it finance growth activities?
Shoffner was concerned during those early days that a preoccupation with planning would cause him to miss business opportunities. Not to worry. After a few conversations about the acquisition, the two learned from a customer contact about an existing facility that might be up for sale. They flew over to Great Britain within the week and agreed to a purchase. Eventually the seller got cold feet -- but even that didn't slow them down. "We were flexible enough to be able to work out a deal that allowed us to set up a new facility," says Shoffner. With the first pipes off the line last February, the entire process, from planning to reality, took just six months.
Reality is the important word to remember when talking about business planning. All the theory and questions and answers in the world mean nothing if the planning process doesn't produce real-life results: faster growth, higher profit margins, better customer service.
At Dura-Line, Shoffner saw plenty of real-life results. Like many other entrepreneurs, he had always had a tough time justifying hiring highly paid people -- even in areas as vital to the future of the company as sales. "But when I asked him questions like, 'If the West Coast market suddenly opens up, how will you sell to it and how will you handle all the extra demand?' " recalls Quinn, "John saw that his growth depended on being able to hire a new salesperson and an additional plant supervisor."
New planners must also be prepared for those agonizing moments when operational answers reveal that certain strategic goals are impractical, at least over a midterm horizon. More frequently, operational planning forces companies to rank their growth goals and strategies. Consider Dura-Line's experience: Shoffner knew that he needed to acquire or build two new facilities in order to reach his new target markets. But given the limits on his own time and management support, he realized that he would have to tackle one expansion at a time. After a few conversations with Quinn he decided it made sense to go after the United Kingdom first, where demand for his product was already so strong that it was distracting Dura-Line from other clients.
John Shoffner is unlikely ever to label himself a strategic planner, but he's more than satisfied with the results of his question-and-answer sessions with Quinn. Now that the U.K. site is nearing completion, Shoffner and Quinn want to act quickly out West. They are actively searching for an existing West Coast production facility. After visiting 10 sites on the market in California, Nevada, and Arizona, they finally found a site they were willing to negotiate to buy.
When they do, you can bet they'll make the decision to buy it on the spot, without time-consuming consultations with financial-planning types back at corporate headquarters. But that's to be expected. After all, action is what planning is all about.
PLANNING ON IT
Throw away the textbook. Here are some steps to make planning for growth work
Here are some simple ways you can keep your company's planning-for-growth process simple, flexible, and effective.
* Start at the top, with the company's chief executive or chief operating officer. They are, after all, the ones who have the best intuitive sense of the company's existing and prospective markets. And never, never, never assign the job of planning to people who don't have other responsibilities at the company -- no matter how talented they are, they won't be able to see how their theories will fit in with the company's business realities.
* Make planning an ongoing process at your company. It distorts a manager's perspective to think about planning questions only at scheduled intervals, whether they're on a yearly or a quarterly basis. Instead, try to incorporate planning into your regular management routine, perhaps on a weekly basis.
* Involve other people by encouraging other executives, bankers, lawyers, accountants, and the like to ask probing questions. Follow the example of Tom Quinn, Jordan Industries Inc.'s president, who did this with Dura-Line Corp.'s John Shoffner. Then discuss your strategies with people from all levels and departments of your own company to make certain that your decisions will be informed and relevant.
* Keep your focus on both strategic and operational issues in order to ensure profitable, controlled growth. Overlooking either factor can be dangerous: ignoring operations can lead to pie-in-the-sky growth strategies, while forgetting about long-term strategic goals makes your future growth almost impossible.
