Winter 2002 Thinking About Tomorrow
The intensity of the all-important holiday selling season usually doesn’t leave much time for anything else, let alone thinking about the future. This year, things were different in ways no one could have predicted; and no past holiday could serve as a guide. Most specialty retailers operated on varying degrees of faith, hope and charity—and no doubt a good measure of prayer that in the aftermath of the events of September 11th, personal and economic reactions would stabilize. Retailers were ready to serve American consumers, who were encouraged from the first to “return to normalcy” and resume daily routines as much possible. And that, of course, includes shopping. Still, while the prospects for Holiday 2001 weren’t stellar going into the season, some retailers would emerge successful, and others less so.
Whatever your own sales results, the end of the holiday season is the time to relax, recover, reflect, and plan for the coming year. The best time to look at the future is while the business from last year is still uppermost in your mind. This is when you’ll remember the decisions—small and large, good and bad—you made while the season was underway, why you made them, and how they worked out. The mistake many retailers make, however, is to let their R&R extend into the first quarter and beyond. By the time they get into planning mode, they’ve forgotten many key facts and details that can guide them.
The shape of things to come
The top of the year is your chance to answer some questions and make some decisions: Should you stay in this business? Why? How? Do you like being a retail entrepreneur? Do you enjoy direct sales to customers? Has it been a profitable enterprise? Evaluating all the elements—product, place, management, staff, merchandising, technology, promotions—should be a matter of course. But what should a plan look like? What are the components that give form to your future? Here are the essential elements.
Every retail entrepreneur has to create or clarify their business goals, no matter what kind of business they have. Specialty retailers, particularly temporary tenants, start a business for a variety of reasons. Some have easy access to a great product—or created one. Some want to bring a passion to market; some just want supplemental income. And some need to expand an existing business into a regional or national enterprise, or create a spin-off.
What were your original goals and objectives? Which ones did you reach? Which ones do you want to modify now? And what new ones do you want to add? Goals and objectives must meet the “REST” test: they must be Realistic (valid and do-able), Easy to state (clear), Specific, and Trackable. “To make a lot of money” is Easy, but because it’s not Specific, you can’t know if it’s Realistic. And if it’s not Realistic, you’re likely not to get anywhere except frustrated. But change it to something like “To make at least per week so I can eventually quit my day job and do this full-time” is more Specific, but not enough. Add a time frame (“by July 4th” or “within 3 months”) and other details or “terms and conditions” for yourself, and you’re much closer to a goal you can chase and reach. Still, make it just one simple sentence that states the specific reason you started your business. Remember, too, that every goal is a moving target: as you reach one, replace it with one that reaches further.
The vision statement
Whatever your original reason, it’s time to decide what you want from your business from now on. To capture and solidify that, create a “vision statement” for your company, even if your company is only you. It’s an excellent way to put into words the reason you do business, and what your vision of the business is for the future. The beauty of a vision statement is that it goes beyond just being a stated goal—it’s a work in progress you can use forever.
Your vision statement isn’t limited to one sentence, the way your stated goal is. A vision statement can include concrete things, such as “I want to be my own boss.” It can also include intangibles, like the sense of freedom you get from making all of your own business decisions. It should also include financial goals, expressed either as an amount: “I want to be a millionaire cart retailer”; or a specific benefit of a level of financial success: “I want to put my kids in private school.”
A vision statement should also include the company culture you want for your business and employees. Company culture gives the company a personality, an “organic soul,” but it’s often overlooked in the planning process. Strong, profitable, growing companies usually have a clearly defined culture. Owners, management and staff of companies with positive “soul” have the sense that their work is meaningful. Those are the businesses that survive and even thrive during difficult times.
Company culture is simply the style and personality of the environment you want for you and your employees to work in. It can be “fun and casual” or “formal and by the book” or anything in between. It doesn’t matter which you choose if it’s a good fit with your personal or business style—as long as you have one, and you put it in writing. Otherwise, you’re likely to have a company that functions without a unifying, energizing theme. No matter how small your business is, a defined company culture is integral to its future.
The next and most difficult step is to create a strategic business plan. It’s your map to the future—where you want to go, and the routes you plan to take to get there. A strategic plan has a number of components that will answer the question, “What do I want the business to accomplish (or be) after Year 1, Year 3, Year 5?” These one-year, three-year and five-year goals must be in the business plan. You can also have longer-term or “stretch” goals that take you further into the future.
A strategic plan must be realistic, do-able, and financially sound. So it has to contain your financial plans (plus your current Profit and Loss [P&L] statements). For example, if you intend to double the number of RMUs you open next year, where will you get the money to buy product and pay rent? You need to ask and answer this and other such questions in the plan. If you intend to borrow from the bank, or use the equity in your home, or take cash advances from your credit cards, put that information in the plan, either as narrative or on a spreadsheet.
A strategic business plan has sections for all aspects of your business, not just the numbers. For example, include pictures of your locations so you can evaluate the strengths and weaknesses of your displays and merchandising. You may need to allocate funds to build or buy better fixtures, and this must be a part of the plan. If you intend to grow, the plan should include specifics on where you’ll find and hire employees, and all of the financial details of additional staffing, including benefits, commissions and bonuses.
Another critical part of the strategic business plan is an evaluation of the product you sell. If you are a vertical company—i.e., you make what you sell retail—how much product can you make or manufacture? Will that level of output limit your potential for growth? Are you willing to buy a ready-made product? If you don’t make what you sell, then which suppliers did you buy from, and were you able to get cash discounts or terms? How will you find and test the sales potential of new products? A thorough review of all product-related issues is an integral part of the strategic plan.
Putting it together
The combination of goal statements, a vision statement and a strategic business plan takes time and effort. But it’s worth it: having a map to the future will put you in charge of your business, to run it and grow it into what you want. Thinking about tomorrow will mean leaving some of the past behind. In the past year, all kinds of business have been challenged to be more than ever before: a part of their community… sensitive to the changing sensibilities of their customers… and perhaps most of all, focused but adaptable. Today, at the start of 2002, you have a wonderful opportunity to take stock: of the past year, of your business, and your intentions… and create a vision for a profitable and productive business for this new year, and many years to come.
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