If you’re like most business-minded people, you have no shortage of ideas. Put on your retailer glasses and you might see opportunities everywhere. If the past couple of years have given you above average sales and you have money in the bank, it may be time to reinvest in your business. But not all good ideas are worth doing; not all opportunities are equal. How do you know which is the best one for you?
Most retailers have figured out a way to make decisions, whether it’s through a gut feeling or by discussing the pros and cons with other leadership. As you’re thinking of investing in your business, thinking strategically means sorting out the best opportunities that align with your goals and position you for the most success in a competitive environment.
To offer more insights into the decision-making process, Hardware Retailing talked to retailers leading successful companies about strategic planning. Their insights and best practices will help you think strategically about your business so you can take advantage of the right opportunities to move your business forward.
Define specific goals.
As you work through a business analysis, start setting specific goals, which should arise when you take an introspective look at your business. Matt Lambert is currently an operations leader at Nation’s Best, a holdings company focused on the home improvement industry. Before coming to the company, he was working at the family business, Lambert Lumber in Broken Bow, Oklahoma, which is now a part of the Nation’s Best group of stores.
In 2008, when leaders at Lambert Lumber met to cast their vision for the business, they felt the biggest opportunity for growth lay in enhancing customer service. Customer service wasn’t failing; it was good. However, the leadership team didn’t want to stop there.
“Our vision for customer service was to blow away any expectations shoppers might have had for service and set a new standard for what they should expect,” Lambert says.
A business analysis revealed the two areas where they could make that happen.
“We informally did a SWOT type of analysis of our business on a regular basis. In this case, we focused on opportunities and challenges, and most of them would come in one of two areas, either vendor relations or employees. Those were the areas where we decided to focus our efforts.”
Lambert says they narrowed their focus to three specific goals: Offer same-day delivery, facilitate the relationship between customer and contractors and cross-train all employees. Each of those specific goals would contribute to an overall improvement in customer service.
Create a detailed business plan.
Nation’s Best vice president Robert Debs says careful planning plays a central role in keeping the business on track. Nation’s Best is comprised primarily of industry veterans with a strong track record and long history in the home improvement industry. As of April 2022, it has expanded to approximately 30 locations in nine states with nearly 700 associates in just two and a half years.
And the company continues to grow. In addition to growth via acquisitions, the company focuses on careful strategic planning at each store, creating organic growth opportunities across the Nation’s Best family of companies.
“We ask our store managers to create detailed business plans and revisit them at least once a quarter,” Debs says. “Our store managers work closely with their teams, as well as Nation’s Best’s operational leadership, in tracking progress on those plans. They are critical self-evaluation tools for every store and our organization as a whole. The plans help us stay organized and keep us accountable for our performance and success.”
There are many components to creating a strategic plan, and core to the process is an analysis of a company’s strengths, weaknesses, opportunities and threats. Often known as SWOT, this type of analysis helps clearly identify the internal and external factors affecting your business. Once you’ve identified them, you are better able to set goals.
Update goals regularly.
Acquisition and growth is also a central part of the business plan at Texas Paint & Wallpaper. Since joining the company in 2018, general manager Joseph Long has spearheaded the company’s growth from four stores to 10 in the Dallas area, and he has no intention of slowing down.
Whether he’s eyeing a new store location or reviewing operations at an existing one, Long says the strategic planning process guides his and his team’s decision making. Every year, Long spends a day with his staff, creating a plan for the coming year. They consider the business as a whole and what’s changed in the market around them. They may, for example, look for opportunities they may be missing or consider where they should invest their money. But the reviewing and planning process doesn’t stop at the annual meeting.
“I meet with the management staff for quarterly meetings,” he says. “We talk about our progress with what we planned for, what’s working well and what isn’t. We also evaluate the strengths of our employees and look for potential next managers, because as we expand, we will need to keep grooming new managers to fill new positions.”
Long also uses monthly progress reviews to compare his plan with what’s actually happening in the market. That process allows him to react to changes and correct his course quickly, rather than waiting to make a new plan at the annual meeting.
Organize your approach.
As you’re creating a strategic plan for your business, it’s helpful to use an organized approach such as a SWOT analysis to help you ask the right questions. Unless you’re analyzing a specific part of your organization (your website, for example) then you’ll be looking at some broad categories. You want to consider every area of the business to get a full picture.
There are many questions you can ask about your business during a strategic planning process. Consider all areas of the business, from the service shoppers receive when they walk in the front door to the way you’re keeping track of inventory in the back office. Understand your competitors and the threats they pose to your company or the opportunities the market offers. You may even want to get the opinion of someone not involved with the daily operations to give you an outsider’s perspective of your company’s strengths and weaknesses.
To start, make a list of areas you want to cover. Ask questions of each area and then decide if your answer represents a strength or a weakness.
“Ask yourself, ‘What am I doing better than the competition?’” says Long. “Look at what you’re selling the most and who you’re selling it to. Then look at what you are not selling but should be. Is there a certain customer market you’re not focusing on but should? Do you need to expand your portfolio? The needs of your customer could change on a daily basis.”
Use a benchmarking tool.
Benchmarking helps quantify your goals. One way is to compare previous year financials to evaluate current progress. If you have multiple locations, set your highest performing store as the standard you want every location to meet.
Another tool is the Cost of Doing Business Study from the North American Hardware and Paint Association (NHPA). This annual report compiles the financial data of participating home improvement retailers and determines industry averages for key profit indicators. Retailers can use the report to compare their income statement and balance sheet against average and high-profit retailers. The report illuminates areas where you are above average or where you need work.
“The Cost of Doing Business Study was extremely beneficial for us early on as we were growing,” Lambert says. “Eventually, we started using our previous year’s growth as a benchmark, but NHPA’s survey was a good place for us to start. We still use it as a valuable comparison tool for some areas.”
Take the customers’ perspective.
For a successful business plan, Lambert recommends retailers consider their customers’ perspective. Don’t assume you know everything about what customers think, because their needs are always changing.
“Always consider your audience. Put yourself in a customer’s shoes and ask, ‘What do I want to experience when I come into this business?’ If you’re not sure, then ask a few customers,” he says.
There are many ways to get your customers’ perspective, such as hosting roundtable discussions, creating surveys for them to complete or having informal conversations next time they’re in the store. Ask them questions, such as, “Where do you usually shop for hardware?” or “What could we be doing better?”
“Have a discussion with your customers and ask them why they choose your business over another,” Long says. “Analyze your competition and see why people might be going there instead of coming to you.”
It could be worthwhile to conduct a secret shopping exercise at your competitors to see how a customer experience there compares to your own.
Prioritize your findings.
After listing and categorizing your strengths, weaknesses, opportunities and threats, it’s time to determine what to do with that information. Look at what threats or weaknesses need to be addressed or what opportunities you can take advantage of. You’ll likely find that not all weaknesses or threats should have equal weight.
As a holdings company, Nation’s Best’s acquisition strategy is to look for best-in-class retailers who are already operating a strong business. Company culture is one of the chief indicators of strength, Debs says.
“We might check off a lot of other boxes, but if we look at them in order of priority, it all goes back to culture,” he says. “Does the store have a culture where the managers act like owners, and do they treat their people well?”
He recommends that any retailer taking a hard look at their business should understand their company culture and how that affects the rest of their operation. When employees feel valued and empowered, they are more likely to provide better customer service and help the company become more profitable.
After prioritizing your goals, create a manageable plan for meeting them and decide how to evaluate. One of the main reasons for establishing a business plan is to hold yourself accountable, so determine upfront the timetable for review and who will be involved.
“Prioritize your list of goals in a manageable way and focus on the top few at a time,” Debs says. “Put your business plan in writing and be diligent in how often you revisit it. Measure yourself against the goals created. Hold yourself and others on the team accountable.”
Emphasize people over process.
When they created a new goal of improving customer service at Lambert Lumber, it meant getting every employee on board. Lambert says they invested in intensive training for the entire staff.
“We cross-trained everyone,” he says. “No employee should tell a customer, ‘That’s not my job’ when they ask for help. Everyone was trained in all areas of the store, and we gave them a level of authority to make decisions so customers didn’t always have to wait for a manager to help.”
When creating a strategy for meeting goals, don’t put a new process or plan in place before first considering how it will impact your employees. It should fit well with your company culture and the unique needs and talents of your employees.
“As you’re deciding the solution for meeting your goal, remember that the process isn’t the solution, it’s the people. Don’t put your process before your employees,” Lambert says. “Stay invested in your people.”
Don’t rest on last year’s sales.
More than 10 years later, the result of the strategic planning process focusing on customer service at Lambert Lumber has been consistent double-digit year-over-year sales increases. Delivery vehicles over that time increased from one to six with currently more than 45 deliveries a day. That’s because the owners knew that even if one way of doing business works today, that doesn’t mean it’s going to be the best way tomorrow.
“When doing a SWOT analysis of their business, one key mistake retailers should avoid is to approach the process with the ‘We’ve always done it this way and it works just fine’ attitude,” says Debs. “Many independent retailers and business owners live with that mindset, which can be detrimental to growth and competing in this ever-evolving marketplace.”
Retailers who stick to doing “business as usual” without any long-term planning can be blindsided when a new competitor arises or sales plummet. A long-term strategy looks for new opportunities while understanding a company’s strengths and weaknesses and their desired position in the marketplace. In short, successful companies have a business plan to guide their growth. It gives them a snapshot of where they are and where they’re headed in the future.
At Texas Paint, Long says continually looking forward is a mindset he instills in his sales representatives as they’re looking for new business.
“The needs of the independent channel change constantly,” says Long. “We have to be proactive and not reactive in sales. We tell our sales reps every year that we can’t rely on last year’s big customer to carry us through this year; we need to find new customers every year. The big account you had last year may not be your big account this year. This is not your grandfather’s paint market anymore.”
To make employee training a part of your strategic plan, see the library of training options NHPA has to offer here.