Jim Buckles is an industry veteran and financial mover and shaker in the retail floor covering arena working for decades with large players. As a consultant, he remains the CFO for retail operators across the country. I invited Jim on TalkFloor to talk about the process of developing a meaningful business plan that can strengthen and guide the business, only to learn that the preparation process for such a plan—which is basically getting the retailer’s head in the right place to develop the plan—is really a make-or-break component to devising a plan.
Here we will touch on this all-important preparation piece and look at the remaining part of the conversation at a later date. The entire conversation, however, is available below. The following are excerpts from the first part of this conversation.
TF: I would guess that every business regardless of its life cycle, whether it’s a startup or mature business needs to develop some type of planning process. Is that the case?
Buckles: Absolutely. Ask any CEO of any company, and they will tell you long-term planning is critical to the success of their business. However, if you ask those same people, do you have a planning process? The answer is almost universally, no. They recognize the need, but they don't do it often because they don't know how to start the process, they often don’t want to look inside the business, the don’t know how to or they don’t have the time.
It's fearsome to start. One needs to take measured steps in that direction so it's not so scary. If you have an honest conversation with many people who started a business and continuing run it, they don't really know how or why they got where they are other than applying tremendous effort and devoting their life to it. They really can’t define the mechanism that got them where they are. If you don't know how you got here, it's really tough to say how they can go forward—not to mention terrifying that you don’t understand why your business is successful and has grown.
Many retailers in this business started off on their knees, seeing a situation where the guy gave them jobs is making more than then they are. They started by thinking, “Maybe I should be that guy, launching the business by the seat of his pants.”
TF: That was then, but now competition is tougher, more sophisticated, the economic environment is tougher. It would seem that going forward by the seat of your pants as they have done in the past just wouldn't seem to be a really great idea. And wouldn't seem to hold a high percentage chance of reaching a successful place in the future.
Buckles: It is very easy to maintain a business so you can continue to have a job. You may have a $70 million business, but you're still just the general manager. You're the decision maker. You have a high touch relationship with your business.
Businesses are very much like people. When you have a new business, like a new baby: it occupies nearly all of your time, you're constantly feeding it and dealing with, your day doesn't end until the last install is finished, and you know an installation crew and their materials for the jobs the next day are set and in place. You live and breathe the business because without you, it just doesn’t happen.
At some point, you get to a stage where you start to bring people in to take over certain aspects of what you are doing. Gradually, you bring in people to be in charge of various aspects of the business and as it continues to grow you reach a stage where many businesses freeze. It's similar to an early adolescent stage, where you've got people to oversee various aspects of the business, you've got a sales manager, somebody in charge of accounting and finances, and another in charge of service, but you don't give them the authority or really trust them. The decision-making process is still in your hands. You don't let the managers go out and do their own thing. You are constantly in there asking about jobs, seeing what they're doing.
One of the biggest challenges to growing a business is recognizing that you need to trust somebody else to make some of the decision you have been making all of these years. It’s similar to giving keys to the car to the car to your 16-year-old saying now you’re ready to drive across the country. You don’t start there. You talk with them, you have them outline situations to you and offer their solutions, guiding them. But many owners are uncomfortable with managers getting to the same place but taking a different route. The manager may approach things differently, organizing differently. And that doesn't mean it's wrong.
If the owner will not let managers have some degree of managerial responsibility, then the owner has trapped the business at a particular size, stuck in terms of getting to the next stage, where you have a mature business capable of making its own decisions. Even if the decisions are not the ones the owner would have made, but the outcomes are the ones the owner is looking for, that is the biggest step for most owners and that is why planning on how to get there is critical to the success of a business.
TF: Is having a plan at the beginning and at every stage of a business key for maximum growth and profitability?
Buckles: A successfully plan for the future means that you have to do some critical self-analysis on who you are, where your business is, and what the true talents are, and that's not comfortable. You may have somebody who's worked for you for a decade or more that you trust implicitly at running a piece of your business. However, it means stepping back and looking at the processes that are in place, how they are working and how can they grow. Also, it means when to recognize, possibly, that you don't actually have any processes including a plan for any particular position. What you have is George. George listens, makes decisions and you are happy for the most part with his decision. Your business is people driven, but not process driven. Now you’re faced with the uncomfortable fact that you have somebody who has worked with you that you trust, who has done a great job, but to get to the next level you now need to work with George on documenting activities, exactly the steps taken to achieve positive results.
When a particular situation occurs, what are the rules? This often makes employees uncomfortable because the critical knowledge and decision-making process for their job is now down on paper. Now anybody can do this job. I'm not important anymore. This is creating a process that has to be about long-term growth and understanding your people.
Basically, a well-run business pretty much has to be documented. There really has to be a plan from day one, as a startup and every stage thereafter. A plan that changes as the situation’s changes. You cannot get to a stage where you are an owner of that business with the freedom to choose your level of involvement without this, sometimes painful, self and business examination.
