Episode 59: Preparing for 2023 With Russ, Sky & Andy
In episode 59 of the Professional Builders Secrets podcast, we’re joined by Co-founders of the Association of Professional Builders Russ Stephens and Sky Stephens, along with APB’s Head Coach, Andy Skarda. Throughout this episode, the trio go over how builders can best prepare for the fast approaching 2023.
Episode 59: Preparing for 2023 With Russ, Sky & Andy
In episode 59 of the Professional Builders Secrets podcast, we’re joined by Co-founders of the Association of Professional Builders Russ Stephens and Sky Stephens, along with APB’s Head Coach, Andy Skarda. Throughout this episode, the trio go over how builders can best prepare for the fast approaching 2023.
Show Notes
Transcript
In episode 59 of the Professional Builders Secrets podcast, we’re joined by Co-founders of the Association of Professional Builders Russ Stephens and Sky Stephens, along with APB’s Head Coach, Andy Skarda. Throughout this episode, the trio go over how builders can best prepare for the fast approaching 2023.
Inside episode 59 you will discover
- How to start planning BEFORE the new year
- When you should start planning
- The components of a strategic plan and how much detail you should go into
- Resources to customise your own plan today
- And much, much more.
Listen to the full episode to find out how access to APB Rewards and our preferred partners can transform your building company.
Russ Stephens - Co-founder
Russ Stephens is a Co-founder of the Association of Professional Builders, a business coaching company dedicated to improving the residential construction industry for both builders and consumers. Russ is a data analysis expert who has introduced data-driven decision making to the residential construction industry. Russ is also a proud member of the Forbes Business Development Council.
Sky Stephens - Co-founder
Sky Stephens is a Co-founder of the Association of Professional Builders, a business coaching company dedicated to improving the residential construction industry for both builders and consumers. Sky is a proud member of The National Association of Women in Construction and she was also recognised as one of 2021’s Top 100 Women.
Andy Skarda - Head Coach
Andy Skarda has owned and led businesses in South Africa, the United States, South-East Asia, and for the last decade, Australia. With 30+ years of business experience, Andy heads up the coaching team at the Association of Professional Builders (APB), helping business owners in the building industry identify and implement the skills and systems they need to be successful, without needing to go back to school or more importantly, without going bust.
Timeline
1:55 How builders can best prepare for 2023
10:31 Creating a strategic plan
13:15 How far ahead builders should plan
24:59 How long it takes to build a strategic plan
35:20 The best practices for planning
42:12 Resources for builders to customise their own plan
Links, Resources & More
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Russ Stephens:
You think in terms of, “Who is going to do this,” not, “How do I do it?”
Sky Stephens:
What are our weaknesses right now? Don't be tainted by what they were.
Sky Stephens:
Close your eyes and just think, “What do you actually want?”
Andy Skarda:
Don't pretend that something's good when it's not.
Russ Stephens:
Revenue – that's just vanity. It's profit that's sanity.
Andy Skarda:
If you believe you can't or you believe you can, you right.
Sky Stephens:
Plan to plan.
Andy Skarda:
P-L-O-C. Plan, lead, organise and control. It's the fundamental definition of management.
Bosco Anthony:
Hello and welcome to the Professional Builders Secrets Podcast, a podcast by the Association of Professional Builders (APB) for building company owners, general managers, VPs and emerging leaders. Here we discuss all things running a professional building company from sales processes to financials, operations and marketing. We have another exciting episode from the Professional Builders Secrets Podcast. I'm joined today by Co-founders Sky and Russ Stephens, as well as Head Coach Andy Skarda, for APB. Sky, it’s always lovely having you join us.
Sky Stephens:
Thank you. How are you, Bosco?
Bosco Anthony:
I'm doing well. Russ, thank you for joining us today as well.
Russ Stephens:
How are you doing, Bosco?
Bosco Anthony:
And Andy, great to have you with us too.
Andy Skarda:
It’s nice to be here, Bosco. I’m always happy to see your face.
Bosco Anthony:
Well, 2023 is around the corner, and I'm already scared to ask this, but let's focus on how builders can best prepare for 2023. What should they be doing?
Andy Skarda:
I think I'll jump in on the front end of this one. My favourite four letters are P-L-O-C, PLOC. Plan, lead, organise and control. It's the fundamental definition of management. Obviously, the planning that needs to be done is strategic planning for where builders want to be taking their businesses next year. It's one of those things that we do on an ongoing basis with our Private Mentoring clients and our Elite Mentoring clients. They never really stop, because we make sure that roundabout this time of the year, they are doing a strategic plan for the upcoming year, but that's getting reviewed throughout the year. We run business planning workshops with all of our members and people who are considering coming into the mentoring program. It's really an ongoing process.
Andy Skarda:
But in terms of your specific question, the one thing that must happen is that planning must be done before the new year starts, because obviously you want to hit the new year running. You don't want to be arriving back from a vacation or a holiday and only then starting to plan, because time is disappearing.
Bosco Anthony:
Wouldn't people be actually taking time off during the end of the year, as well? You're actually recommending that they go into the planning stage before the new year starts?
Andy Skarda:
Correct, absolutely. Really, what that means is we’ve got a set of SMART goals for the new year. SMART stands for specific, measurable, achievable, relevant and time bound. The emphasis there needs to be on achievable. I was actually talking to a client today who was bemoaning the fact that he set up his entire year based on financial outcomes that he did not tie back to the realities of what's going on in the construction industry now. Because of that, he put himself in a place where what he wanted to do was not achievable. Obviously that's created incredible frustration for him this year. Making sure that this is practical and real and takes into account what's going on in the industry and in the world at the moment is critically important.
Russ Stephens:
I’ll just add to what Andy said there about doing it before the end of the year. Don't delude yourself by thinking you're going to do it over that Christmas period, because this is setting yourself up for failure. We see this a lot of times. People think, “Oh, that downtime? Yeah, two, three weeks off, I'll do it then.” It rarely happens. There are exceptions, but a lot of the time you're setting yourself up for failure. So make that time before the end of the year.
Andy Skarda:
And let's be real. Particularly with the year that most builders have had this year, they need a holiday. The last thing you need in your break time is you now crunching your brain to project where next year's going. Get that done, all set up, ready to go. You're going to have a wonderful Christmas break and then come back and make it happen.
Bosco Anthony:
Well, let's talk about the members at APB. When do they actually start to work on their plans? Is there a magic spot just before the holidays? When's the sweet spot? If you have to look at an opportune time, when's the best time to actually plan for that?
Russ Stephens:
Like Andy mentioned, they're always working on it, really, and that's because they've got a three-to-five-year plan that they're always working on. So the next 12 months is always on the radar, albeit at a high level. But I guess the first time they really start to put some meat on the bones is about mid-year. For those members who attend our annual retreat, which occurs in June each year, that's the first time they probably start to put some real meat on the bones for that calendar year ahead.
Russ Stephens:
But apart from that, generally it's in between September and November. I wouldn't be leaving that too close to the death. In December, you've got that mad rush before Christmas, with all those deadlines occurring. It’s very hard to organise trades and supplies, as well. So again, you might be setting yourself up for failure by trying to do it in December. But between September and November, that's when I would say most of our members create their detailed plan for that next calendar year.
Russ Stephens:
By a detailed plan, what I mean is breaking that year down into quarters. You should bear in mind, as well, that quarter one is already going to be largely influenced by what has happened in quarter three and quarter four of the prior year. Because the workflow figure, which is the balance of un-invoiced contracts, that is going to give you a good insight into what your likely revenue is for quarter one. Also, the sales marketing that occurred in those final two quarters as well, will have a huge bearing on contracts being signed in quarter one and quarter two. So, you don't have to leave it all to the last minute, but the closer you can finalise it towards the year end, the more accurate it's going to be. There's quite a bit of work that goes into this.
Bosco Anthony:
For are listeners out there, can you break down the components in a strategic plan for us?
Sky Stephens:
A hundred percent. Firstly, they're a lot more exciting than they sound. These are very exciting documents and plans for your entire building company. The way we teach strategic planning is first of all, forget the detail and forget all of your numbers, and close your eyes and just think. What do you actually want? Design your perfect building company. What do you want? And then when is that? However it looks, how far in the future is that? And that's when you know the picture of what you are wanting. Then you start being more logical. Then you can actually think, “Okay, what do I want? What does that actually look like? How far away is that?” And then just start working backwards. And that’s, honestly, all the strategic plan actually is.
Sky Stephens:
Once you’ve done your dreaming, whether it’s just you, yourself, or you and your business partners, whoever’s strategically involved in the company, then you just start working backwards with real numbers. That’s when you actually start including your lead indicators and your lag indicators, because you need specificity. So, a strategic plan isn’t your vision board, but you need to start with your vision and your goals so that you can put your numbers in place.
Sky Stephens:
The components of a strategic plan, as Russ just mentioned, you’ve got three to five years. What's going to happen in the next one year? Then break it down for the next quarter. It really can be as simple as that. Then you can make it as advanced as you want it to be by how much detail you get into. We teach a pretty simple structure so that you can keep it, as we teach it, on one page. So, you can actually always print out one page. In your three to five years, you've got a lot of your lag indicators there.
Sky Stephens:
Just for everyone listening, lag indicators take a little bit more time to influence. These are things like revenue, gross profit margin, net profit margin and cash. Whereas your lead indicators are a little bit quicker to move. These are things like total advertising budget, the amount of leads, anything that you can actually influence more quickly.
Sky Stephens:
In your three-to-five-year plan, you're going to have how big your building company is actually going to be. But you're also going to have about three to five key initiatives of what needs to be in place for your building company to be of that size. It's probably going to be how big your team is or how many offices you have, or whatever. Then you can break it down to, “Okay, what's my one-year goal? How am I actually going to get there?“ And again, you’re probably going to have three to five key initiatives of what needs to happen in order to get there. Then you break it down into quarters. These will have a lot more specific numbers because these have to be achieved in the next 90 days. You don’t have three to five years to achieve them.
Sky Stephens:
Obviously, there is work that goes into it, but it starts off really fun, and by the time you get into the specifics, it’s getting more and more exciting because you can see all the puzzle pieces just coming together.
Bosco Anthony:
How much detail is too much detail in a strategic plan?
Andy Skarda:
We always recommend that you stay out of the tactics. Sky mentioned some really important words there, like ‘dream’. I recommend to all of my clients that they have a glass of wine or a decent gin before they start the dreaming process just so that they get all of the day-to-day humdrum out of the process. It really is something that you want to be able to visualise clearly in your mind, where you want to take your business.
Andy Skarda:
Then we always break the things that builders need to do to get there down into three primary areas. So rocks, pebbles and sand. Sand is the day-to-day stuff, the email and the stuff that is going to be there, like it or not. The pebbles support the main things that’ll move the needle, and then the rocks are the things that are actually going to move the needle on your business.
Andy Skarda:
We always like to keep strategic planning at the rock stage. It’s left so that the pebbles and the sand can be discussed with your team to drive engagement. What you want to be doing as the owner of the building company is to be saying, “This is the outcome I’m looking for.“ That’s at the strategic level. Then when you sit down with your team, you are not debating the outcome, but you’re actually inviting them into the discussion for them to help you determine how it’s going to be done using the people and the tools and the vehicles, and now you’re into the tactical space. What that does is, if they’re part of coming up with that process, you’re going to drive a lot more engagement from them because they were part of coming up with it. You didn’t tell them how to do it. They told you how they would do it.
Bosco Anthony:
So, in many ways what you’re saying is the vision is where the creative engine starts, and then you basically get the team to collaborate with you to sense check those into actual executable items.
Andy Skarda:
Correct. Stephen Covey talks a lot in his book, The Seven Habits of Highly Effective People, about the two creations that you first need to visualise. This applies to anything in the world. Somebody first had to visualise a wheel. There was a caveman; his name was Ooga Booga, and he was sitting looking at the sabretooth tiger that he just killed. But he was eight kilometres away from his cave. How’s he going to get 190 kilograms of tiger home? He sat and he thought about it, and then he came up with a round thing and a stick, and another round thing. When he could visualise it in his mind, then he knew what he needed to go and look for in order to get that sabretooth tiger home.
Sky Stephens:
Wow. Is that how it happened?
Andy Skarda:
That's exactly how it happened.
Sky Stephens:
I'm kidding.
Andy Skarda:
I was there.
Bosco Anthony:
I think we're going to have another podcast just on story time telling from Andy, just on all the creations of things. All right. So, how far ahead should builders be looking for when it comes to planning the goals?
Sky Stephens:
We've talked about the three-to-five-year goals in the strategic plans that we do. But we also have other sections in this one-page plan that we work through with our builders in our business planning workshops, that Andy just mentioned. These are something that our best members actually do every year.
Sky Stephens:
There's a section for your BHAG. This is your big hairy audacious goal. We did not invent this; this is straight from Jim Collins. Your big hairy audacious goal is not just your dream, this is your ultimate dream. Your BHAG is supposed to scare you a little bit. You don’t pluck a wild number out of the sky for how big you want the building company to be, what you want to sell it for, or anything like that. It doesn't need to be pie in the sky. It needs to be realistic, but far enough away that you can't achieve it in a few years or five years. Your big, hairy, audacious goal could be 10 years into the future. It could be 25 years into the future. It depends how old you are, really, and how far into the journey you actually are. But that's the furthest away you could look.
Sky Stephens:
But your BHAG is not your entire strategic plan, like you're doing all the numbers for every single year in the lead up to this 25-year goal. It's like the north star that's the direction you know, just so you can keep moving forward. But what's your three-to-five-year goal? We say three to five years because it’s not anywhere in the middle – you’ve got to commit, by the way. But we tend to just pick three years because it's a lot easier for people to picture. Three years into the future is far enough away that you can achieve some massive things, but it's close enough that it's around the corner.
Andy Skarda:
Yeah, without a doubt, you don't want to go too far. I think COVID has taught us that. None of us, three years ago, believed we would be in the situation we have been in for the last three years. So, the BHAG, as Sky has mentioned, is wonderful because it is taking you further out. But when it comes to actually now starting to work out numbers and tactics and so on, three years absolutely would be the longest horizon you'd be looking at.
Russ Stephens:
I was convinced Sky was going to say 500 years, in line with the Japanese.
Sky Stephens:
Yes, there was a line someone said to me, and it's something like, “The Japanese make 500-year business plans. What's stopping us from making a five-year plan?” I said, “That’s also very good point.”
Andy Skarda:
Wow.
Bosco Anthony:
That's interesting. When you think about planning, is there a difference between forecasting and planning? I've always been curious about this.
Russ Stephens:
Well, a forecast is a prediction of future events, and planning is an articulation of how a company intends to respond to that forecast. So, really, a business plan starts with the numbers, which is the forecast. But then you put meat on the bone by developing the strategies that are going to enable the business to reach and exceed that forecast. So, if you're looking to grow, then think about how. What strategies are you going to need to put into place? How are you going to scale up your lead generation? Will you need more resources to service this increased revenue? In which case, what's the recruitment process?
Russ Stephens:
Another good thing to look at when you're planning is the results of your SWOT analysis. So, that's analysis of your strengths, weaknesses, opportunities and threats. What gets uncovered there drives a lot of the planning, because obviously you want to cover off your weaknesses. At the same time you want to be taking advantage of the opportunities that you've identified.
Bosco Anthony:
And when you talk about strategies, are they the same as the tactics? Or are these two different things, when it comes to the strategies and tactics?
Russ Stephens:
They're two different things. So, a strategy to generate the leads is going to help you increase demand, which could be a strategy to increase profit margins or increase revenue. That strategy could be increased advertising on social media, for instance Facebook. But then you go into the actual tactics, and that's when you're getting granular. How are you actually going to achieve that? You're going to want a content marketing strategy combined with a lead generation strategy, and then the actual tactics of doing that. Really, the tactics are going to be done by your team, and that's high-level planning.
Andy Skarda:
That is really a great example of the putting the meat on the bone, because the strategies are the skeleton. Then the meat on the bone using Russ's example would be who exactly in the organisation, which human resource, is going to do what in order to create that content or run that ad campaign. It literally becomes putting the names and the places and the tools that are going to be used, and the software and that.
Russ Stephens:
Yeah. Which reminds me of a great saying to keep in mind, I think, when you're going through this process. And that is, “Who not how.”
Andy Skarda:
Yeah.
Russ Stephens:
So, you think in terms of “Who is going to do this,” not “How do I do it?”
Bosco Anthony:
You talked a little bit about workshops. Obviously, you work with builders on their strategic action plans, and you also just talked about SWOT analysis. Is there a reason why you encourage builders to do a SWOT analysis? And take me through the process of the quarterly strategic planning.
Andy Skarda:
It's the first step, because we always like to work on confirming where you are now. If you think about what Sky said earlier, we're thinking about where you want to end up. We're thinking about your BHAG. But we need to know where you are today so that we know where you are starting that journey. And the SWOT analysis does that for us. It sounds very corporate-y, but SWOT stands for strengths, weaknesses, opportunities and threats. We always break that down into the two fundamentals. Strengths and weaknesses are internal. They are things that you can physically control because they're part of your business. Opportunities and threats are external. You have no control over them, but they are going to affect your business one way or the other.
Andy Skarda:
Now strangely enough, what we find – and this happens a lot in our business planning workshops, which is often the first time that a coach gets to work with one of our builders – builders battle with strengths. Now, you would think that they would be the easiest one of the lot. But funnily enough, when we say to a builder, “Tell me about your weaknesses,” they can rattle those off very easily. But there's almost, I don't want to say it's a shyness, but often, that's where we have to prompt. We literally have to say to people, “You've been in business for how long?” And they say, “15 years.” And we say, “So that means you've got?” Then there's this deathly silence and the gears move, and eventually they get to experience and systems and those kinds of things.
Andy Skarda:
So, it starts there. What have you got? What have you got to work with now, in your favour? What's working against you now that you can control? So, there's strengths and weaknesses. And then when we go externally, you've now got to look at what you can use to help you succeed in your plan versus what's going to stop you achieving your plan.
Andy Skarda:
It's really one of those things where what we want builders to be is honest with themselves. Don't put your head in the sand. You've literally got to be really straightforward on, “What are we good at? What are we not good at? What do we know is going to hurt us?” In the current climate, you pretty much know that it’s price increases, lack of availability of trades, those kinds of things. Those are external threats that you can do very little about. But they could have a marked impact on your plan for the future, and therefore they must be taken into account before you get into the numbers.
Sky Stephens:
You know what the trick is though? You sit down and do your strategic business plan, and we keep calling them quarterly strategic plans because this is what they're called to us at APB. But just to put that into context, yes, you're planning out three years, one year, and then the next quarter. So, you’ve got your one-year plan and you're actually reviewing it each quarter. That's why it's quarterly strategic planning.
Sky Stephens:
But the trick is, when you kick off your quarterly strategic plan and you do the SWOT analysis that Andy was just talking through, do not look at last quarter’s SWOT, and this is where it gets so interesting. You’ve got to always go in with zero-based thinking. It’s a blank canvas. Ask yourself, “What are my building company’s strengths right now? What are our weaknesses right now?” Don’t be tainted by what they were.
Sky Stephens:
Always save these strategic plans that you do, because in one year and even two years, you’ll have four and then eight of these to look back on. It’s so fascinating to see what your weaknesses were, because you’ve turned them into strengths by now. Or the opportunities, because you’ve now capitalised on them. That’s so fascinating. Always save your plans. They’re so interesting.
Bosco Anthony:
When you think about this, it sounds like you’ve got to be really honest with yourself, as well, when you’re analysing this, because it’s a moment of reflection. I guess the question is, how honest do you want builders to be with their responses?
Andy Skarda:
Totally. Literally. Don’t pretend that something’s good when it’s not. Russ mentioned lead generation earlier. “I don’t have enough leads to get the sales that I need to generate the revenue and the margins that I need.“ Be brutally honest with yourself. No matter what else you’re good at, the thing that needs to be addressed most urgently is getting in more leads. Make sure you put that on the top of your list.
Sky Stephens:
There was a client who sat down in their business planning session, and they proceeded to say that one of their strengths was the systems and processes that they have in the company. But unfortunately, it was not a strength. Unfortunately, that is what they were here for. They needed to work on systems and processes because it was leading to unhappy clients, low margins and low team morale. But they were so adamant about putting that as a strength, it actually made the rest of the strategic plan completely worthless, because they were doing it based on rubbish information.
Sky Stephens:
You have to make these plans so you can share the direction with your team. You are the leader, and you then share it with your team so you can all row in the same direction. If they start seeing that and they know that's not true, the rest of your plan's rubbish. Why would they follow it? You don't know what you're talking about.
Bosco Anthony:
How long should businesses be planning sessions like this? And how long should it take typically, to go through this process?
Russ Stephens:
A lot of it can depend on the prep that you put in for the actual planning session. It can be done in half a day with prep. But really, I guess, when you add it all together, you're probably realistically committing a full day per quarter, and maybe even a bit longer when you're doing the annual plan and looking at the full year ahead. There's actually a business planning workshop that we run for builders online in very small groups. There are no more than four building companies attending these online planning workshops, and they go into a lot of depth, not just taking into account the numbers and what needs to be done on each individual company, but actually drilling into their marketing message and the whole lot. So, that in itself is a full day workshop, and there's a bit more work for the guys to do beforehand and after, as well.
Russ Stephens:
That's something that they really need to do every year. It's not set and forget. These workshops aren't something you just attend once and you've ticked a box. It really is something every professional building company needs to attend every year.
Russ Stephens:
So, there's a lot of prep that can go into these things in terms of developing some ideas so you come to a meeting prepared. But mainly, it's about the numbers. Because if you are tweaking and tweaking your numbers in terms of the forecast, then that can have a bit of an impact, and you find yourself working down the numbers and then revising because your resources need to change in line with the revenue.
Russ Stephens:
To make a bit of sense of that, when you are tweaking the numbers, you always start with the end in mind, which is the net profit. It doesn't really matter about how much revenue you want to generate in the next 12 months. How much net profit do you want to generate? That's what really matters. Revenue – that's just vanity. It's profit that's sanity. If you want to double the net profit in the next 12 months, then you've got a hard dollar figure there.
Russ Stephens:
So, think realistically in terms of your net profit margin. What did you do last year? What can you realistically get to in the 12 months ahead? Once you understand that, you can start building out your forecast in terms of the numbers, because you'll understand exactly what you need to do in terms of revenue to achieve that. You'll then understand what you need to have in place in terms of your fixed expenses.
Russ Stephens:
You can really start to build this out all the way through up into the lead indicators, into how many prelims and concepts you need to sign. How many opportunities have you got to create? How many marketing qualified leads have you got to generate? Then you know exactly how much you need to spend on advertising, because you know what it costs to acquire a marketing qualified lead. So, you simply multiply that by the number you need to generate. You've got your advertising budget. A quick slip down the forecast, check in your fixed expenses. Do you have that budgeted for?
Russ Stephens:
There's a little bit of fiddling and a large part of it can certainly be done beforehand.
Andy Skarda:
Sorry, just before you try and duck away Russ, there's a nugget, there's a gold nugget gleaming in the middle of that. Revenue is vanity. Profit is sanity. Is that what you said?
Russ Stephens:
Yeah, yeah. That was taught to me.
Andy Skarda:
That's a t-shirt, I'm sorry. Maybe even a tattoo. That's really cool.
Russ Stephens:
Before I got my first business, I remember going into a wholesaler. A very successful guy, he was. He used to strut around his warehouse with a big cigar coming out of his mouth. And I remember him always going on that revenue is vanity, profit is sanity. That's how he justified having a smaller business than one of his competitors; he always reckoned that he had the better business.
Andy Skarda:
I worked with a client recently, in the last couple of weeks, where we looked at the impact of increasing his margin versus the impact of increasing his revenue. The bottom line was, you can actually achieve double the outcome with half the work if you put the focus in the right place.
Russ Stephens:
This is the fun bit that Sky was talking about, I think.
Andy Skarda:
Yeah.
Russ Stephens:
Because this is fun, especially if you love numbers, doing those little ‘what if’ scenarios. For example, “Well maybe instead of 6% net profit, how about if we could get to 6.5% net? What would that do?” Because what you're doing is dropping down the revenue that you’ve got to achieve now. Yeah, it's beyond exciting, this time.
Andy Skarda:
I think if there's anybody out there listening to this who isn't a numbers person, that's also okay. Because what we're really saying is, there will be somebody in your team who is. You've got a bookkeeper. You've got an accountant. If you can get to the place of knowing what you want, you can then go to part B, if you like, of your plan and then bring those specialists in to help you. When you say to somebody, “I want X out of the business,” they'll be able to help you unravel the number side of it.
Russ Stephens:
I think a lot of the time, we hear from some builders that they think maybe they're not good with numbers, but really, they are a lot better with numbers than they realise. Especially as every builder is all across their estimates. They're doing some quite complex estimating. If they can do that, they can really do this. This is quite simple by comparison, to be honest.
Andy Skarda:
We've mentioned it a couple of times: if there are members listening and you haven't yet done a business planning workshop, chat to your member success coach because we run them pretty much once a week, every week somewhere in the world. As Russ mentioned, we limit them to four builders per group, maximum. We always try to make sure the people are similar and are on the same process. Literally, an executive business coach will walk you through the process step-by-step. Get your first one done that way, and once you've been through it, once a year will be enough to keep the process going.
Sky Stephens:
That's a good point actually. Because if you've never done one of these before, what better way than to have an executive coach guide you through it? If you have done them before, this is where so many builders get so much value. If you do your planning quite regularly and you do these every year, what better opportunity than to have a third party review it and challenge you on every one of your goals? Think bigger. Why this? Why that? Is it realistic? Is it possible? Who's going to do it? That's so valuable.
Andy Skarda:
The big thing there, Sky, is do it. One of the sad things we see so often is some people are really good at planning, and they end up with their target indicator of, “Ready, aim, aim, aim, aim, aim...” They never pull the trigger. So, doing it even once a year with a coach puts you in a place where the coach will say to you, “All right, so here was last year's plan. How much of this did you get done?” And that could then show you some areas that need some work.
Sky Stephens:
Gosh, you've reminded me of one of my favourite books: Ready, Fire, Aim. Forget the “Aim, aim, aim.” Ready, fire, aim, because you're already running the company.
Andy Skarda:
Exactly.
Sky Stephens:
You've already got some plans in your head and this is the opportunity to step back, and now you can re-aim. I love it.
Bosco Anthony:
I've got a question here. This has been hitting my mind because you've talked a lot about aiming higher and being aggressive and being competitive with your goals, as well. This is a hard question to ask, but do builders suffer with imposter syndrome? Do they have this glass ceiling typically that they have to break, in your experience? Obviously, you are all surrounded by so many builders out there. But is that something that your coaches have to change the mindset of?
Andy Skarda:
Emphatically yes. I think I've shared on a previous episode; if I have, forgive me, but we've just had a recent wonderful experience of a client who joined the Private Mentoring program in absolute disbelief. He said, “What you guys are telling me is possible is completely impossible. You've been smoking something exotic. You need to stop it, but I'm prepared to give it a go.”
Russ Stephens:
“Just to prove you wrong.”
Andy Skarda:
Yeah. “Just to prove that it's impossible, I'll show you.” Four months later, he literally has achieved every one of those numbers that he thought was impossible. So, absolutely there's a lot of mindset in this. I think Henry Ford said, “If you believe you can't or you believe you can, you're right.”
Sky Stephens:
That's an extremely good point. Because that client who said, “I'm going to prove to you that it can't be done,” is actually quite lucky that he achieved it because it's very difficult if you go in with the mindset that you can't do that. So, there was that little glimmer of belief, clearly. I love it.
Bosco Anthony:
We've recently talked about the different levels in previous episodes and some of the things that you incorporate through these levels. Can the levels be incorporated into the planning, as far as aiming for the next level? Or is there parallel mesh between the levels and then also part of the planning when your members work with your coaches?
Andy Skarda:
Well, I think we mentioned in that episode the fact that the levels are designed to help a builder get to what we call professional status, in which case, everything that would come up in a strategic plan will be affected by one of those levels. So, absolutely. The levels wouldn't necessarily be incorporated into the strategic plan, although we do have some builders who say to us in the process, “I want to move from level four to level five in the next year.” In which case we'll help them make that one of the rocks that I mentioned earlier, and we'll make that a particular focus to get to whatever that next category is over the 12-month period.
Andy Skarda:
But the beauty of those levels, Bosco, let's not forget, is that they all have a practical outworking. They're either focused on making the business more efficient or making the business more profitable, which is the fundamental reason for doing a strategic plan in the first place. So, it dovetails very nicely in terms of combining the two.
Bosco Anthony:
For the builders listening out there, how can they best plan their planning sessions? Are there any best practices or golden gems as far as where to do it and how to do it?
Sky Stephens:
At the end of the day, it's probably one of the first things to get bumped when you're busy.
Bosco Anthony:
Interesting.
Sky Stephens:
The second Russ says, “Half a day to a full day,” initially, when we talk to builders who have never done a business plan before, the colour goes out of their faces. They're as white as a sheet, because they think, “I can't afford to not do anything for one whole day.” But we'd probably argue and challenge, “You can't afford not to.” Especially if you're in a situation where you think you can't afford to take a whole day “off.” That’s in quotation marks because you're not; you're working on the company. If you think you can't afford to do that, you need it more than anyone. That's the same with any kind of coaching, let's be honest. But especially to take the time out of the company to plan.
Sky Stephens:
That's going to be the key. You need to put it in your calendar in advance. You need to plan for your planning session. We know that sounds ironic, but put it in your calendar. Invite whoever else is going to be there. They need to be the important decision makers, the leaders of the company. Typically, let's be honest, for builders listening to this podcast, it's going to be you as the owner of the company and your other half, if they're running the company with you. Maybe your business partner, maybe your two business partners. But it's just going to be you guys doing this planning session.
Sky Stephens:
The best thing you can do is to put it in your calendars. It's in there in advance so it's blocked out. Don't squeeze meetings in between before or after. Leave it so it's that whole day. Set the agenda, have a proper structure. Work to a plan. This is where our members have an advantage. We've got a whole action plan that they get to move through.
Sky Stephens:
Probably the best tip we could give you is actually go offsite. Actually leave your offices, leave your premises. You can do it at home, but if you have kids there, don't do it there. Go somewhere else where you're not going to be interrupted or disturbed in any way. Because if you treat it as one of the most important things for your business, it will be one of the most important things for your business and your building company.
Sky Stephens:
So, go offsite. If that's just not possible for whatever reason or excuse you end up giving, whatever room or boardroom in your offices where you do end up doing it, put a “Do Not Disturb” sign on there. If you do go offsite, let your team know that you're away and it's “Do Not Disturb.” You shouldn't be called unless the world is burning down. You need to be that clear so that you're not fielding calls and getting interrupted. It's so important. It needs your full attention, your full concentration, so you can make that plan.
Sky Stephens:
It's actually why it takes so long. It's what Russ and Andy were talking about just before. You have your dream. You need to put into detail. What does it take? What do you need to do? And then what Russ was mentioning before with the forecast, you're having that dance. You're going back and forth. “Is it realistic? Do I need to change this number?” That's why it takes some time. If you get interruptions, that concentration is broken, so it's not going to work out so well. So, plan to plan.
Bosco Anthony:
I've got a question about backup plans. Should we have a backup plan in this world where we're living through with so much uncertainty, as well? So, we've talked about how you can plan budgets, how you can forecast. A lot of these things can come from these business plans, as well. But in a world of uncertainty, should we factor in the uncertainty?
Andy Skarda:
Well, it's part of why SWOT is not SWO. It's part of why it's got the T on the end, because you need to take a realistic look at threats. That's a practical thing that we look at. One of the things that amazes some people when I run a SWOT analysis with them at the moment, and my prophecies are starting to come true, is I'll put low interest rates as an opportunity and a threat, simply because I'm looking at the fact that if they're low now, where are they going to go in the next year or three years? It's having a healthy awareness of the things that could stop you achieving what it is that you're planning.
Sky Stephens:
I think also to chime in on that one, a professional building company is stable enough that it takes care of its own plan B. So, in our episode about the Professional Builder Levels, when we talked about that level, I think it's level eight of the Professional Builder Levels, about having at least three months of your fixed expenses as working capital, but the goal is to get to 12. There's your plan B. You're taking care of yourself. It's also another reason that we have our members get booked out 12 to 18 months in advance. Then you are taken care of. You're not running from pillar to post. You don't have to be so reactive to anything that could happen.
Russ Stephens:
I think it's important to plan for success, but to budget for failure. I think if you can always do your planning with that in mind, make sure you've got the budget numbers that can deal with not actually hitting those; that optimism.
Andy Skarda:
And not only that. As a concept, we are always conservative on revenue and heavy on expenditure. That's just a fundamental process that we apply to this sort of thing. So again, there's no rose-tinted spectacles in this. This is gritty. With this kind of discussion, some people can look at this and say, “This is too corporate for me.” No, it's not too corporate for you. It's been stolen to some degree in the corporate world, but for any business that wants to be growing and prospering, this is an absolute necessity.
Andy Skarda:
Sky was saying it's the first thing that gets bumped. I was on a mastermind session recently with probably 50 of our top builders, and I asked them this simple question. Would you go onto one of your client's sites and renovate or extend their home without a set of plans? There was a global gasp as the air left the room. “No. How would we? We'd never think of doing that.” Well, why would you do that with your business then? Because that's essentially what you're doing. Every year that you want to grow, you're extending your business, aren't you? Now, if you wouldn't build a home for a client without a plan, why would you consider extending your business without a plan?
Russ Stephens:
There's a great quote, isn't there? Abraham Lincoln is quoted is saying, “If you give me six hours to chop down a tree, I'll spend the first four sharpening the axe.” I think that really is a great thing to keep in mind with business planning. That's pretty much what you're doing; you're sharpening the axe before you start an execution. We can all think we're so busy, and all of a sudden, we think we're better off just doing the work rather than sitting down talking about it. But no, that time you spend preparing, planning, talking about it, that will come back to you in reams.
Bosco Anthony:
Speaking of the tools, are there any resources that our listeners can get to potentially help customise their own planning in the future, as well?
Andy Skarda:
Tons. As usual, I think you've stolen Sky’s thunder again. I heard you do this on an episode recently, and I'm going to rebuke you publicly for it now. You've stolen Sky's ‘Netflix for Builders’ analogy, which is the reality. We refer to our training portal as that. But there's in-depth training in there, and Russ regularly and constantly is putting out articles on how to do this. So, our resource page, our website, would be a good place to start. You know me, I'm the barefaced one out of the trio. I think the simplest thing is to sign up for a business planning workshop, become a member, and let's walk you through the process first so we can show you how to do it properly.
Sky Stephens:
Always direct these questions to Andy, Bosco. He's always selling for us.
Bosco Anthony:
All right. Well, it's been a pleasure talking to you guys, as always. Any final words of wisdom for our listeners out there for planning?
Andy Skarda:
Just do it. Nike.
Bosco Anthony:
Just do it.
Sky Stephens:
That's exactly what I was going to say. Just do it. Get it done.
Bosco Anthony:
All right. Well, thank you so much for your time and energy today. As always, it’s been a pleasure talking to you again.
Andy Skarda:
Thank you. Thanks, Bosco.
Sky Stephens:
Thanks, Bosco.
Russ Stephens:
Cheers, Bosco.
Bosco Anthony:
Thank you for listening. Remember to subscribe to Professional Builders Secrets on your favourite podcast platform and leave a review. To learn more about how the systems at APB can help you grow your building company, visit associationofprofessionalbuilders.com. See you next time.