Fail to Plan, Plan to Fail
Learn the importance of having a solid strategic plan for your heavy-duty business.
Episode 345: It can be difficult to stop and make a plan when you are busy in the day-to-day tasks of running your business. However, without a good plan, your business might struggle to grow. Transforming your heavy-duty parts business is not just about adapting to market trends; it’s about mastering the art of strategic planning. Discipline in planning, as emphasized by Scott Boltz, Director of Consulting at the Heavy Duty Consulting Corporation, prevents the distraction of chasing shiny objects and aligns the business with its core goals, which is critical for long term success.
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Heavy Duty Consulting Corporation: Find out how many “fault codes” your heavy-duty parts business has. Meet with us today. Visit HeavyDutyConsulting.com
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Transcript of Episode
Jamie Irvine:
You are listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvin, and this is the place where we have conversations that empower heavy-duty people. Welcome to another episode of The Heavy Duty Parts Report.
We’re very happy to have you here. In this episode, we’re going to discuss the importance of having a strategic business plan when you are operating a heavy duty parts company. We’re going to share with you a lot of information that we experience at the Heavy Duty Consulting Corporation with our clients, the good, the bad, the ugly.
We’re going to get into all of that before we start our conversation with our guest today, I wanted to review with you some interesting information I found that really puts into perspective how many business owners actually operate with a business plan.
And I think this is so important because two of my favorite quotes is fail to plan, plan to fail, and the five Ps – proper planning prevents poor performance.
Now listen to this. A study of Harvard Business School alums that had started businesses discovered that no more than a third had a written detailed business plan. Put another way, only a minority of entrepreneurs, including even MBAs from a preeminent business school like Harvard Business School, started their ventures with a formal written business plan and then continued to operate their ventures with a formal written business plan.
Now, if even people who come from those preeminent schools don’t use a business plan, something that they were trained to do in their MBA, you can imagine that when we talk to people who are just as qualified in many ways to run a business but maybe don’t have an educational background like that.
Maybe they started off in heavy-duty, maybe their parents or grandparents started the business, they grew up in the business and now they’ve taken over.
It stands to reason that those individuals also often do not operate with a strategic business plan in place. If so many people do this, does that mean that not having a strategic business plan or operating without a business plan rather is okay?
Like if so many people don’t do it, even these people who are professionally trained don’t do it. Do we need to do it? Do we need to have a business plan? Is this just some sort of academic exercise that has no real intrinsic value when operating a business?
Is there no connection between business success and having a strategic business plan? That’s what we want to get into today. So to help you with that, I’d like to invite our Director of Consulting Services, Scott Boltz to the program. Scott, welcome back to The Heavy Duty Parts Report.
Scott Boltz:
Hey, Jamie, good to see you. How are you?
Jamie Irvine:
I’m doing well. I’m doing well. So we are talking about strategic business planning and I shared with the audience some statistics from a Harvard study of Harvard alums. I kind of started to talk a little bit about the realities of the people that operate businesses in heavy duty.
I think my first question for you is when we meet our clients at the Heavy Duty Consulting Corporation and we talk to them, our initial conversations often center around the business owners’ ambition, the goals they have, maybe the dream they have for their business, but when we meet them, what do we often find is missing?
Scott Boltz:
Well, it’s not just them, but it’s almost everyone. It is so rare to see an organization of people with a clear defined set of disciplines that they constrain upon themselves. And so that’s one of the key kind of topics that I think is going to be a theme throughout this conversation is discipline.
So often our clients are first generation or second generation, sometimes third generation, very successful people that have been able to over a period of time generate a business that’s gotten to a certain point and then it kind of plateaus and they say, we want to grow, or something like that, or it plateaus and then it is governed by the fluctuations of the market.
So if the market takes a downturn, so does their business, and because they have no discipline around what they’re doing, they’re only relying on the historical facts that have been true to get them to where they are. But it doesn’t mean that where they are is going to get them to where they want to go.
Jamie Irvine:
Yeah, I think what you’re describing, the way I see it is a very reactive approach to business. So something happens in the market or in the world and then they try to react to it. It’s always reaction as opposed to that proactive approach that is necessary to really drive to that next plateau and maybe one that they’ve not been able to reach.
Scott Boltz:
Indeed. And we ask some very simple questions, what is it that you want? How are you going to get there? Why do you do what you do?
And so it’s almost an unfair question because they haven’t sat down and written out the discipline of listing all those things in a way that they can create a uniform way of managing their business, inspiring their people, inspiring their customers, and also not going in places where they don’t need or want to go. So the business plan also prevents the shiny object problem.
Jamie Irvine:
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When I think about our most successful clients versus clients that have not succeeded in our program, let’s talk about clients that have not succeeded in our program. They often, not only are they reactive, but they often have an attitude of winging it.
It’s interesting to me because even in situations where we have the initial marketing, we have done, maybe I was on stage at a tech conference or a industry conference or they heard some of our marketing via the podcast or through some other medium, what’s interesting to me is in that initial discovery of us and our services, oftentimes when I look at the content that they’ve consumed, I have explicitly said that you can’t just wing it.
You can’t just get into the parts business by calling up some suppliers and buying some product and trying to sell it. I have gone through in sometimes I’ve gone through an entire hour of instruction on what the preconditions for success are in business and why you can’t just wing it anymore.
They hire us and yet somehow they want us to just hit the easy button for them and basically enable them to continue to wing it. That’s not the answer, is it?
Scott Boltz:
It’s not at all. And Jamie, you’re being very kind by saying, clients, we have only, I could count on one finger, maybe two fingers.
Jamie Irvine:
It’s definitely the minority of who we work with.
Scott Boltz:
Correct. Correct.
Jamie Irvine:
It has happened.
Scott Boltz:
It has happened. And again, discipline’s difficult to, especially self-imposed discipline is more difficult than anything else, right? It’s easy to go into a system that has a set of rules and you follow the rules. It’s much more difficult to apply a set of rules to yourself that takes discipline.
So I guess what I would say to that is that if you want to come into an industry where you currently play in the space, but you want to expand into other horizons beyond that, let’s say parts for instance or other things or even other adjacencies within service, then you have to know what you don’t know before you make any moves.
And you have to do it in such a way that the market will accept you because we don’t play in this space as a singularity. We’re an environment of people. We have an environment of customers, we have an environment of vendors, and even the vendors have vendors. And so we have to be able to structure ourselves in such a way that we’re going to be maximally effective and successful.
And if you don’t do that in advance before doing anything else, then you’re almost guaranteed for failure. And then you fall into another trap, which is the biases trap. I think the world’s a certain way despite what the world thinks, and we stop behaving in a way that the market would be acceptable to what we’re doing.
Jamie Irvine:
They’ve convinced themselves that what they don’t do doesn’t work.
Scott Boltz:
A man convinced against his will is of the same opinion still.
Jamie Irvine:
Yeah, we go over that quite a bit. So you’re right. The majority of our clients have been very successful operating in our program and adding this level of discipline to their business. And that’s why we do in many ways that’s why we do what we do, because our why is to help heavy-duty people thrive.
So we’ve worked very hard and we’re constantly updating and improving our systems to enable our clients to take this disciplined approach and to succeed with it. Let’s talk about some definitions here. So what we’re saying clearly is the solution to this problem of winging it or not taking a disciplined approach is to develop a strategic business plan that helps you to get out of that mode and get into a much more proactive mode.
So let’s talk about the purpose of developing the strategic business plan in the format that we recommend. And I want you to talk to me about how that kind of creates a funnel for information. Where does it start and where does it end? And then we’ll get into the application and how we use it.
Scott Boltz:
Indeed. Well, we follow a model that I first was trained on when I worked for a company owned by Bank Capital. Bank Capital has very little tolerance for any plan that is not well founded or well thought out. So they want to know anytime you say something, they want to know why and how, what’s it going to cost?
And there’s a waterfall effect of all the things that you need to consider in any business decision, especially one strategically. So we follow that methodology and that metric, and it’s also been governed and guided by a lot of our executive coaches that we currently work with. And so we start with the big macro idea.
So we start with why. So if a company cannot define and be able to explain and be able to articulate why they’re in business, then they’re not in business. I mean, they are technically speaking, but they cannot refine themselves.
So then there’s a core group of topics underneath that we need to define like core values is one thing. So here’s our why and then here’s our core values that support that why, and then here’s our mission.
And that’s a statement internally for everyone that works for our company and then even our vendors that need to fall into that mission. And then we get into the compelling value proposition. And what that is is the five to seven things that we tell customers at every level from the people that answer the phones, people that work at the counter to the technicians, to the outside salespeople. Everyone is singing from the same hymnal.
So that’s a discipline movement in that own funnel, but the funnel is much greater than that. Then we get into market analytics and we look at the entire economy as a whole in the space in which we play, and then we get into from there, especially in the trucking market, how freight is moving and what that heat map looks like.
And then we get into what we call Tam Sam Som, which is an understanding of the total market, the serviceable market, and the serviceable obtain market from there. So now we’re coming down the funnel.
Then we get into the current state of the business in that we describe what the business is now. And then another exercise we go into is to describe where we want to go. What does the future state of the business look like? And then the middle in that whole thing is the strategy.
So the bridge that goes from the current state to the future state is the strategy of the document. And once that’s all in place, you bolt on the PNL, the balance sheet, we understand our financials, and then we establish key performance indicators, and then we use all of that to guide the marketing to achieve those goals.
Jamie Irvine:
So when you put this together for a client and this work has all been done properly, what should you be able to do with that strategic business plan?
Scott Boltz:
It’s funny how useful it is, and what I mean by that is that first of all, it’s a communication device for you as a business leader to your team. So the first thing you should do when that document is complete is to present it to your entire internal team. That internal team now sees that you have a plan and they understand where you want to go, and they bolt that mission into their own personal missions in their specific jobs.
If you require financing, whether you’re talking to a bank or private equity or VC or something else, you can use that document in that place. So those people understand that you know what you’re doing, you have a plan and you have metrics to measure against.
And so it’s going to help in a financial perspective as well. And then thirdly, your vendors and your marketing partners. It’s a document that you can provide to them that says the same things that it says to the other people, but it’s used differently with their respects.
So they can then internalize your entire mission to their respective responsibilities and disciplines to your business to make it move forward. So basically it is a momentum multiplier that brings everybody in that touches your business and moves it in the same direction.
Jamie Irvine:
Scott, not only can you use it there, but there’s other stakeholders that you can use it with. So for example, we’ve had clients pitch this to their family because family members are interested in the business, especially family members like wives that rely on the business to provide them with a living for their children.
It’s been used with family members, for example, between one generation and the succession plan to the next. It’s been used at that end of the spectrum. You mentioned financial institutions, you mentioned also suppliers.
And that supplier one is so interesting because it’s not an obvious, but really if you are developing, let’s say from a service business and you’re moving into a parts and service business and you’re setting up a proper parts distribution business, when you use this with suppliers, they look at your plan and they go, yeah, I want to support this new distributor.
I can see now how what they’re going to do is actually going to help me with my business objectives. So it’s extremely valuable with suppliers. Another one is with customers.
You can actually use it with customers because you can say, look, I’m supplying you. Here’s where we’re going and here’s how we’re going to enhance our ability to help you and customers look at, now, you may not share every detail with suppliers and customers, but there’s definitely large components of this that can become very useful.
And what I’ve seen how this translates into more immediate success is sometimes our clients are like, wow, we spent, sometimes it can be weeks, other times it can be several months building out this plan and it feels like we’re not getting any forward momentum, but instead of just going out in the marketplace and just winging it and hoping for success.
When you do it that way, any success you have, you may not be able to replicate, and failures, you don’t necessarily understand why.
So in either case, that’s bad. But when you have this plan in place, what we’ve seen with our clients is one, they sit down and negotiate with suppliers, and suppliers have those initial meetings and they go, we’re in. You’re signed up. Let’s go.
On the flip side, we’ve seen it where we’ve taken the chairman of a board and CEOs of companies, of our clients, we’ve taken them into the field and we’ve gone out with their salespeople and we’ve walked customers through the why, the value proposition, the customer-centric policies and the commercial covenants that were put into the value proposition.
And so all of this time that we worked in the boardroom to develop all this, then the CEO or the chairman of the board gets to actually see in real time us go five for five, eight for eight multiple days in a row out in the field with customers where we sit down, we walk them through it all, and the customers go, check, check, check, check, check.
Yeah, I’d like to set up an account with you. I had like to move forward with this and start buying your product. It’s been phenomenal to see those things play out in real time after the discipline strategic business plan has been put in place.
So there’s just so many applications for this strategic business plan that go way beyond what most people think of when they think of the academic exercise of creating a formal written business plan. I want to talk to you about some of the things people do, even if they have a business plan, the pieces that are often missing. Scott, what’s a lever? Why is it important and how do you use it?
Scott Boltz:
That is a fantastic question. So it’s one of the things that few companies ever delve into. Normally what happens is there’s these grand ideas, we’re going to expand to another city, we’re going to go into another market, let’s say mobile maintenance or something like that. But there is no tangible description of an action that must be done.
There’s no understanding of what it’s going to cost, how long it’s going to take, who needs to be informed. There’s a ladder effect that is not comprehended, so it is just a grand idea and that’s it. So it sounds great, the boardroom and it sounds great amongst your executive leadership team.
And yes, we’re going to do this, and then we’re like, okay, let’s do it. And then you run into your first obstacle and everything dies. And at the next quarterly meeting or the next monthly meeting, whatever the frequency may be, they’re like, where are we at on this?
And they’re like, well, we kind of hit a brick wall and we’re working on it. And then it just kind of peters off. So what a lever truly is a tangible description of the initiatives that you’re going to do to go from your current state to your future state.
So if we do nothing and we ride inflation or the market wave, the business should do something like this. It’s going to be basically flat. But if we add in a service and if we add in a new vertical and if we add in a new product category, all those things should net a return. Great.
So then the lever process that we go through is to describe the lever, which I just did, but also talk about the criterion necessary to make it a reality. And what is reality? Reality is that it’s working and it’s generating revenue and that revenue is on top of the baseline that we’ve talked about within the system.
Jamie Irvine:
I also think that what I really like about the lever is the way that we walk people through establishing what things are going to cost, how long they’re going to take the resources around people that are going to be needed, the additional resources or things that will be needed to be successful.
And then looking at a reasonable expectation on return on investment. Because when you have a big objective like scaling a business to a certain level that the business has never hit before, you’re going to have five levers or more to get there.
How do you rank order those? How do you put those in the right order so that you can build one on the next and achieve success? And I think when I think of some of the reasons that our clients have struggled, one, they didn’t have the capital to support the goal.
Two, they didn’t have the right people sitting in the right seats. And even with our help, they struggled to recruit and bring in the right people. And three, sometimes there was a disconnect between their ambition and the reality both internally and more importantly externally.
And so without walking through all of those steps and putting those levers in place and rank ordering them, even with a strategic business plan, if you have that component that’s missing, you’re still winging it to some degree, you’re still not fully articulating everything that you need to in order to be successful.
Scott Boltz:
So I think one of the things you said really kind of keyed me off, which was the disconnect between reality and perception. So a business owner can have a great idea.
You could have, let’s say five great ideas and how do we rank order them was your question. And so the way that you rank order them is you work through our process and you map out all the requirements necessary to get them in place. What people are involved, the right people, how expensive are they?
Once you have all that in place, you must also understand how quickly it can be done. So I’d rather do something that has minimal investment and a great return first and push down something that is going to take a lot of time and a lot of capital investment and a lot of people to get done.
The way you rank order it is how soon to where I receive return and how great is that return? The problem that most business owners that don’t have the discipline behind their process in their levers is they go with what makes them feel better or what they think looks better to the outside
Jamie Irvine:
Or is exciting.
Scott Boltz:
Or exciting, yes or fun. And so we really look at the return on the investment and the speed in which that return arrives because that return could finance the other ones.
Jamie Irvine:
For anybody who’s listening that is a current client of ours that is enrolled in this program, I want you to know that based on our research, you now have elevated yourself into a very small minority of business leaders in this industry.
So that alone is going to give you a strategic advantage. So Scott, what happens that causes them to start to struggle even when they start off really strong with a real disciplined approach?
Scott Boltz:
Well, it’s kind of funny to see because discipline is difficult and it’s not difficult once, it’s difficult for the period of time that you’re going through the process. And so it’s fine to say, I’m willing to commit to this and we’re going to go through it and we’re going to be smart, we’re going to be good.
And then three weeks into it, you have to produce a document that actually requires time and effort and you also have a business to run. And so what happens is they’re more focused on running their business that day than running their business to the goals that they want to achieve.
And so there becomes a time responsibility and a time debt, let’s call it a debt. And that debt, if that debt becomes too big, it becomes too burdensome for them to continue forward and then they run out of gas.
And that’s usually how I see it happening. And our message to them is we go as fast as you do, do not lose the initiative required to get your business to where it should go, and we’ll work with you on that time flow.
And there are things that pop up and you lose employees and you gain employees, and this thing happens. And there’s all kinds of things that will try to blow up your ability to create a good strategy.
But if you’re disciplined and you can weather the storm and you come out the other side with something holistic that will guide not only yourselves but your team, your vendors, your customers and everyone else, and you’re winning.
Jamie Irvine:
And I often see too where it’s interesting, it’s not just problems that can derail the process we’ve had now in the last quarter, two clients have acquisition opportunities fall into their laps in the middle of this. That completely blew up three months’ worth of work.
And we had to adjust. And since we work in acquisitions and mergers with our partners like Notre Capital, we were able to help guide our clients through this. Actually, we’re actively doing that right now as we record this.
But it’s interesting because sometimes it’s success that derails the process, not just failure or struggle.
So on either end of the spectrum, there is going to always be a competition for your time, your energy, your resources, and really at the end of the day, what I see is our clients that are the most successful are the ones that are able to, one, maintain the discipline over an extended period of time, and two, delegate that down to people into their organization to help them produce what needs to be produced.
The ones who struggle with that or don’t have the ability to do that, then the responsibility continuously falls on their shoulders.
And one of the things in our consulting program that we do is after strategic business planning, after people and organization, sales and marketing and lead generation has been focused on, we look at operations, we look at the ability to systemize the business, and that’s the next iteration of disciplined business planning and execution.
So if you’re looking to get a quick fix, if you’re looking for us to come in and just hit the easy button for you, we’re not the right people to talk to, we’re not the right service for you.
But if you’re really ready to commit yourself and dedicate yourself to a disciplined approach, and if you’re willing to respect the truly honored position we get to hold, which is one of an accountability partner with you, and if you’re willing to do that over whatever period of time it takes to execute on your plan and get that plan in place and to win, and we’re definitely the right people for you if you work in the heavy duty industry.
So Scott, this has been a really great conversation. I’ve really enjoyed talking to you about this and sharing what’s been going on with our clients and what we’ve found to work and not work. I hope that the listeners, regardless of whether you become a client of ours or not, I hope you took something away from this conversation that you can use to help you be more successful in your business.
Our why is deeply centered on helping heavy-duty people thrive. So if that’s the case, we are very, very happy. If you need some additional help and you want to work with us and you think this program is for you, we’d really like to talk to you. Scott, in conclusion, what’s the one thing you want people to remember from what we’ve talked about today?
Scott Boltz:
I think it would be that regardless of the position that your business is in as an owner, whether it be an upstart or a second generation, or no matter where you are in the arc of your growth, if you’re operating without a plan, you’re not communicating to your team, to your vendors, your customers effectively.
And if you want to grow that business, you require a system in place that will create the discipline necessary for you to achieve your goals. We can definitely help you do that.
Jamie Irvine:
You’ve been listening to The Heavy Duty Parts Report. I’m your host, Jamie Irvine, and we’ve been speaking with Scott Boltz, Director of Consulting services at our parent company, the Heavy Duty Consulting Corporation. If you’d like to learn more about our services, head over to heavydutyconsulting.com. Links are in the show notes, and we’d love an opportunity for you to meet with either myself or Scott to talk about your specific situation.
So that brings us to a conclusion of this week’s episode. We still are running the promotion on our parts management training program. If you want to talk to us about that, head over to heavydutypartsreport.com/pmt. That stands for Parts Management training.
We’ve got just a couple spots left where you can have that 20% discount that we talked about when we launched the program. That whole promotion is coming to an end very quickly, so jump on that as soon as possible if you think that will be something that will work for your company and help your parts managers succeed.
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