Find a Path Out of the Recession

January 25, 2010
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Steve Harvey

I was deep in the woods wandering around among the tall hardwoods, underneath a lush canopy of greenery. Everything was so vibrant, so alive. It was as if I had walked into the sanctuary of the Earth.

I had been enjoying my time alone, but suddenly I realized it had to be getting time to leave. I looked at my surroundings and made a startling discovery. I didn’t know where I was.

I kept moving in what I thought was a logical direction but it seemed, the harder I tried, the more I found myself in an uncomfortably familiar place.

I had to stop and assess the situation. I had to make a plan.

As I am accustomed to in my business, I developed what I thought to be a clear and concise, measurable goal: GET OUT NOW! Find my vehicle in one hour and fifteen minutes.

My goal had all of the basic necessities. It was clear, concise and measurable. It was doable. Or was it?

The canopy was so thick I couldn’t get a sense of direction from the position of the sun. I didn’t have my GPS, or a compass. I had breath, mobility, and a strong motivation to live - and that was it. Taking into account the tools and information I had at my disposal, it was highly probable that there would be a search party looking for me by dawn.

Many of us go through a similar exercise every time we set out to establish our goals. We want more business, better profits, and less stress. We know that our goal has to be calculable, attainable and clearly defined.

For example, this is the basic one-year goal for our business: $10 million in service sales in 2010; minimum of 10 percent net profit; four weeks vacation per year. It meets the criteria for an admirable aspiration. It might be doable, for some. However, it is very lofty for the majority of HVAC service contractors across America.

Let’s try again.

Our first order of business is to establish a starting point. Let’s call our business Wandering Mechanical. We have been stuck at $5 million per year revenue, and we know we want to do better. We decide to make growth a big part of the goal and so, we have a pep rally with our staff. We are going to double our business, double our profits, and more than double our vacation time. “Everybody go sell,” we say. “Make money, and buy an RV, because this is going to happen!” So we all get busy, and the first quarter goes by.

Wait a minute! Have we been here before? I know I’ve seen this spot. What did we do wrong? We just made a circle in the woods.

GET REAL WITH GOAL SETTING

The vehicle is still out of reach, and darkness is coming. But, Wandering Mechanical had a great goal. It was clear and concise. We got everyone on board. What happened?

Most of you have seen the error in the above scenario. The goal was too much, too soon, and it was unreachable in a year. Even if we were to be able to attain it, growing that quickly would almost assuredly result in profit losses. We would have problems staying on top of that much work if it came in a windfall, and under those circumstances, we certainly couldn’t take more time off. What were we thinking?

We could take the same goal and lengthen the time period for achievement, but few of us can see that far ahead. Yearly goals are hard enough to perceive. We may be able to predict what the environment will be inside our company during the coming year, and we may even have a handle on external factors. But, we would have to be clairvoyant to be able to predict all of the long-term roadblocks to success. It is tomfoolery to go five or 10 years out - to run headlong into the woods without recognizing the incremental nature of the path.

But watch what happens when Wandering Mechanical sets some waypoint goals.

Last year: $5 million in sales, 6 percent profit, two weeks off.

2009: $5,750,000 in sales, 7 percent profit, two weeks and two days off.

2010: $6,612,500 in sales, 8 percent profit, two weeks and four days off.

2011: $7,604,375 in sales, 9 percent profit, three weeks and one day off.

2012: $8,745,375 in sales, 10 percent profit, three weeks and three days off.

2013: $10,011,826 in sales, 11 percent profit, four weeks off.

Over a five-year period, we’re looking at 15 percent growth per year. We gain a percentage point in profits and we add two days off to our schedule annually. All of a sudden the path is quite clear. The goal is now not so lofty, but absolutely doable. And we know where we are going every step of the way. Long term goals demand short term accomplishments to become a reality.

The National Bureau of Economic Research, a non-profit tracker of the economy, keeps a chronology of the beginnings and endings of U.S. recessions. The bureau says this recession began in December of 2007, but we didn’t actually realize we were wandering in the woods until much later, in 2008. We looked around, and nothing seemed familiar. Up until then, business was like an afternoon in the park.

All of a sudden, the sun started to set and we began to panic. Some of us looked to our long-term goals and took the opportunity to create an incremental path toward a successful outcome. We may have to make some waypoint adjustments - and the path may be a little longer than we expected - but we are definitely not lost.

Publication date: 01/25/2010

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