One of my core business beliefs is, “What you think reality is today can totally change in six months.” There has always been change in our industry, but the upheaval now is unmatched with any point in my lifetime. We live in a different world than we did a decade ago, and I think many are unprepared for what lies ahead.
I remember the arduous process of writing three- and five-year business plans when I was a young manager at Wickes Lumber. Today, with governmental uncertainty, shifting markets, online innovations, and continuous technological advances, it is arduous to write even a one-year realistic business plan.
However, as a business leader, you have no choice but to embrace change and hang on for the ride. In considering a five-year business plan for the industry today, here are some of the changes I believe we will face.
1. There will be fewer big box locations and hardware stores as online companies cut into sales for home repair items. Unless it is an emergency, customers will abandon store searches and opt for a point, click, and ship purchase. Weekend and same-day shipping will be the norm for most weekend warriors.
2. Employee headcounts will be fewer and investments in self-service systems will increase. Labor shortages and wage rates will force businesses to set up more efficient inventory and customer flows. DIY customers will also be DIY shoppers, with technology kiosks and self-service material handling.
3. Companies will be forced to educate their workforces. Internal training budgets will be considerably higher as companies commit to home-growing talent. Corporate training positions will be more prevalent as the continued labor shortage is exacerbated by emerging world markets, lack of technical training, and constraints on immigration.
4. Single-family housing starts will continue to be sluggish as the line between affordability and demand is crossed. Multifamily housing starts will improve as more families are forced into rentals. Overall housing starts will probably go through a period of recession and rebound moderately from current levels. Don’t expect a housing boom in the next five years.
5. The supply chain will become more fragmented. Free and open trade will not be the mantra, and that will do more harm to American consumers and workers than most expect. Higher building material prices will naturally slow sales. Foreign suppliers will focus more energy on emerging markets, which will force new business alliances, and heavy debt loads will force consolidation of wholesalers. Independent cooperatives will be needed more than at any time in the last 25 years.
6. The leading method to promote your business in five years will be social media. Successful companies will focus on hiring talent and developing programs that can generate original online content. Hiring a qualified marketing manager will be imperative for companies competing for online space.
7. Finally, companies that rely on China for products may have to find new trading partners as China changes from a business competitor to a world adversary. It would be foolish to ignore the huge Chinese military buildup, as history has too many examples of how diplomatic mistakes created military tensions.
Those are my assumptions for a five-year business plan today; however, they could totally change in six months. It’s a different world.
