Raking Leaves vs. Annual Planning

Getting those pesky leaves before snowfall.

It’s November. The Midwestern Iowa leaves feature Technicolor rainbows of colors; bright red, deep orange, a thousand shades of yellow. A bit of warmth lingers, but Thanksgiving, December, and the Holiday season make this time of year go by quickly. Two painful realities of the season loom in the distance - yard cleanup and annual planning. 

As I jot down these few words, I feel the approaching pain of a future Sunday afternoon manhandling a rake around the property.  Some pay a neighborhood teenager to handle the raking. But it’s hard to find an $8.00 an hour surrogate for End of Year Planning. Planning needn’t be the dreaded task hanging around the corner. Join me as we remove the pain out of the process.

Start early. Many of us don’t dig into the task of Year End Planning until the last minute. A few of us dread the seemingly gigantic nature of the job so much, the procrastination pushes us into next the year. I know people who move paper clip sorting to the front and center in order to excuse themselves from the dreaded details of planning. 





Break planning into smaller bit-sized (and delegable) pieces. Here are a few bite-sized bits of the annual plan:
• Inside Sales/Customer Service
• Marketing/Events
• Non-Selling Expenses
• Demo/Equipment
• Warehouse/Delivery
• Employee Benefits
• Employee Training 

Think, is there a lead person in the Inside Sales Department who might provide you with a rough plan for improving the level of customer service? Could a delivery driver provide feedback on how logistics might be streamlined? Why guess, why assume the burden of everything? Can your marketing person provide insight (cost and projected dates) on desired events? Delegate the gathering of information.
Your accounting department can provide you with a list of expenses for things like rent, utilities, phones, computer lines, taxes and insurances. Push things a step further, ask for best ideas of escalations for the coming year. While nobody has a totally reliable crystal ball, they can give you strong estimates for the future.

Provide your teams with a common format. Have all cost oriented information provided using the same breakdowns as your monthly financials. Use a spreadsheet which can be easily be combined into a final document. 

Evaluate your team – strengths, weaknesses and areas for improvement. Managers and supervisors with direct reports need to take a physical inventory of our most precious commodity – people. The plan should include: evaluations, planned compensation adjustments, training needs and overall skills rating.

Sales Forecasting is the big kahuna of planning. For distributors developing a solid plan for future sales and gross margin is the most critically important step of planning. We recommend using what we call the Who, What, Why approach to forecasting. Here is a short synopsis:
This plan is specific and manageable throughout the year and requires only a minimum of effort to set in place. Here is a simple breakdown:

1. Salespeople are provided with their customer sales for the previous year broken into product categories.

2. Salespeople review each account (who) and estimate future growth or shrinkage (what) by product category. As they review the numbers they answer the question of why this number will grow or shrink – things like one time projects, new products specified, competitive issues and the customer’s own growth are considered.

3. The numbers are tallied by salesperson and combined into

the final plan.

4. Management reviews and compiles the numbers with their salespeople. Many sales guys prescribe to the old tenant of “Sandbagger or Loser” and submit dismally low projections. This must be addressed on an individual basis. The process allows for coaching, mentoring and managing, but that’s another article.

Providing each salesperson with the same formatted spreadsheet and instructions for compiling the date makes the whole procedure easier on management. And, in our experience, a salesperson with the numbers and accounts already laid out can provide pretty good information in just a couple of hours. 

Final words
Would you invest in a business that had no projections, forecast or operating plan for the coming year? Why then do so many distributors simply glance over the whole concept of building an annual plan? 

If you have a planning process, get started early, involve

others and make yours the best ever. 

If you don’t have a process, allow me to recommend a short easy to follow workbook: The Industrial Distributor Annual Planning Workbook. It’s on Amazon here.

We also offer more personalized assistance and one on one training calls.  Email today and let us put together a winning plan for your team!  

Believer, Skeptic or Psychoplanner, Part 2

Part II – Planning Must-Haves


Every step of the plan has a due date - when we say we will get something done in the future, the future rarely happens in our lifetimes. However, when we say we will get it accomplished by 3rd quarter and set milestones for the January, March, May and August, results take place.

Every step of the plan has a single person responsible for its completion – committees rarely get anything done unless the chairperson takes on the responsibility. The same holds true with departments, groups and other work teams; somebody needs to be responsible for shepherding the results. This doesn’t mean they do all the work, but they must hold others to the course.

Plans must be documented and archived – when plans aren’t written and documented they get lost in the shuffle. Employees forget their responsibilities. Later on, disputes arise as to the actual results expected and commitments made.

Plans must be reviewed – any plan without periodic review is a waste of time. Review is easy when the plan is documented and individuals are held accountable for their implementation. Further, in companies ramping up their planning skills, it takes a couple of reviews before employees believe that planning is serious and real.

Not every plan works – some plans just plain doesn’t work. Good managers and their companies take the time to understand what changed, what mistakes were made, and which assumptions proved to be incorrect. This improves future planning.

Don’t confuse lack of execution with a poor plan – many times plans don’t work because somebody failed to follow through on their commitments, mishandled an important step or didn’t have the personal horsepower to drive things forward. Without execution, even the best plans fall short of the mark.

There must be consequences for lack of performance – some people respond to plans in a better way than others. In every company we have dealt with, we have discovered a few who did not take the planning process seriously. Sometimes these poor performers produce a respectable result. In their own mind, their results prove planning is a wasted effort. We believe differently. Periodic review and individual responsibility soon flushes out poor planners. Be prepared to deal with these individuals.

There is no generic best plan – beware of those who tell you their plan is the best. The right plan is based on your company, the skillsets of employees, long term culture and business climate. Your plan must be tailored to your situation. This doesn’t mean you can’t model your plan around a successful plan of another company. Instead, it means your plan must be tailored.

Expect (demand) planning improvement – one of the most rewarding experiences comes years after an active planning process has been put into place. As the team develops planning skills, activities that once took years can be accomplished in months. This accelerates the growth of your business.

Bring in outside help – this may sound just a wee bit self-serving but ask yourself these questions: Does any of this sound like rocket science? Why aren’t we better in our planning? An outside resource helps you anticipate the bumps bruise and roadblocks along the way.

Anticipate pushback - as you begin adding discipline to your planning process expect pushback. The most common phrases heard in the trenches of wholesale distribution sound remarkably close to these. “I’m too busy to plan right now.” “I already have a plan it’s just not designed in a formal way.” And the omnipresent favorite, “Listen, do you want me out selling or sitting in the office planning?”

This isn’t about strategic planning
Let’s not get this confused with some kind of elaborate strategic planning session. This type of activity could best be considered tactical planning. Applying planning to some of the critical aspects of our business to accelerate the flow of results is paramount to success in our world today. Planning helps prioritize important tasks in a world full of distractions.


Next week well get your creative juices flowing with some Planning Topics for Distributors.  Until then, check out our planning tools on Amazon.

Happy New Year

It’s a time for reminiscing

The big Times Square Ball is about to fall. 2014 slowly shuffles down Memory Lane; and 2015 boldly marches forward. The ghost of Dick Clark’s New Years Rockin' Eve shows past flash through the subconscious of America. TV pundits scour their previous 364 shows for memorable moments. Celebs step onto the red carpet and captivate us with half backed renditions of personal growth. Culture dictates this as the time of year for quiet reflection and forward thinking resolution.

Taking momentary advantage of this space in time, let’s reflect:

What new bit of technology did we discover in 2014?
I personally discovered the power of the mobile app. Mid-year I noticed a young salesperson pull out their tablet and walk a customer through the selection of a complex industrial sensor. With the assistance of the app, this relative neophyte seller displayed the product/application skill of a seasoned veteran. Get ready, this one will impact our world. This category could go on for a dozen pages.

What part of your customer’s world changed in 2014?
With all the pseudo-crisis activities blasting out on distributor news sites, scare tactic tweets and LinkedIn propaganda efforts, it’s easy to focus on what’s going on in our world. But isn’t it all about the customer? Here are a few points to ponder. Customers dependent on water are experiencing a drought. Companies relying on engineering expertise can’t find enough talent. Massively fluctuating oil prices give petroleum related companies unbelievable heartburn. How tuned into these issues are you?

Where you really selling solutions in 2014?
I recently read an article stating 70%+ of all distributors claim to be solution sellers. At the same time, experience dictates most distributor salespeople struggle to keep up with simple product knowledge. Most fail to understand customer pain points in a meaningful way. Think about orders won and orders lost. Were you selling, really selling solutions?

What value did you provide to your own organization in 2014?
Most readers will quickly point out increases in sales and gross margin generated. Great stuff. For most of the distributors reading, anything greater than an 8% growth number probably indicates you outgrew the market. But, let’s move deeper. How did you produce greater profitability? Did you do something that sets the stage strategically for coming years? How did your work increase the stock value of your company?

What do you wish you could have accomplished in 2014?
Don’t be shy. We all have at least one wish. I wish I could have finished my new book on building account based strategic plans. You have a few of these as well. Which were strategically important? What lessons might have been learned?

Let’s shift our focus from the past to the future. Looking ahead….

Why will it be easier and better to be your customer in 2015?
Pushing the old adage “What have you done for me lately?” forward, let’s think. What strategic service, product offering, technology tool or other offering will you provide your customer next year? Chances are more of the same doesn’t count. Further, putting together this competition killer of a plan will take some time. Wouldn’t now be a good time to start?

What will you do to make your competitor’s life more difficult in 2015?
Let’s assume you have some really difficult to duplicate competitive advantages. Your competitors fear you. Resting on last year’s advantage is not a good strategy. What strategic plans, investments, activities and positioning will be needed to make competing with you harder in 2015 than today?

What really important stuff should you accomplish in 2015?
I have every reason to believe 2015 will be an action filled year. Business is set to be brisk. Our customers will reward us with orders. Urgent crisis will come by the dozens. We must remain focused or meaningful advantage will slip through our fingers. The answers to our questions at the end of 2015 will not shine as brightly as they might have.



Before we go…
If you are not through planning for the New Year, I suggest you get started. Our Distributor’s Annual Planning workbook contains lots of tips, tricks and some of the right stuff to get your planning started. It is available here. 

We also have some other resources available electronically. They can be easily downloaded here.

Happy New Year

Why Do Salespeople Need an Annual Plan?

I’m a Salesperson, for crying out loud, why do I need an Annual Plan?

Some will do just about anything before planning.
It takes more than just adding it to the top of your "do do" list.

Let me talk directly to my friends who fill the critically important role of Distributor Sales.

First, I consider myself to be a member of your brotherhood.  I know it’s a tough job.  Day after day, you load in to your vehicle, had out to face down angry customers, smart-alecky purchasing guys, and unsavory reps from vendors.  You trudge through rain, sleep, snow and traffic that would wilt the heartiest of letter carriers.  If no one has said it recently, thanks for what you do. 

Salespeople are the backbone of the Distribution Industry.  Now don’t you feel better?  But here comes the part where I explain precisely why you’ve got to make time for something many find distasteful.  Bear with me… I promise it will only take a moment.

Regardless of what you think, Annual Planning isn’t just for the guys up in corner offices.  Management needs to plan for financial ups and downs.  They need to worry about managing cash flow, maintaining the right inventory, measuring staff needs and budgeting for the coming year.  And, no doubt you will be asked to share in the fun.  Most of you will be asked to assist with sales projects.  Some of you will be assigned to being part of annual physical inventories.  A few might even be handed a paint brush as part of an end of effort to spruce up the office.  But there’s more for a salesperson to think about. 

Customers aren’t forever

Reviewing many distributors in a whole lot of industries, we’ve learned customers aren’t forever.  Typically, you can count on losing 10% of your “base” business every year to things like plant closings, mergers and acquisition activity, economic shifts and changing needs.  Simply stated, in order to stay even, you have to grow business by 10 percent.

A good annual plan would include evaluating customers on your list who may be on the decline.  Understanding where this loss will come from will direct your thoughts on call frequency and use of your time.

At the same time, determine which accounts are poised for growth.  Sometimes this has nothing to do with you.  If your customer has an expansion pending, your numbers may improve even without your special efforts.  But, working to increase your presence at a growing account pays larger dividends to your sales number.

Special pricing and supply contracts

Special pricing agreements have grown in importance in distribution.  In some lines of trade (like the Electrical and Automation business) they have literally exploded in use.  We tend to create them and forget them.  An annual plan would include reviewing the agreements for inconsistencies. 

Here’s how it works, a customer indicates they are going to buy hundreds widgets for their new project.  You provide them with a pricing agreement but sales of their new machine never took off.  But, when they buy a single part, they get the special price.  This fact cuts into your commission check and sets the wrong kind of expectation for the future.

A good plan includes candid conversations about raising the price to a more acceptable level.  While this may not be comfortable, we have discovered distributors who present massive price increases (6+ percent) often irritate the customer.  You can always lower the price later if and when their quantities grow. 

Pushing the envelope further, do you have any accounts where a special price agreement might give what one client calls “the new exclusive”?  Formulating special pricing agreements, locks out competitive distributors who handle the same product lines.
Click here for a brief tutorial on special pricing agreements

Personal Positioning with Supply Partners

We all have them; friends and allies who sometimes can make our job a bit easier.  They tip you off to opportunities.  They give you insider information.  They allow you to make more money for yourself and for your company.  And, sometimes they are easy to overlook.

Now is the time to plan a meeting with each of these people to talk about their goals and plans for the next year.  Chances are any manufacturer’s salespeople need extra details to feed back to their headquarters group.  Investing in a planning meeting will strengthen your relationship and create future opportunities.

Planning for information storage and retrieval

A lot has happened in the world of distributor data.  CRM systems spring up everywhere.  New ERP operating systems are being sold daily.  New phone apps, smart phones, tablets and internet availability nearly everywhere make it hard to keep up with things. 

In some instances we sales types have been left with more options, but never a clear cut path to bringing all the data together in the way we can use it.

I recommend spending some time thinking about what customer information you need on a daily basis.   We could do it just about any time, but end of year is a great time to plan and begin your implementation.  What information?  How will you add to it?  Where will you keep it?  What’s important for you versus requested/required by management?

Calculate the Gross Margin potential per call

Plan by understanding the gross margin potential required attain your 2014 goals.  Selling is an emotional endeavor.  We all have our favorite customers.  They appreciate the work we do, they greet us warmly and make the people side of the job pleasant.  But, are they big enough or likely enough to warrant our time? 

I have a spreadsheet used to calculate the gross margin potential for sales calls.  Shoot me an email; I will share it with you.

There’s more but….Lot’s more…

This message might run for another couple thousand words, but nobody would read it.

Let me sign off with a list of topics you need to think about:

·       Sales Skills – What are you doing differently today than five years ago?

·       Product Training – What are your strengths and weaknesses?

·       Specialists – Are you getting the full bang for the buck from the ones you work with?

And my favorite

Vacation, relaxation and play – Work hard, play hard.  Have you pondered loading the gang into the old family trickster and hitting the road for Iowa?  If your kids haven’t seen the sun shining over 13.7 Million acres of corn, they may be missing out.

Don't forget about our planning special running through the end of December.  It's a great time to help yourself and the nerds on your team.
Yeah, you read that right!  

Get Excited, it's Time For...Annual Distributor Planning!

Annual Planning for Distributors

It’s November. The Midwestern Iowa leaves feature Technicolor rainbows of colors; bright red, deep orange, a thousand shades of yellow. A bit of warmth lingers, but Thanksgiving, December, and the Holiday season rapidly approach. Two painful realities of the season loom in the distance - yard cleanup and annual planning.

As I jot down these few words, I feel the approaching pain of a future Sunday afternoon manhandling a rake around the property. Some pay a neighborhood teenager to handle the raking. But it’s hard to find an $8.00 an hour surrogate for End of Year Planning. Planning needn’t be the dreaded task hanging around the corner. Join me as we remove the pain out of the process.

Start early. Many of us don’t dig into the task until the last minute. A few of us dread the seemingly gigantic nature of the job so much, we procrastinate into next the year. I know people who move paper clip sorting to the front and center in order to excuse themselves from the dreaded details of planning.




Break planning into smaller bit-sized (and delegable) pieces. Here are a few bite-sized bits of the annual plan:
• Inside Sales/Customer Service
• Marketing/Events
• Non-Selling Expenses
• Demo/Equipment
• Warehouse/Delivery
• Employee Benefits
• Employee Training

Think, is there a lead person in the Inside Sales Department who might provide you with a rough plan for improving the level of customer service? Could a delivery driver provide feedback on how logistics might be streamlined? Why guess, why assume the burden of everything? Can your marketing person provide insight (cost and projected dates) on desired events? Delegate the gathering of information.
Your accounting department can provide you with a list of expenses for things like rent, utilities, phones, computer lines, taxes and insurances. Push things a step further, ask for best ideas of escalations for the coming year. While nobody has a totally reliable crystal ball, they can give you strong estimates for the future.

Provide your teams with a common format. Have all cost oriented information provided using the same breakdowns as your monthly financials. Use a spreadsheet which can be easily be combined into a final document.

Photo courtesy of
www.keepcalm-o-matic.co.uk

Evaluate your team – strengths, weaknesses and areas for improvement. Managers and supervisors with direct reports need to take a physical inventory of our most precious commodity – people. The plan should include: evaluations, planned compensation adjustments, training needs and overall skills rating.

Sales Forecasting is the big kahuna of planning. For distributors developing a solid plan for future sales and gross margin is the most critically important step of planning. We recommend using what we call the Who, What, Why approach to forecasting. Here is a short synopsis:
This plan is specific and manageable throughout the year and requires only a minimum of effort to set in place. Here is a simple breakdown:

1. Salespeople are provided with their customer sales for the previous year broken into product categories.

2. Salespeople review each account (who) and estimate future growth or shrinkage (what) by product category. As they review the numbers they answer the question of why this number will grow or shrink – things like one time projects, new products specified, competitive issues and the customer’s own growth are considered.

3. The numbers are tallied by salesperson and combined into the final plan.

4. Management reviews and compiles the numbers with their salespeople. Many sales guys prescribe to the old tenant of “Sandbagger or Loser” and submit dismally low projections. This must be addressed on an individual basis. The process allows for coaching, mentoring and managing, but that’s another article.

Providing each salesperson with the same formatted spreadsheet and instructions for compiling the date makes the whole procedure easier on management. And, in our experience, a salesperson with the numbers and accounts already laid out can provide pretty good information in just a couple of hours.

Final words
Would you invest in a business that had no projections, forecast or operating plan for the coming year? Why then do so many distributors simply glance over the whole concept of building an annual plan?

If you have a planning process, get started early, involve others and make yours the best ever.

If you don’t have a process, allow me to recommend a short easy to follow workbook: The Industrial Distributor Annual Planning Workbook. It’s on Amazon here. 

And if you would like to really jump start your planning process, River Heights is offering special phone-based consulting during the month of November and December for only $300. It’s a one hour question and answer period with our “Fearless Leader” and Master Planner, Frank Hurtte. Here’s what you get:
• A copy of Frank’s workbook in printed format
• The workbook delivered in Word format (so you can share with everyone in your team.)
• A collection of distributor friendly planning forms and other documents developed by River Heights Consulting (why reinvent the wheel.)
• An hour long one-on-one coaching session with Frank Hurtte.

Drop us a line if you want more information: info@riverheightsconsulting.com
After all, annual planning is NOT just for Dinosaurs!