Business planning is an integral part of the Succession Planning process.  I was reminded of this when I read about a local lumber supply company closing its doors after 155 years of service.  Curious if this was now a common phenomenon for retail lumber yards, a quick internet search revealed five closing announcements since February.  All of them were family owned and, on average, been in business for 90+ years.  One common theme for these closing was competition from big-box national chains.

This is where a good Succession Plan comes into play.  A key aspect of Succession Planning looks at and tries to anticipate the future business and competitive environments.  After all, what good is a Succession Plan if the company you are handing down or trying to sell is shrinking or worse?

So what strategies could these companies have included in their business plans as they saw the rise of the national chains?  Here are some examples of how other lumber supply companies addressed this.

Targeting a niche marketHobby Hardwood Alabama targets “hobbyists, craftsmen and professionals” by selling locally grown, low-temperature-kiln-dried lumber for woodworkers looking for a product superior to the uniformly bland processed lumber sold by the national chains.

Expand Offerings to Meet Changing Needs:  Millard Lumber in Nebraska took on the motto “More than Lumber” and started manufacturing a number of products to meet the changing times including roof trusses, pre-manufactured wall sections and pre-hung doors.

Technological Advancements:  A trade journal noted how Millard Lumber is also using modern technology to manage their warehouse and track inventory.  Such advancements enhances customer service and results in higher margins.

Become a Destination:  Destination marketing is defined as “the process of communicating with potential visitors to influence their destination preference, intention to travel and ultimately their final destination and product choices.”  While usually associated with the travel industry,  Weed & Duryea Lumber turned itself into a destination in Connecticut with year-round educational workshops for DiYers, offering toys and fresh popcorn to attract children (and their parents) and creating a kitchen showroom where “contractors and designers … can go work with clients”.

One alternative of business planning within the Succession Planning process is to ensure revenues and profitability with the current business model continue increasing sufficiently to support future generations.  Another is building the business into an attractive sale or takeover target as Michigan’s LumberJack Building Centers, Inc.  did.  Either way, the well thought out Succession Plan incorporates a business plan to take the company into the future.

So now it is just a matter of setting aside the time to do the planning.  More about that next time.

What strategies are in your business plan to account for changing business and competitive environments?