Consider housing shortage tailwinds as you craft your business plans.
Thoughtful preparation fortifies your business for uncertainties that can’t be avoided. Start by evaluating—or re-evaluating—your long-term business goals. Whether you’re updating an existing business plan or rethinking long-term plans for yourself and your business, you’ll want to factor the drivers of housing market dynamics and conditions into your decisions.
Today’s tailwinds mean growth for many building products companies. Determining suitable expansion strategies and finding the capital you’ll need to grow will likely be top priorities. Ask yourself these questions:
- Will organic growth be the most effective approach given your market position, financials, and stage in the business lifecycle?
- Should you consider a potential merger or acquisition?
- What’s the best way to fund your growth? Traditional financing? Private equity partnership?
As a leader and owner, your goals should be front and center as you develop your plans. If you’re thinking of exiting the business within the next 10-15 years, how might the current tailwind affect those plans? Does the questionable outlook beyond the current ten-year growth window have you thinking of exiting sooner rather than later?
Whether you’re planning to expand or transition out, enhancing your business’s value should take precedence. That may mean concentrating on capital efficiency and balance sheet optimization to strengthen your business’s fundamentals. You’ll likely also be looking to capitalize on emerging business opportunities and maximize your business’s market value for when you do exit.
Have a clear vision for your exit.
Market dynamics may affect the exact timing of your exit, but you should shape what that transition looks like now. Bring your vision into clear focus. Doing so increases the likelihood of completing the transition on your terms; whether that happens in two years, ten years, or even twenty years down the road; you'll be better prepared by carefully considering your exit strategy.
As you map out your succession plan, think about the steps needed to put all the pieces in place, paying particular attention to company ownership and leadership, with these questions in mind:
- Is the next generation of your family prepared to take the reins? How will you ensure that the future leaders you’ve identified receive the training, mentoring, and leadership experience they’ll need to be ready to take over?
- Would you be better off seeking a strategic industry player or searching to attract private equity when looking for an external buyer? The answer hinges on your objectives—do you prefer a quick exit, or would you rather maintain limited involvement while keeping an ongoing equity stake in the business?
- Are key managers or employees interested in a negotiated sale? Company managers know your business, its customers, and its value—that makes them a winning option to continue what you’ve created. An employee stock ownership plan (ESOP) could be attractive if you have long-time, dedicated employees who would value owning a piece of the company.
While you have the best vision of where you want to take the business and what your exit should look like, it’s not the time to go it alone. Craft a multi-year plan aligned with macro housing trends. Keep the complexities of succession planning, business growth, market positioning, and executing major transactions in mind—it’s no simple task. You’ll want to lean on your business advisors and draw in professionals who can help you with the strategic implications and technical intricacies of the next steps for your business.