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The facts support the case for the need for contractors to have a strategic plan. Clemson professor Dennis Bausman's research indicates that contractors with a strategic plan make 35 percent greater profit than those without one. In today's hypercompetitive marketplace, this is not a luxury, but a key to survival. So if you don't have one, you need to create one immediately.

However, even if you have a strategic plan, you might still be in trouble because it might not be relevant to current business conditions. In a survey of Construction Industry Roundtable members, 50 percent said that the construction industry model was either obsolete or required major changes. Ken Simonson, the AGC's chief economist, said that when the industry emerges from the recession, construction will be a different industry.

Unfortunately too many contractors believe they should wait until after the recession is over to worry about a strategic plan. Their excuse is they are just too busy trying to survive. This is a formula for disaster. In turbulent times it's more important than ever to understand what you must do because there is so little room for error.

Too many contractors have built-in excuses for why they don't need to develop a strategic plan.

The reality is without a plan, your business will flounder, and during hypercompetitive times, the exposure is greater. Of course, you can't describe the entire strategic planning process in a short report, but unless you address three critical questions, you are like a ship without a rudder. Those questions are as follows:

General Sun Tzu's philosophy expressed in his book, The Art of War, is to avoid war by outthinking the competition instead of attempting to outmuscle them. For those who think we are not in a war, what do you call a price war? It has casualties just like a shooting war. Unless you address the above three questions, you will be unable to create a superior strategy that consistently beats the competition. This will force you to fight a war over price.

Let's examine these three questions.

What services are we going to provide? Too often contractors simply chase any work that is available instead of asking what services they perform better than their competitors. It's a mistake to believe you have to only match your competitors' performance because when you do that, you will be forced to compete based on price, the only differentiator.

Who are our targeted clients? This relates to the first question because after you identify what you do better than your competitors, you then must identify the prospects or clients who place the high value on that differential. They will pay a premium for that value.

How can we beat or avoid the competition? This question is at the heart of any strategic plan because it represents how your company will offer the services that it does better than its competition to those prospects and clients who place a high value on that service. This allows you to avoid price wars because it enables you to shift the discussion to value.

During a recession the price wars become virtually lethal when some contractors start bidding work at below cost. However, there are other contractors that are taking work below your cost that are actually making a profit on the work because they have a competitive advantage and have lower costs. I've talked to several contractors this year who all complain that volume is down; then they smile and say, "But profit margins are up!" The reason is simple: they are focusing on the projects where they have an advantage instead of just chasing work.

Even more important, contractors that take this critical step, focus their businesses on what they do best, and find clients that appreciate that effort will see their businesses soar when the recession ends. Preplanning a project has been identified as one of the best way to improve project performance and profitability.

Contractors that don't preplan waste a lot of time and money. Strategic planning is merely the preplanning process for your company. While things may be slow now, it is the time to plan for that turnaround. How can you be ready to take advantage of the right opportunities if you haven't even identified them, let alone planned how to exploit the opportunity?

So what are you waiting for? It's time to act.