No one can predict the future. If you run a small or medium sized business (SMB), do you really know what your business will look like in five years' time? What are your long term objectives and how will you reach your goals?
Having a clear strategic plan in place with a focused implementation process is crucial to long-term business success. Put simply, if you don't look into the future, how are you going to get where you need to go?
What Exactly is Strategic Planning?
Strategic planning determines where an organization is heading, how it's going to get there, and how to tell if it got there or not. Plans can range from one to ten years, depending on the unique goals of each business. The process helps you answer key questions, such as:
• What's the core mission of the business?
• What do you want the business to look like in the future?
• What do you currently sell, and what can you sell in the future?
• Who do you want to sell to?
• How do you stay ahead of the competition?
The main reason behind the process is to ensure that the direction of your business is well thought out and meets your long-term objectives.
Why is Strategic Planning So Important?
With the right strategic plan in place, you can:
• Clarify the values of your organization
• Explain to investors or lenders your future potential
• Cultivate a stronger work-ethic
• Ensure the company continues in the right direction
• Guide all team members in daily decision making
A strategic plan helps you determine where to spend time, human capital, and money. It can help to keep your lenders, investors, and shareholders happy, and can help you to secure future funding. In short, it gives you peace of mind.
When You Need to Consider a Strategic Plan
A strategic plan is particularly important in times of change. Some common scenarios include:
• Your business has recently merged with another or is hiring outside agencies
• Economic conditions force you to look again at funding sources
• You are targeting a new audience
• You need to introduce new product lines or services
• Your business is growing too fast without a clear direction
Who is Responsible for a Strategic Plan?
CEOs or senior managers are often in charge of creating and overseeing strategic plans, but there are no strict rules regarding planning and implementation. What is important is to determine who is accountable for the process and how you are going to monitor it.
Regular meetings with key team members ensure everyone can play a part in keeping the plan on the right path. Bringing in a trusted business advisor can also help the process run more smoothly.
Strategic Planning Tools and Techniques
Many procedures overlap, so it's important to be flexible in your approach and use the tools that make sense to you. Here's a basic roundup of some of the most common techniques.
• SWOT analysis. Acronym for Strengths, Weaknesses, Opportunities, and Threats. By making the most of your strengths and minimizing your weaknesses, you can handle threats before they become dangerous and take advantage of opportunities.
• PEST analysis. Acronym for Political, Economic, Social, and Technological. This focuses more on external factors that could affect your business, and how to take advantage of changing trends
• Scenario planning. This involves anticipating possible events, and how the company should react to minimize damage and maximize opportunities.
• Strategy Maps and balanced scorecards. Using diagrams and tables, these are used to measure and control a strategic plan.
• Porter's Five Forces analysis. This is a form of competitive analysis that looks at five competitive forces: industry competition, potential competition, power of suppliers, power of customers, and the threat of substitute products.
A good strategic plan can give you peace of mind and help take your business to new heights. It doesn't have to be complicated. In fact, once you take the time to lay out a strategic plan, it can quickly inform your daily decisions, keep you focused on the direction of your business, and maximize the growth potential of your business.