by Stephanie Willis, Kansas SBDC Advisor
As a business just starting out, you might think your days of business plans are over…. think again! Continuing to work your strategic plan will be key to ensuring your business is a success.
What is a Strategic Plan?
Strategic Planning is an organization’s process of defining its strategy or direction and making decisions on allocating its resources to pursue this strategy.
There are many benefits of strategic planning including:
- Improving Employee, Customer & Supplier Relations
- Preparing for Profitable Growth
- Enhancing Access to Capital
- Reducing Overall Risk
- Maximizing Long-Term Value
- Increasing Transferrable Value
In a recent Small Business Pulse Survey, 75% of the owners surveyed believed that a written strategic plan caused their business to perform at a higher level in sales and profits. In addition, if your business is one of the 250,000 businesses that baby boomers will transition by 2030, the transferrable value of your business will be greatly enhanced by having a Strategic Plan in place.
One might ask: “Why doesn’t our company have a Strategic Plan?” or “Why can’t we execute the Strategic Plan we have developed?”
Many companies feel the planning process is superfluous; if the business is generating revenue and has money in the bank, it is doing fine. However, “the biggest issue in strategic planning is not the formulation, but rather the implementation” according to the International Association for Strategy Professionals.
How do you ensure the development and execution of your company’s strategic plan?
STEPS TO SUCCESSFUL STRATEGIC PLANNING:
- DISCOVER: Where is the business today?
- Assess all areas of the company that impact every business regardless of size or industry: Financial, Planning, Leadership, People, Sales, Marketing, Operations and Legal.
- Complete a SWOT analysis (Strengths, Weaknesses, and Opportunities & Threats) to define the internal and external factors that may impact the company’s future performance.
- DEFINE: This is the big picture (3-5 years in the future)
- Mission – An external statement as to why the company exists: business, customers, and competitive advantage
- Vision – An internal, inspirational statement defining what the company will look like in the future: beliefs, values, and behavior
- Objectives – identify 3 top level objectives for the company of which one should be EBITDA. (Sales – Expenses not including interest, taxes, depreciation or amortization)
- Strategies – identify 3-5 strategies that are based on the company’s strengths and are focused on achieving the company’s Mission
- FOCUS: Develop the company’s Strategic Plan utilizing the Discovery information to identify gaps and opportunities needed to achieve its Defined Mission, Vision, Top Level Objectives and Strategies.
- Identify Solutions in each of the key areas (Financial, Planning, Leadership, People, Sales, Marketing, Operations and Legal) and ensure alignment of the departmental goals and compensation programs with these solutions.
- Determine:
- Objectives for the next 1 to 2 years
- Tactics and Action items for each 90-day period
- Every action should tie specifically to one of the three company objectives
- IMPLEMENT: Communicate, Monitor and Review
- Formalize Future Projections including the costs associated with achieving the objectives
- Develop and Monitor Key Performance Indicators that align and support the strategic plan
- Communicate frequently with all levels of the company ensuring they understand their part in the company’s success
- Review progress each quarter
- Annually reset based on actual performance
Taking the time to clearly articulate the purpose and direction of your business will help achieve success at a more rapid pace.
