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Simple Small Business Strategic Planning Tool
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This presentation was given by Art Helmstetter at a Dayton Chamber of Commerce sponsored workshop to help small businesses learn how to develop a strategic plan for their business. For information or assistance contact www.b2bplanner.com
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- 1. Small Business Strategy Development Process Understand Understand Analyze Analyze Decide Act Decide Act
- 2. Art Helmstetter “Large and Small Business” Managing Director, B2B Planner Ltd. Small Business Development Director Global Planning and Marketing Quaker Chemical Corporation Strategic Planning Business Management 25 consecutive years achieving profit goals Started up four businesses Two start ups survive today Grew two other businesses from 0 to over $25 MM Education MBA, BS & MS Engineering,
- 3. “If you don't know where you are going, any road will get you there.” Lewis Carrol, Alice in Wonderland “I can't change the direction of the wind, but I can adjust my sails to reach my destination.” Jimmy Dean
- 4. Strategy Development Agenda • The case for strategy development. • Why small businesses don’t plan. • Need to respond to a rapidly changing world • A planning model for today • Key Elements of Planning – Internal Factors – External Factors – SWOT Analysis • Planning Tools and Templates • The Simple Steps Model
- 5. The Brutal Facts 1. Nothing you do will 100% guarantee success 2. Planning can greatly improve your chance of success 3. Not planning WILL greatly increase your chance of failure This is confirmed by the large number of companies without business plans that fail within 5 years
- 6. Definition of Strategy Development A business’s process of • defining its strategy and direction, • and making decisions on allocating its resources including its capital and people. Keep It Simple by answering three questions: • "What do we do?" • "For whom do we do it?" • "How do we beat the competition?”
- 7. We Live in a “Hyper” World • Hyper-competitive market – Global competition – Excess capacity in the US • Hyper-Speed of Change – Accelerating technology development – Digital speed of operation • Hyper-Uncertainty – Changing economy – Changing government intervention
- 8. Why Businesses Don’t Do A Strategic Plan? What’s Your Reason? No one makes you “Too expensive” Takes too much time Can’t get the information Don’t know how Doesn’t work Is not fun
- 9. Planning Is NOT a Do It Yourself Process • You don’t do it often • You need a process • It takes time • You need perspective and objectivity • It takes research
- 10. Who Can Help? • Advisory Committee • Trained Staff Member • SCORE Mentor • Sole Practitioner • Large Consultant But YOU must OWN the process!
- 11. A Plan Is the Conclusion of Strategy Development Strategic Thinking What Might Happen Options Strategic Decision Making What Will We Do Decisions Strategic Planning Business How Will We Do It Plan
- 12. Alternate Business Planning Models Serial Planning Model For Stable Conditions Business Strategic Plan Budget Plan
- 13. Alternate Business Planning Models Dynamic Planning Model for Changing Conditions Both models use similar elements and analyses, but the process is very different.
- 14. Alternate Business Planning Models Dynamic Planning Model for Changing Conditions Customer External Behavior Factors Strategic Thinking and Analysis Business Plan Internal and Budget Capabilities Both models use similar elements and analyses, but the process is very different.
- 15. Elements of Strategy Formulation Vision Analysis Mission Segment Market ation Research SWOT
- 16. Traditional Market Research • Market Size • Growth Potential • Customer Needs and Wants Buyer Behavior Preferences • Competitive Intelligence
- 17. Simplified Market Research Focus on your “addressable” microcosm Focus on YOUR customers What do your customers really buy from you? Buyer Behavior Preferences Find the common characteristics Can you sell your customers different things? Who do your customers compete with? Can you sell to them? Focus on YOUR competitors
- 18. Customers: Who Buys from You Demography Occasional Geography Buyers Where Does Your business come from? Repeat Consumers Buyers Businesses
- 19. Customers: Segmentation Dividing the market into groups Product they use How they use product When and where used Use a segmentation dimension Industrial Commercial Consumer Identify underserved, high value groups Income Career or Industry Current Product Use Use common elements to select products and marketing
- 20. Simplified Competitor Research Focus on YOUR market Google ‘em Visit their website Search in directory listings BUT ALWAYS BE ETHICAL! Yellow pages digital and print. Google and Yahoo local Angie’s List Check out their reviews Talk to their customers, employees, suppliers and competitors
- 21. Supply or Value Chain Determine your position in the value chain How far are you from the final user Produce Make Assemble Sell Service Raw Material Parts Product Product Product
- 22. Five Forces of Competitive Intensity New Entrants Supplier Competitive Buyer Power Rivalry Power Product Technology
- 23. Focus Your Actions Based on your SWOT Internal External Strengths Opportunities Manufacturing New Markets Positives Innovation New Application Marketing/sales New Technology Weaknesses Threats Barriers Cost Competition Marketing/sales Economy Staff skills New Technology
- 24. Focus Your SWOT on the “Make or Break” Issues
- 25. Focus Your Actions Based on your SWOT Internal Factors Strengths Weaknesses Opportunities Threats Confront Avoid External Factors Exploit Search
- 26. Actions To Grow Market • Increase reach in existing Expansion • Find new markets Product • New business w/customers Expansion • New products • Products Innovation • Application • Processes
- 27. Actions to Improve Performance/Efficiency • Credit Policy Financial • Pricing • Capital investment Operations • Improve processes • ERP systems IT • Web based sales, marketing • Rewards & recognition HR • Capability building
- 28. FOCUS on 1-2 Goals Goal 1: Strategy 1: Implement the Timeline: Team ________________________________________________________________ ________________________________________________________________ Action Items: _________________________________________________________________________________________________________ Timeline: _________________________________________________________________________________________________________ Timeline: TASK WHO BY WHEN Resources needed ____________________________________________________________________________ ____________________________________________________________________________ Enabling factors/barriers ____________________________________________________________________________ ____________________________________________________________________________ RESULTS: __________________________________________________________________________________________________________________ ______________________________________________________________________________
- 29. Eight Strategic Measures to Monitor and Update 1. Executive Summary 8. Champions 2. Goals 7. Time Lines 3. Objectives 6. Outcomes/Results 4. Strategies 5. Action items 32
- 30. Why Strategies Fail • LACK OF STRATEGIC FOCUS 33
- 31. Why Strategies Fail • LACK OF STRATEGIC FOCUS • Inaccurate or biased intelligence gathering • Failure to identify weaknesses and threats • The strategy is a poor fit between the external environment and an organizations' resources • Overly optimistic about resources and abilities • Inadequate support of others • Lack of discipline to follow the plan • Not making timely adjustments when needed 34
- 32. Focus on the Future • Commit to writing a strategy and plan. • Use a proven process, and • An experienced person to facilitate the process. • Meet with that person monthly to follow up on the strategy and plan
- 33. Now Go for a Ride Steer Pedal Balance Look Ahead
- 34. Thank You! Understand Analyze Decide Act
- 35. Focus Your Strategy With SCORE’s Simple Steps
- 36. Current Situation Traditional Model Maturity Start-up Initial Rapid Growth Expansion Stability Yesterday’s Paradigm Slow Pace (Years) Survival Decline Many Opportunities Subtle Impact Specialization (Isolation) Agriculture Based Economy Product Based Economy Services Based Economy Worksheet Current Situation (Position)
- 37. Current Situation Emerging Model Development Defense Start-up Offense Decline Compete Survival Grow Recovery Expansion Tactical Strategic Shaped Shaping Today’s Paradigm Hectic Pace (Months) Few Opportunities Volatile Impact Diversification (Collaboration) Experienced Based Society
- 38. Welcome to the Experience Driven Economy Experience Loyal Consumers (Unprecedented Consumer Mix) Digital Customers (Connected, Online and Influenced) Interactive Communications (Not Just One-way Advertising) Customer Relationships Experience (Not Just a Sale) Driven Economy Hectic Pace (Immediate not prolonged) Limited Opportunities (To Succeed or Fail) Volatile Impact (Business Outcomes) Diversification (Not specialization) Collaboration (Not isolation)
- 39. Small Business Size, Scope and Type of Business Entrepreneur 1-5 Business Change Cycles At each of these levels, Vertical businesses go through Market Business significant transition in Group 6-25 several key areas. Vertical Local Employees Business Company Neighborhood Organization Segment 26-125 Investment Doctor’s Revenues National Cash flow Office Regional Expenses Corporation Offerings 126-500 Hospital Facilities Healthcare Virtual Resources Global Systems Enterprise Processes 500 Above NAICS Classification Code: www.census.gov/epcd/www/naics.html
- 40. Current Situation Development – Start Up Need (Pending motive) Desire (Feasibility) Ability (Qualification) Timing (Opportunity) Action (Start-up) Simple Steps to Starting a Business Establish a viable for-profit business or non-profit organization
- 41. Simple Steps to Starting a Business - Start-up Track Step 1: Awareness Advantage SCORE . . . (Concept/Interest) Integrated Business Performance Solutions Simple Steps Workshop Series Step 2: Awareness Integrated or Segmented Track (Personal Qualification) Scheduled (Open) Workshops Combined Track Step 3: Evaluation (Business Feasibility) Aligned Mentoring Business Start-up Coaching Step 4: Commitment SCORE Resources (Network) (Decision/Funding) Step 5: Implementation (Preparation/Launch) Worksheet Worksheet Business Development Qualification and Decision Process Feasibility Guide
- 42. Current Situation Recovery – Tactical Shaped by Marketplace Disrupted by Industry Majority and Laggards Declining or Survival Involuntary Disruption Simple Steps to Business Recovery Need to move the business out of the current situation
- 43. Simple Steps to Recovery Defense Track- Tactical Step 1: Awareness (External Perspectives) Advantage SCORE . . . Integrated Business Performance Solutions Step 2: Discovery Simple Steps Workshop Series (Internal Insights) Integrated or Segmented Track Step 3: Evaluation Scheduled (Open) Workshops (Sustainable Business Model) Combined Track Isolate Challenges Aligned Mentoring Business Recovery Coaching Step 4: Commitment (Solution Recommendations) SCORE Resources (Network) Prioritize Initiatives Step 5: Implementation (Execute and Management) Step 6: Measurement (Measure Results and Repeat) Worksheet Business Recovery
- 44. Current Situation Voluntary Transition Shaping Marketplace Disrupting Industry Innovators/Early Adaptors Competing Aggressively Steady Growth Voluntary Evolution Simple Steps to Business Expansion Want to move the business to the next level
- 45. Simple Steps to Expansion Offense - Strategic Step 1: Awareness (External Perspectives) Advantage SCORE . . . Integrated Business Performance Solutions Step 2: Discovery (Internal Insights) Simple Steps Workshop Series Integrated or Segmented Track Step 3: Evaluation Scheduled (Open) Workshops (Sustainable Business Model) Combined Track Isolate Challenges Aligned Mentoring Step 4: Commitment Business Expansion Coaching (Solution Recommendations) Prioritize Initiatives SCORE Resources (Network) Step 5: Implementation (Execute and Management) Step 6: Measurement Worksheet (Measure Results and Repeat) Business Transition
- 46. Common Concepts – Different Execution Development Defense Offense Start-up Track Recovery Track Expansion Track Entrepreneur (BP) DNA Business Operations DNA Business Performance DNA Leadership Priorities (Balance) Leadership Balance (Priorities) Leadership Balance (Priorities) Start-up Leadership Alignment Recovery Leadership Alignment Transition Leadership Alignment Development Process (5 Steps) Recovery Process (6 Steps) Transition Process (6 Steps) Development Challenges Survival Challenges Growth Challenges Start-up Problems Survival Problems Competitive Needs Start-up Needs Recovery Needs Growth Opportunities Start-up Opportunities Build Business Model Fix Business Model Expand Business Model Business Performance Priorities Business Performance Priorities Business Performance Priorities Business Operations Priorities Business Operations Priorities Business Operations Priorities Foundation (Scheduled) Initiatives Tactical (Immediate) Initiatives Strategic (Planned) Initiatives Evaluate External Forces Manage External Forces Leverage External Forces Resource Identification Resource Allocation Resource Commitment Development Funding Sources Recovery Funding Sources Expansion Funding Sources
- 47. A Sustainable Organization Model External versus Internal Balance External Forces of Business Targeted Marketplace (Geographic Segment) Change The Demand Side Targeted Consumer Stakeholders - Society Communities Community, (Consumers) (Customer Segments) Media and Other Economy Communities (Money) Innovation The Supply Side Business Business Supply Chain (Technology) Performance Operations Partner, Alliance Marketplace Strategies Strategies Professional (Commerce) Communities Front-office Back-office Events (Environment) Policy Leadership (Stake Holder) DNA (Standards) Leadership Allocation (Self) or Balance (Team Leadership Lifecycle Alignment
- 48. Advantage SCORE . . . From Challenges to Solutions Today’s volatile business climate is a lot like a tennis match, challenges come at you pretty fast. Whether you are winning, losing or just starting out in business, SCORE can help you match point and win. Regardless of business size, scope, type, or current situation, seasoned SCORE professionals leverage integrated solutions with years of life/work experience to Volatile Business give you an “advantage” in today’s Climate challenging business environment. The fastest tennis serve on record for men is 156MPH and 139MPH for women
Editor's Notes
- Welcome to our workshop today.The words at the bottom of the page are a simplified version of the process to use to produce a strategic plan. You need to understand your business’s situation and capabilities, analyze the implications of this situation, decide what goals and objectives you will have for your business,and what actions will you take to achieve these goals.So let’s get going.
- I have spent a major part of my career planning for growth and profitability. I have spent the rest of my career producing higher profits. I like profits. In fact I love profits, even other people’s profits.Profits are the tangible results of producing value as judged by the market.I think there is only one reason I like planning: and that is to produce profits.Now you know who I am and why we are here.Since we have a manageable size here I would like to know who you are. If we could take 30-60 seconds eachPlease state your name and company’s name, if you have a strategy, is it written, when you last reviewed it, and who formulated it.
- I want to pose three questions to start our discussion.Who here is planning to retire.?Who is planning to retire over 5 years from now?Who is working with a broker or planner on that plan?You have a strategic plan and are using a planner.The catch is, if you own a business, and plan to retire, you are depending on your business to be successful to fulfill your strategic plan to retire. Do you have a similar strategic plan for your business to be successful? If not, you don’t have a retirement plan.I really like what Jimmy Dean says. Is the wind always blowing at your back? It feels like it is always blowing in your face. But if you have the understanding of sailing, you can move forward even into the wind.
- Today we are going to take a practical look at why you should plan, why you may not have a formal written plan, why your really need a plan, selecting a process to do your plan development, and an example SCORE uses to develop plans for clients.We will also give you some materials to help you with your planning.
- Everyone in business needs someone to bounce things off of.If you don’t have a Board of Directors or Advisors, or an experienced Mentor, you should consider engaging SCORE or another person or company who can provide you with perspective and objectivity.
- Unfortunately, as much as I like planning, it is not a silver bulletBut it is something that will lower your risk and increase your opportunities.I believe that it is more important for a small company to have good planning because you are more vulnerable to events than a large company who have more resources to respond with.
- So let’s get to the meat of the issue.Strategy Development is not a complicated concept, it is about providing products and services to customers that they need and will pay for, and how you will differentiate your products, services, and company to beat the competition.If these questions were answered do you think you have a decent plan?So let’s talk for a minute about diirection – Who does not want to grow your business Who does not want to lose their business Suppose you make a decision to grow your business that risks you losing it? Or that took twice the people that you now have Would you still want to grow your business?So your plan needs to look at HOW you will achieve your goals
- Before you can create a strategic plan, you need to start thinking strategically.This means stepping back from the chaos and noise of day to day crisis and looking at what is important.Strategic thinking should help to simplify how your business interacts with the world. It quite simply allows you to focus on those things that will result in your business being successful.
- I don’t have to tell you that things are moving fast, and seem to be accelerating.There is no new normal.No matter how hard you paddle if you are headed upstream, you will go nowhere.The idea is to understand your market, competition and capabilities to determine how you can paddle downstream and use the current to push you along.It will NEVER be easy, but you can make it easier.
- But why don’t small businesses in particular plan –It may seem strange, but you don’t HAVE to, until you HAVE to and then it’s too late!A lot of the clients that come into SCORE have waited until to late to come to us, and if they had come a year earlier when the warning signs first appeared, we might have helped them. There are a number of other reasons, but they all boil down to the fact that I think you simply don’t understand how to do it efficiently and effectively. This is definitely a case where one size does not fit all. Your process should fit your company as well as your plan does.
- THE best way to overcome most of the barriers to planning is to find someone to focus on this as their top priority while you continue to focus on your business. You will be surprised at how effectively this can be done if you pick the right person and process to coordinate the plan.One of the key items for you to evaluate in selecting the person to do this is the process they will use. There is no reason to reinvent the wheel, but you do have to be careful not to try to put a bicycle wheel on a Mack truck. This is a key decision that 80% of companies don’t even think about. They typically go with whatever process the guy they pick happens to use.
- The good news is that you can find someone who has experience facilitating strategic planning in a number of places to match your budget and your needs. There are ways to do it at no additional cost, a small cost or a huge cost. I would like to talk to you if you want to do this.I have worked on plans that cost $100,000, and others that have cost $1,000. Both were good plans.However you choose to do the planning process, YOU have to own the process and everyone you are working with needs to clearly understand you are absolutely committed to executing the plan.
- Plan development consists of three primary process steps.Thinking about possibilities and identifying your realistic options.Making informed decisions about what you will do. And finallyDefining how you will do it: the who, what and when of it.
- Traditional planning has been linear and periodic, happening once per year, or every two or three years, and was static, since things changed in fairly predictable ways. However, as we have said, that is not the world that we live in today. We need a dynamic model that is interactive, and continually be evaluated and adjusted, even though the core strategy may stay the same.
- A dynamic model monitors the important changes occurring internally and externally, analyzes the implications using the focal point of strategic thinking, and drives decisions to adapt to key changes. This seems complicated, but can be integrated into you business management thinking, and become part of your company culture. It MUST become part of company culture in today‘s marketplace.
- Hopefully you have a vision and mission. I am not going to discuss this, but if you don’t have them you should, even if the company is only you, you need to know where you want to go and be able to explain it to you customers, employees, and your banker. It is your elevator speech. In this presentation we are going to focus on the mechanics of understanding your situation, analyzing your options, and deciding on an action plan.
- Traditional market research is intimidating, and done by trolls in the marketing department.And although the topics are the same, in a small company it needs to be done differently.
- Small companies need to focus on their “real” world of customers and competitors. A cleaning service in Dayton is not going to sell to customers in California. And this is a place where that thing called “social networking” will be used by successful companies to understand their market on a real time basis. If you do it right, social media is a conversation with people who are important to you, and to whom you need to be important either personally or professionally. If you make it easy for your customers to talk to you, and to know that you will listen and respond, they will tell you more than you would ever believe. This is another what? Focal Point. Why?Because this group is made up of customers who already buy your products. They accept your value proposition. And they may have friends who would too.!
- Market research is an intimidating thought – one best left to marketing experts. However, if you can’t afford a brilliant marketing expert like me, what can you do?A good way to do market research yourself is to identify your customer characteristics, and then finding other customers who are like them, especially in buyer behavior.An example I use is to think about what your customer is buying from you is a Honda accord that a 17 year old boy is buying and a 35 year old mother is buying. Are they buying the same thing? What can you tell me about these customersOne is male and young, and one is female, not so young, with a child. What would you expect their buying behavior to be? How would you make your sales pitch to them? The key question about them is how many of each of these categories buy your cars now?As you can see, this line of reasoning allows you to gain insight useful to determine target markets and your marketing approach
- What have been doing here is segmenting customer groups.Segmentation provides you with a what? A “focal point”.And the gold standard of segmentation is a group who are underserved, and provide high value. This group provides you with the best what? Return on invested time and money, or profit. And we all know that I just lover profit. Segmentation helps you be very specific in how you find and get customer.
- Another aspect market research is to study the competition.Again, if you are creative you can do it yourself using tools available to you on the internet.Also, talk to people about them. Find out the same things you find out from your customers about you.Then compare why people buy from them instead of you or visa versa.
- Another key strategic question to ask yourself is where you operate in the value chain.This has a large impact on how you focus you business on research, production, or sales, or customer service
- You have to get a couple of things right in strategy development and this is one of them.This tells you whether you need to be a leader or follower.Or if you are in a no win situation where businesses come and go all of the time.The company that I used to work for sold to GM and bought raw materials from Exxon… so how much power did we have in the horizontal axis of this diagram?The implication is that our primary cost and price to the customer were very constrained. So our strategy had to address this, and it did very well. When GM went bankrupt the company got all of their money within 90 days, and GM was on a 15 day payment schedule.So this is a very powerful concept which works in the real world in determining what how you can compete in a given market situation.
- Here is another critical item in your strategic analysis.Your SWOT is the foundation for your strategic analysis/In this process you take what you found out about your external situation and match it up to the internal characteristics of your business. The important thing about the internal characteristics is which are critical strengths and weaknesses.You can then look at the opportunities and threats you see and determine how you can counter them.We have provided you with a list as a handout that can help you do your SWOT. I would like you to pick up to three strengths and weaknesses from the list, no more, or others you feel you have.And then do the same thing for opportunities and threats.I would like you to take this back and discuss it with people at your company, or an advisor to confirm you thoughts.
- Once you have your SWOT you can use it to match Opportunities to strengths and Threats to weaknesses which will increase your probability of success and minimize the risk to your business.
- When you have a good SWOT, you use it to stack the deck in your favor.Don’t play those games where your probability to lose is high – avoid.Play those games where your probability to win is high – Exploit.Apply your strengths to threats to overcome themApproach opportunities carefully where you have weaknessesI would prefer a diagonal on this chart because the business world is more risky than in the past.So another consideration with your SWOT is the amount of risk you feel you business can take.
- So how can you identify opportunities to grow based on your SWOTThe possible areas to consider are market expansion, product expansion, and innovation.I would like to say something about innovation. We think of it as new software or materials, but people innovate every day in business to make things work better. But it tends to be random. If you can focus innovation in target areas defined by your strategy, the innovation will have a larger impact on business success.
- We can also look at areas to increase efficiency and that way strengthen weaknesses or reduce costs, or improve service;In the SCORE model we call this the back office functions
- The key to achieving results in your plan is to --- what?FOCUS that’s right. Especially for a small business it is critical that you only take on one or two goals at a time or you will get overwhelmedI would like you to take a minute to think about THE most important goal or two that you should consider for your business right now.
- Bob Talty from SCORE likens running a business to riding a bicycle. You pedal like hell to move forward.Keep your balance so you don’t fall.steer to avoid obstacles, butMost importantly you do what? look ahead t o see what’s comingAnd the faster you are going the further ahead you need to look.So the keys to success are Have it in writingUse a proven processUse an experienced facilitatorAnd finally, follow up often – which means not only monitoring progress, but checking assumptions, monitoring your customers and competitors for changes, SCORE has experienced mentors who can help you develop your strategy and plan and work with you through it’s execution.
- Remember two things about how planning is like riding a bikeIt’s not as hard as it looksAnd you never forget how once you do it.
- It’s really not as hard as it looks.Have you ever noticed the only old guy in these pictures is standing up.
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Strategic Planning
What is strategic planning.
What is a strategic plan? Strategic planning in management is the process of documenting and establishing the direction of your small business—by assessing both where you are and where you’re going . So, what is the purpose of a strategic plan? And what does an effective strategic plan consist of? A company’s strategic plan consists of it’s:
- Long-term goals
- Action plans
A well-written strategic business plan can play a pivotal role in your small business’s growth and success because it tells you and your employees how best to respond to opportunities and challenges.
In recent years, many small business owners have been focusing on long-term planning. In fact, in 2020, there were three business areas that small businesses focused on strategy for, including:
- 46% in sales
- 41% in advertising
- 36% in customer service
If you haven’t been focusing on a long-term business planning process, it’s not too late to think differently. Your future success depends on effective organizational strategic planning. It’s also important to remember that a strategic planning process model involves your entire business. The discussions that result can lead to meaningful changes in your business. The purpose of strategic planning is to also analyze your business and set realistic goals and objectives. This leads to the creation of a formal document that lays out the company’s views and strategic goals for the future.
Ready to learn more about strategic management and planning? Keep reading through the next sections.
The 3 Step Strategic Planning Process
What are the 3 steps in strategic planning? When it comes to the strategic planning process, think of it as having three phases:
- Development
- Review and updating
The goal of developing a strategic plan is to ensure everyone in the business is aligned when it comes to your small business’s goals and objectives, as well as to create a formal strategic plan document.
1. Discussion Phase
The discussion phase is meant to gather as much information, opinions, and input as possible. Set up a regularly scheduled meeting with the employees and any other staff in your business who will be involved with strategic planning. Make sure you have an agenda and clear expectations of what you want to accomplish in each meeting. This will keep discussions on track and help prevent distractions. In the first few meetings, try to answer questions that will help you define the business’s current status, such as, “Where are we now?” and “Where are our competitors?” Once you have a good idea of where the business is, you can focus in on specific details in future meetings.
In addition to regular meetings with your employees at your business, you can also gather information from people outside your company, like:
External people will have a unique perspective on not only your business, but also the industry you’re operating in. Getting their opinions on where they think the industry is going and what they think will change in the future can help you put together your strategic plan and determine where you want your business to be down the road.
You can also conduct a SWOT analysis. SWOT stands for strengths, weaknesses, opportunities and threats.
When you’re conducting a SWOT analysis, you and your employees will examine what your business does well, where it can improve, any future opportunities to pursue that could help facilitate growth and success, and any competitors or external factors that could prevent the business from succeeding.
Your strengths should be pretty easy to identify. When you’re discussing your business’s weaknesses, don’t be afraid to be candid. Every business has weaknesses and things to work on. Any weakness you and your employees note means it’s something you’ll aim to improve on in the future with a detailed initiative outlined in the strategic plan.
Opportunities available to your business may be pretty clear, while identifying threats to your business can be more difficult. Speaking with people outside of the company should give you a good idea of where the industry could be heading and if there are any major competitors or challenges coming. If you can identify a number of threats and challenges to your business early on, it puts you in a better position to address them if and when you encounter them down the road.
2. Development Phase
After you’ve collected all of the information, it’s time for the development phase. This is when you’ll start putting together your business’s strategic plan. A strategic plan consists of five key components:
- A vision statement
- A mission statement
- Goals and objectives
- An action plan
- Details on how often the strategic plan will be reviewed and updated
Decide with your employees what you will use to create the strategic plan. Are you going to purchase software to help you create and house the plan? Or are you going to create the plan yourself and save it in the cloud for easier access?
When you’re creating goals and objectives for your business, make sure they’re realistic and measurable. Work with your employees to create goals and objectives for at least the next one to three years. And discuss how these goals and objectives will be measured and tracked.
For example, if you have a goal of increasing sales by 10% in the next year, you can track this by measuring sale numbers. Equally important is having an action plan to achieve these goals and objectives. If you’re trying to increase your sales by 10% in a year, you can pursue more marketing and social media outreach as part of your action plan. If an action plan doesn’t help your business achieve its goals, the plan needs to be rewritten.
3. Review and Updating Phase
A critical part of the strategic plan should address how often it will be reviewed and updated. Designate someone to be responsible for reviewing, updating, and sharing any changes with the rest of the company. Whether it’s you or another employee, you’ll want to make sure everyone in the business is aware of the changes and how they affect the overall strategic plan.
The strategic plan is meant to be a fluid document; don’t fall into the trap of creating the document and letting it sit on a shelf for years. If you developed meaningful objectives and action plans, they should help with regularly checking the strategic plan. For example, if your action plan requires you to put in sales numbers every quarter to track revenue, you could take that time to review the rest of the plan.
You can also set an alert to check the strategic plan on a regular basis. Whether it’s every few months, every quarter, or every year, a recurring alert can help you review and update the document.
When you’re reviewing your strategic plan, you may find that you’re not on track to meet an objective or goal that you previously set up. Don’t panic. Reassess the situation and, if you need to, discuss the issues with your employees. Figure out what went wrong and why your business isn’t on pace; maybe the goal was too ambitious or not realistic. Change the goal or objective and update the action plan to help you get back on track.
You also may find that your small business has met a goal or objective earlier than you thought you would. If so, you can create a new goal or objective to work toward, or try to maintain the progress you’ve already made. Discuss the ideas with your employees to see what they think is possible.
Strategic Plan Examples
Strategic plans can vary, depending on the type of business you operate or the industry you’re in. Here are a few examples of different strategic plans:
Strategic Planning Examples for Business
A strategic plan for a business will include the company’s mission and vision statement, as well as its goals and objectives and the action plans to achieve them.
The strategic plan is different from a business plan. The business plan is typically used to help start the business and acquire the necessary funds to open the doors. A strategic plan outlines the strategy for growth and success in the future by using existing resources.
The Canadian Soccer Association’s strategic plan for 2014 to 2018 is full of information and details. It includes an examination of the organization’s current status and what the focus in the future will be. It includes the goals and objectives of the Canadian Soccer Association, as well as the strategies it’ll use to achieve them.
According to a recent report, the top challenges for small businesses in 2021 are:
- 23% said a lack of capital and/or cash flow
- 15% said they anticipate marketing and advertising struggles
- 19% said they expect challenges with recruiting and retaining employees
Nonprofit Strategic Plan Examples
A strategic plan for a nonprofit organization will include the same key components. A nonprofit strategic plan may focus more on the internal and external factors that can pose any threats or challenges to the organization. Because the structure of a nonprofit organization can change rapidly due to different factors, the strategic plan takes this into account and aims to address possible changes ahead of time.
The Minnesota Council of Nonprofits’ strategic plan for 2010 through 2014 outlines the organization’s:
- Community it serves
- Goals for the four-year period
Each goal includes an in-depth description of why it’s important to the Minnesota Council of Nonprofits, as well as the strategies involved to achieve those goals. The plan also lists the people responsible for working on the strategic plan.
IT Strategic Plans
The IT industry is constantly changing. This means a strategic plan for an IT business should identify and address the changes in the future as well as possible. While other business strategic plans may focus on the next three to four years, it’s not uncommon for an IT strategic plan to look at the next year to year-and-a-half.
When it comes to developing, reviewing, and updating your IT strategic plan, it’s important to involve your business’s Chief Information Officer. This person’s knowledge and skill set is useful in putting together a strategic plan for your tech business. In addition to the Chief Information Officer, you and your employees can look at whether you need to upgrade any part of your infrastructure to meet the goals and objectives you’ve outlined in your strategic plan.
Because of the rapidly changing circumstances, you may be reviewing your IT strategic plan more frequently than with other businesses. Adjust your plan as necessary to put your business on the best path to success. The plan also should include details on how to make a decision when it comes to investing in new equipment or technology.
Marketing Strategic Plans
A marketing strategic plan’s goal should be to generate sales for the business. Whether it’s increasing sales numbers by 15% or increasing the number of customers in the next quarter, a marketing strategic plan helps businesses generate more revenue and increase their customer base.
A marketing strategic plan can include marketing technology, software, or web-based platforms to help track your business’s progress toward its goals. The plan also could address the specific types of marketing the business will pursue—for example, whether your business will pursue traditional print advertising or digital ads.
Because a marketing strategic plan aims to increase your business’s exposure and numbers through different techniques and methods, it’s a good idea to include the budget in the document. This way, you and your employees will work toward the marketing goals and objectives you want to achieve without spending too much money.
Strategic Planning Template Checklist
Should you use strategic planning models or templates? Yes, in fact, a good strategic plan template, sometimes called a strategy mapping template is like a checklist. The template will include different sections for you to complete and help you cover a variety of topics. Using a thorough template will help ensure you have a comprehensive strategic plan for your business.
You can use computer software for your strategic planning template, or you can create your own with Microsoft Word or Excel. You can also download our Strategic Plan Example Template to use.
- What does a strategic plan include? At the top of your template, label it “Executive Summary” and provide an overview of your business. Include the time period you’re looking at for your business’s strategic plan; for example, if the strategic plan provides a three- to five-year outlook.
- Underneath this section would be information on “Your Company.” This is where you’ll put in your mission statement, vision, values, and information on leadership.
- A section on “Research” will include information on your clients and customers, competitors and the industry.
- You can also create a section on “Products and Services,” which will detail any products you sell, pricing strategy, delivery systems and capabilities, and suppliers.
- A section of your template should focus on “Measurable Goals.” These should be realistic goals or objectives that you want your business to achieve within the time period you set. Don’t forget to include details on how the progress of each goal or objective will be measured.
- Whether you include it within the Measurable Goals section or as a stand-alone group in the template, don’t forget about your “Action Plans.” This provides an overview of how you and your employees are going to achieve your business goals and operational plans.
- You also can put your SWOT analysis into the template. List the identified strengths, weaknesses, opportunities, and threats with your business. Remember to be honest and candid. When you are reviewing your strategic plan in the future, you can reference the initial SWOT analysis and check to see what has changed.
- The last section should detail “Reviews and Updating.” Explain how often the plan should be checked (every few months, quarterly, annually, etc.). Provide a list of people who should be responsible for reviewing and updating the strategic plan, as well as communicating any changes with the broader business.
Why Is Strategic Planning Important?
The strategic planning process can take some time, but it’s beneficial for everyone involved. As the small business owner, you’ll have a better idea of the organizational goals and objectives you’ll want to accomplish and a path to do that. For your employees, the process can foster an increase in productivity—contributing to the success of the business.
Communicating Your Strategic Plan
In a business environment, strategic planning requires you to involve your employees. Your employees are involved in the day-to-day operations and can provide you with a unique view of the company. Employees can share with you what they think is and isn’t working with the business today, which can inform your planning for the future.
In addition to your employees, it’s beneficial to reach out to people outside of your company to get their opinions. Like your employees, vendors have a unique perspective on your industry. Talk to them about the business, and get their thoughts on how they think the business landscape can change in the future.
The U.S. Small Business Administration recommends that the strategic planning process be a flexible one. When you meet with your employees and any people outside of the company, remember that the discussions should encourage new ideas and thoughts.
Increase Productivity
Involving your employees in the strategic planning process also means they receive a sense of accountability that can increase productivity. Whether they contributed in the process or were informed of the business’s long-term goals and objectives after the strategic plan was created, they’ll be more likely to want to help you achieve those targets.
Identifying Strengths and Weaknesses
As part of the strategic planning process model, you’ll examine and analyze your entire business. You’ll take a look at what your business does well and the areas where it still needs to improve. By identifying your business’s current strengths and weaknesses, the process gives you and your employees an opportunity to improve in the future and become a durable business by minimizing risks.
Although you may have a good idea about what your business excels at and areas that need to be improved upon, don’t forget to involve your employees. They may tell you something you didn’t think of.
Setting the Direction of the Business and Fostering a Proactive Environment
By the end of the strategic planning process, you and your employees should have a clear direction of where you want the business to go in the future. These discussions and the planning process itself help put the business in the best position to succeed in the future.
Strategic planning gives you and your business time to figure out how to grow over the next few years and how to address new opportunities and challenges. Think about the challenges or issues your business may face in four or five years and plan accordingly, so your business doesn’t stumble down the road.
Strategic Planning Misconceptions
There are many strategic planning misconceptions. From not having enough time or thinking it only benefits larger businesses, to fearing you’ll put your business on the wrong path, there are a variety of reasons why business owners may be wary of strategic planning. But don’t be alarmed; strategic planning can help your business—big or small—and the benefits far outweigh any perceived negatives.
Regardless of the size of your business, a strategic plan is beneficial. Whether you are a small business or a large corporation with hundreds or thousands of employees, strategic planning helps you make sure the company is headed in the right direction.
But how do you know if you’re steering the company in the right direction? The beginning phases of strategic planning focus on research and discussions. The decisions you make during strategic planning aren’t based on assumptions; they’re based on research and information you’ve gathered while talking with your employees and people outside of your company.
The strategic planning process may seem daunting at first, but when you understand what’s involved and how to do it, it’s not that complicated. It takes time, but the amount you invest in the process pays off when everyone in your company works toward accomplishing the goals and objectives you’ve laid out.
The process doesn’t stymie creativity either. When you meet with your employees for strategic planning, you’re asking everyone to have a discussion and brainstorm ideas. The strategic planning process puts everyone’s minds together to think of creative ideas.
If you go through the strategic planning process once, don’t think you won’t have to do it again. The strategic plan is a living document; it should change over time. It’s not uncommon for business owners to create a strategic plan with their employees and rarely—or never—revisit the document. Reviewing and evaluating your strategic plan regularly will help keep you accountable and on track to achieve your goals and objectives.
What Makes Strategic Planning Successful?
Successful strategic planning involves a team effort among you and your employees, as well as among you and your vendors and other outside people. The more you engage your employees with strategic planning, the better they’ll understand the strategy you want to have for your business.
Strategic planning concepts also need to be flexible. While it’s necessary to have goals and objectives for your business, you also have to be able to adapt to changes. For instance, 44% of small businesses without a website, plan to create one in 2021 to adapt to the growing online shopping trend brought on by COVID-19.
When strategic planning is successful, everyone in your business is on the same page with the business’s direction and goals. Each individual understands what makes the business stronger and what needs to be worked on. And it’s more likely that each person wants to contribute to the business’s growth and success.
When Should Strategic Planning Be Done?
When it comes to strategic planning, you want to start it sooner rather than later . It doesn’t necessarily have to be done in the first few days or weeks of the company’s life—you may want to be in business for a few months to give yourself a better idea of what is and isn’t working.
But even if you’ve owned your business for a long time, it’s not too late to get started on strategic planning. It’s never a bad time to sit down and think about the current status of your company and where you want to be in the next five to 10 years. When you’re ready, gather your team together and schedule regular meetings dedicated to strategic planning.
Where Do Strategic Plans Go Wrong?
Strategic planning is an ongoing commitment. Even if you go through an initial round of strategic planning and it leads to the development of your business’s first strategic plan, it’s still not finished. The plan has to be implemented.
Strategic plans also can go wrong if the goals and objectives you set are unrealistic. Every business owner wants to see their business grow and succeed, but if you set an overly ambitious growth rate, it could discourage you and your employees.
A successful strategic plan requires commitment. Your entire team needs to be focused on the business and carrying out the strategic plan. If the strategic plan isn’t being used regularly or as the foundation of the business, you and your employees can lose sight of the company’s direction and goals.
The top three reasons strategy implementation fails:
- Poor communication
- Lack of leadership
- Using wrong measures
Reviewing and Updating Your Strategic Plan
A strategic plan is a living document. Don’t spend the time to create a strategic plan and then put it on the shelf to collect dust. Live by it. And regularly update your strategic plan. How often you should update your strategic plan depends on how your business works.
If your business works in a fast-paced industry and can be affected by changing outside factors, you should review and update your strategic plan on a more frequent basis. For example, if your business operates within the ever-evolving tech industry, you will probably want to check on your strategic plan after each quarter.
At the very least, you should review your strategic plan every year. When you review your strategic plan, you’re looking at the assumptions made and checking to see where your business stands in relation to those assumptions. What you thought would be challenges and threats to your business a year ago may not be the same now.
Don’t be afraid to change any part of the strategic plan. In fact, only 77% of small business owners are somewhat or very confident in their ability to execute their strategy but 95% still fall short of meeting all their goals. Updating your plan can help you stay on track with your goals. And if outside factors are having a bigger impact on your business than you initially thought, you may have to change your objectives or goals.
The regular review is a good opportunity to check back in with your employees. Your employees helped you create the business’s strategic plan and they’re as invested in the success of it as you are. Give them a summary of where the business currently stands. Talk with them to see if things have improved or if they still have concerns with the business—or if any of their initial concerns have changed.
After you review the strategic plan, share any changes with your team. Even if you didn’t make any changes, it’s a good opportunity to give the rest of your company your thoughts on the business’s status and confirm that things are on the right track. You also can encourage your employees to continue working hard to achieve the goals and objectives in the strategic plan.
Focusing on the long-term strategy of your business is also essential. Long-term strategic planning is as important as having a business plan and can lead to the success of your business. You and your employees will understand the current status of the company, productivity will increase as everyone works toward achieving the business goals, and you’ll put yourself in a better position to address any potential issues that may come up in the future.
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This was helpful and have grown to work better as a manager.
That’s great to hear, Samuel! Thanks for commenting!
I gained great knowledge. Thanks for teaching us about strategic planning and its benefit.
You’re welcome! We’re glad you found the article helpful.
I really needed this.
We’re glad the article was helpful!
Hi, the article is well written and worth reading. Thank you for sharing the valuable information. Please keep sharing more.
We’re glad you liked it, John! You can read more about Strategic Planning in the articles below:
https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/key-components-of-strategic-plan/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/
Very innovative and thought provoking…..interesting read….
Thanks for commenting, Reena! We’re glad you found the article interesting.
Thoroughly enjoyed this…
That’s great to hear, Melanie! You can also check out our other strategic planning articles, here:
Loved it all
That’s great to hear, Jean!
I really enjoyed this notice. Be blessed.
We’re glad you enjoyed it!
I’m very much interested in your support with the information. Thank you very much as it will help me develop my organization.
Thank you for reaching out, John! You can learn more about strategic planning with these articles from SBA: https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/ https://sba.thehartford.com/business-management/why-is-strategic-planning-necessary/
Thanks for commenting!
Very good notes. Easy to understand.
That’s great to hear, Samuel! Check out our other strategic planning articles to learn more:
lnterested in learning more about this subject.
That’s great to hear, Linnet! You can learn more by checking out these other SBA articles on strategic planning:
https://sba.thehartford.com/business-management/strategic-planning-process/ https://sba.thehartford.com/business-management/why-is-strategic-planning-necessary/ https://sba.thehartford.com/business-management/develop-a-strategic-plan/
Good write up, very informative.
Thank you! We’re glad you enjoyed it.
Really liking this website!
That’s great to hear, Lise!
I really enjoyed reading the article about the strategy planning. There are many things I was not aware before.
We’re so glad you enjoyed it! Thank you for the nice comment!
Good stuff. Straight forward.
We’re glad you liked it!
Great article. keep it up.
Will do, thank you for the nice comment and for reading SBA!
Insightful.
Thank you, Stella!
Fantastic article!! Done with clarity. But my question has always been, at what point does the goals and objectives come in the strategic Planning process? Do we establish the goals and objectives after defining the Mission and Vision statements or do we develop goals and objectives after the analytic tool is utilized (SWOT, PEST,)? etc
Thanks for reaching out! This can depend on the business owner. While some business owners may have initial goals and objectives early on, it can also make sense to this after doing the analysis (SWOT, PEST). The information from these analyses can help create meaningful goals and objectives. The idea behind goals and objectives (both short- and long-term) is that they’re supposed to support/ladder up to the mission and vision statements.
Good article and very interesting.
Thanks for the comment! We’re happy to hear you found it interesting.
Thank you, this is a great article!
You’re welcome, Muhammad!
It was a great. Very helpful.
We’re glad you found it helpful! Thank you for the comment!
Great article. I really enjoyed reading it.
We’re glad you enjoyed reading it! Thanks for leaving a comment, Samana!
I need your coaching.
Thanks for reaching out! Check out this SBA article: https://sba.thehartford.com/business-management/small-biz-owner/build-stronger-mindset/
Under #8 in the article, you can sign up for a free 1-hour consultation!
Excellent piece of information on strategic planning!
We’re so glad you liked it! Thanks!
I appreciate this greatly. It’s helpful for small businesses especially for new initiatives and those at the mature business stage. Thank you!
We’re glad you liked it. Thank you for commenting, Adolf!
It is better to make some terms like vision, goal and mission clear.
Appreciated article.
We’re glad you liked it. Thanks for commenting!
Very informative! It helps me a lot as a student. Thank you 😊
You’re welcome, Joice! We’re always happy to help and glad to hear you find our articles informative.
I enjoyed reading the article. Thank you for providing the overview about the topic. Examples and links are very useful too.
That’s great to hear! Thank you!
Any discussion on Strategic Planning is good discussion – it is such a critical element of any organisation that aspires to be good and dares to be great.
Great point, Steve!
A very interesting article.
We’re glad you liked it! Thanks for commenting!
Informative article! You have made strategic planning so easy to understand. But how do i reference this article in an academic paper?
One way to cite this article in an academic paper is like this:
Vo, Eric. “What Is Strategic Planning.” Small Biz Ahead Blog , 2 Sept. 2020, sba.thehartford.com/business-management/what-is-strategic-planning/
I fully agree with you. The article is useful, but mostly for beginners and students. But it is informative and I liked it as well.
Thank you for sharing this very informative article. It will definitely guide me in conducting our own Strategic Planning at our office.
Thanks for the comment. We’re glad the article could help!
I definitely enjoyed every little bit of it. It is a great website and nice share. I want to thank you. Good job! You guys do a great blog and have some great content. Keep up the good work. SEO canada
That’s great to hear! Thanks for the comment!
This is helpful. Thank you.
Thanks for the comment, Patricia!
Really helpful… thanks alot.
Glad you enjoyed the article!
What is the difference between Policy development & Strategic planning?
Companies first come up with strategic plan to establish their long term goals and objectives along with general actions to be taken to support those goals and objectives. You then establish policies to ensure that your team is staying within those actions. For example, your strategic plan may say you want to increase revenues 20 percent next year in the aerospace market. Your actions will include marketing campaigns and outreach events. Your policies will then ensure that your team are not undertaking actions that are not included in these campaigns and events.
Thanks for your educative explanation on the preparation of strategic business plan.
Thank you for this article. It helped me to understand the strategic planning process, which is something I am studying and this was straightforward and to the point.
Thank you Emily!
This article is a good basic overview. Something that must be emphasized is translating the strategic plan into specific actions with measurable outcomes. If you go into work on Monday after completing your plan and do your work the way you did before the plan, then the plan has already failed. I see this frequently in the businesses with which I work. Another key is to clearly tie individual staff roles and performance expectations and goals to the strategic goals. When effectively done, you begin to harness the very real power of employees’ intimate knowledge of their work and how to do it better.
Thanks for sharing. This is very helpful to business owners and managers. As it is said, the strategic plan need to be flexible, same applies to getting knowledge of strategic plan as business environments keep changing.
Glad to hear this was helpful. Thanks for reading!
Thanks for so much for the this exciting read. I can’t wait to start doing the stuff with my team
Strategic planning is important to an organization because it provides a sense of direction and outlines measurable goals. Strategic planning is a tool that is useful for guiding day-to-day decisions and also for evaluating progress and changing approaches when moving forward. Found an another website Evolvetraining.ac.nz it has lots of valuable information for everyone
Thanks for sharing such an informative blog.
I really enjoyed reading the article.it motivates and gives direction in the business Thanks
I thank you for this platform because it is updating my knowledge on Strategic Planning
I really enjoyed reading the article. It was written in simple language and in a manner that helped me identify key points under each subtitle. I am going to use this as a guide to some strategic plans am working on, thanks.
This teaching is educative.
That’s good to hear. Glad you liked it!
This is a good and educative article. It’s very informative. Thanks.
I actually appreciate this piece. The writing is incredibly beneficial. my start up manufacturering business seems to be in better position with articles like this! My gratitude to the masterminds behind this program, Cheers.
Your article is helpful if you have employees, but how does this work if you have sub-contractors? Do you get them involved?
Now i have an insight of what strategic planning is. So what can be the sub-topics to include when writing an essay?
Great article. Thanks for the detailed information. Your blog is by far the best source I’ve found. Thanks!
Thank you, Victoria!
This is a comprehensive Strategic Planning manual.
Very interesting and valuable document. Enjoyed reading the participatory role of employees. Thanks a lot.
Thank you for the comment, Gemechu.
Love this article!! Thanks.
We are so glad you enjoyed this article! Thank you for the comment, Vanessa!
I send it to Beby.
Interesting read.
Thank you Bert!
Very practical article- thankyou very much
Thank you for reading!
Howdy! Great article on strategic planning for small businesses. I agree with the statistic you quote from Constant Contact. In my work, I find that most business owners can only think and plan about a year out. There are a couple of contributing factors to that ‘limited’ sight. For many business owners, this is the first time they have ever been where they are. They are suffering from ‘not knowing what they do not know.’ They are smart enough to recognize it, but they are cautious about the outlook because of it. The second is the rate of change in the economy, which only speeds up each year; it is just that very few businesses have the tools and expertise to keep pace with the change. Both factors lead to a general hesitation to look out too far or to dream too big.
I love the fact that you see that strategic planning needs to flexible and inclusive. It’s crucial to have a framework but to be flexible to incorporate learnings and shifts along the way. When you involve all the people who work in and on your business, there is more engagement, better ideas and a higher rate of success.
Great insights. Thank you, Leslie!
Thanks a lot for this wonderful article, Eric. You have resolved my problem of trying to know what strategic planning really is. I look forward to more up building articles. Thank you!
Thank you for the comment, Melvin!
Hi Christyne,
Your question about involving subcontractors is an interesting one. To me, a plan should involve as many of those that are strategic to your business and getting as much feedback as possible – as long at it’s relevant – should be the goal. So if you have a few good contractors (like my company does) that you think could contribute some value to the formation of your plan I say go for it.
Your article is helpful if you have employees, but how does this work if you have sub-contractors. Do you get them involved.
Hi Cristyne- please see the response below from Gene Marks.
Great job. This was very helpful.
Thank you for your feedback, John!
You have the BEST newsletter! This article was another great one. I shared it on all my social media platforms. I offer strategic planning services and this article is helpful in promoting my services. As well, most people think a strategic plan is ONLY for nonprofits. Thank you!
Hi Leslie, thanks so much for sharing!
Great summary “how-to” article for busy business owners. I often encourage our clients to start simple and achieve! This road map is an excellent way to jump in to real-life strategy setting!
Thank you, Patti!
This is an explicit, yet simple, post on strategic planning.
Thanks deeply for sharing this!
You’re welcome! We’re so glad you liked it and found it informative.
Great article, thanks for spelling this out in such easy-to-read terms.
Thanks for your feedback, Wende!
It’s a great eye opener into strategic planning process. Thank you for the great efforts.
Glad you liked the article! Thanks for the comment!
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Strategic Planning For Small Business: How To Get Results
According to the U.S. Bureau of Labor Statistics , around 20% of small businesses fail within the first year. By the end of their fifth year, this number increases to 50%. Once you hit the ten-year mark, only 35% of small businesses remain operational. While the lack of an effective strategic planning process isn’t the sole reason for these failures, it is certainly a contributing factor.
A lot of SMEs (Small to Medium Enterprises) are unable to define and execute a proper strategic plan. This is usually because most small SMEs do not understand strategic planning and the role it plays in managing your business.
Strategic Planning For Small Business
Following is a guide to help you understand the strategic planning process and the importance of small business strategic planning .
What Is the Strategic Planning Process?
The strategic planning process is a process used by organizations to develop a plan for achieving their long-term organizational goals. It works as a roadmap that is used to identify your strategic goals and objectives, as well as what needs to be done to achieve them.
What Steps Are Involved In the Strategic Planning Process?
The strategic planning process for small businesses is as follows:
Step 1: Analysis of Your Strategic Position
Small business strategic planning begins with analyzing your current strategic position. This involves understanding the external and internal environment of your organization and identifying your strengths, weaknesses, opportunities, and threats (SWOT analysis).
An analysis of the internal environment of your organization helps you understand your strengths and weakness. As a result of analyzing the external environment, you gain insights regarding the opportunities and threats present.
In order to conduct a SWOT analysis, gather input from sources such as the executives of the organization, your customers and external market data. When you gather this information, it will help you identify your strategic position in the market. This is used to identify the strategic goals and objectives for your organization and help in developing a plan for the future.
You should also carry out what’s known as a PESTLE analysis. This involves understanding the political, economic, social, technological, legal, and environmental factors that affect your organization.
A PESTLE analysis is normally conducted before the SWOT analysis. The results of this analysis are used to identify the potential opportunities and threats in the external environment of your organization.
Step 2: Developing a Vision
The second step of strategic planning is developing a vision. Using the information gathered in the previous step, you must develop a roadmap for the future. Remember, an organization’s vision is more than just a two-line statement on your website. It is the foundation of your strategic planning process.
The strategies or objectives that you adopt must be aligned with your vision.
This is important because you developed your organization’s vision according to the condition of the market. Market conditions change on a daily basis and you must adapt accordingly. However, abandoning your vision and strategic plan in favor of short-term success will affect the sustainability of your organization.
Step 3: Developing a Mission Statement
Many organizations fail to understand the difference between the vision and the mission statement. They believe them to be interchangeable, but this is not true.
A company’s vision represents its long-term plan and where they want to go.
A mission statement , on the other hand, identifies the purpose of the company. It helps answer questions such as what the company does, who its customers are, what value they hope to provide, etc. Essentially, it helps determine how you plan to accomplish your vision.
Step 4: Establishing Organizational Values
This is another key step in the strategic planning process. In order to accomplish your mission, you must establish some organizational values.
These core values will define the culture of your organization. They will help establish how employees are expected to behave and what they must strive to achieve.
Core values are the things that you truly care about and live every day. Creating core values that are nothing more than a “wish list” is a waste of time and energy. #ProTip
The culture and values of an organization play a very important role in its success or failure as well. What your employees do on a day-to-day basis will determine your achievements through the course of the year.
Step 5: Risk Assessment
Risk assessment is very important in strategic planning. This is an extension of the weaknesses and threats identified earlier in the first step of the planning process. You must be constantly aware of the risks and roadblocks that stand in the way of your goals and objectives.
Assessing the possible risks associated with executing your strategic plan helps you plan ahead. It allows you to take on a proactive approach so that you are able to act quickly and resolve any problems that arise.
Step 6: Developing a Small Business Strategic Plan
So far, you have identified your strategic position in the market as well as your vision, mission, and the risks associated with your plan. You are now ready to develop a strategic plan for your small business.
In order to develop your plan, you must consider the following:
- What strategies will have the greatest impact and help achieve the vision and mission of the company?
- Which types of impact should you prioritize? (For instance, are you looking to establish a value-based relationship with your customers or focus on generating revenue?)
- How do you expect your competition to behave?
- Which objectives need to be achieved urgently?
- What tactics should you employ to execute your strategies?
- What resources do you have available?
- How should these resources be allocated?
- How will you measure the progress of your strategic plan?
You must use your vision, mission statement, and organizational values as a reference when selecting strategies. This helps you discard any initiatives that do not further the progress of your organization and help improve your strategic position.
Step 7: Executing and Managing Your Strategic Plan
Once you have developed a strategic plan for your business, you can move on towards implementing it. In order to execute your strategic plan, you must first communicate it to the rest of the organization.
This is done through meetings, email, conversations and sharing the relevant documentation. Make sure your employees receive a clear outline of the organization’s vision, mission, values, goals, objectives, strategies, and tactics.
Organizations that fail to communicate these crucial aspects of a strategic plan to their employees are likely to fail.
Once the entire organization is on the same page, start executing your strategic plan. This involves setting up teams, organizing and allocating resources, guiding and motivating employees, and keeping track of the progress made.
Step 8: Reviewing the Strategic Plan
In the final stage of the strategic planning process, you must review your strategic plan and make changes accordingly. Reviewing your strategic plan involves analyzing the amount of progress made and the current performance of your team.
Compare your progress with the standard of performance that was expected. You must also re-evaluate your priorities and any shifts in the internal and external environment of the organization.
If you observe any changes that influence your strategic position, revise your strategic plan and implement it accordingly. This helps to ensure long-term success.
What are the Benefits of Strategic Planning for Small Businesses?
Strategic planning is one of the key determinants of success for an organization. Some of the key benefits of strategic planning for SMEs include:
It Helps to Minimize Risks
Economic uncertainty is a common phenomenon. As a result, businesses that do not have a functional or concrete strategic plan will find it harder to succeed.
A strategic plan can help mitigate this risk.
It provides the organization with valuable information regarding industry trends and competitors. This allows you to make better decisions. It also helps to bring things into perspective. A business is a dynamic entity that’s fueled by innovation and creativity.
A strategic plan is a great way to rekindle that entrepreneurial spirit and bring in fresh ideas that will take well in the market.
It Gives a Sense of Direction
Small businesses need to survive amongst the large corporations and competitors that exist in their niche. Having a sense of direction is very important in this regard. Fortunately, your strategic plan is a constant reference.
It helps you determine whether you are on the right track or not. It helps you keep track of the goals that have been achieved and those that need to be worked on.
Having a strategic plan in place will help you analyze your progress and allocate resources accordingly. It helps you keep your business focused on only the initiatives that support your company’s mission. This is extremely important for the survival and success of SMEs.
It Minimizes The Inefficient Use of Resources
Strategic planning is very useful in streamlining the operations of your business. It helps bring every employee on the same page. This prevents inefficient use of resources. All employees work towards the same goal and do not invest time and money in tasks that are not aligned with your goals and objectives.
It Enhances Operational Efficiency
With a strong strategic plan in place, a business has a roadmap to follow. This roadmap leads to tactical action steps of the goals they want to achieve.
Organizing functional activities, managing management, determining decision making factors and deciding how to align and budget capital/resources are just a few areas in which strategic planning can help.
In fact, a strategic plan is a great way to break down long-term goals into shorter, more achievable ones. This ultimately increases the productivity and operational efficiency of SMEs.
It Improves Employee Engagement
Another advantage of strategic planning for SMEs is that it improves employee engagement. We have already discussed how the strategic planning process helps bring every employee onto the same page.
When this happens, employees are able to take better ownership of the goals and objectives that have been defined. A strategic plan also inspires trust and motivation within employees.
This is particularly important for SMEs and their employees. A strategic plan inspires confidence in your capacity to lead the organization to success. Knowing that there is a formal strategic plan in place encourages employees to work harder. It also provides employees with some concrete goals and objectives that they can aim for.
It Provides a Formal Framework
The strategic planning process helps specify the policies, procedures, and strategies to be followed. It involves decisions regarding the deployment of resources and provides a guideline for implementing the strategic plan. When you go through this process, you establish a formal framework.
This helps managers in making better decisions in case a problem arises. It also allows employees to act in a more responsible manner. They are aware of how their actions impact the organization and whether it can influence the strategic plan in a negative way.
It Improves the Scope for Improvement
Reviewing and revising your strategic plan can help you improve the overall efficiency and profitability of the organization. You are able to analyze your existing strategies and whether they have delivered the results that were expected.
It also allows you to adopt new trends much more quickly and take on a more dynamic approach. This can help you stay afloat in spite of external and internal challenges that threaten the sustainability of the organization.
The Takeaway: Small Businesses Must Have a Strategic Planning Process in Place
Strategic planning is an extensive and dynamic process that encapsulates the organization’s vision, mission, goals, objectives, and strategies. It helps provide a defined framework under which an organization must operate.
Having an effective strategic planning process in place can benefit an SME in several ways. It improves the financial and operational efficiency of small businesses, helping them stay viable. It also plays a crucial role in identifying and establishing the values and work culture of a small business.
Most importantly, it defines the business’s vision, purpose and thus, its identity.
Working without a strategic plan can put you in a risky and uncertain business environment that can lead to the eventual demise of your small business.
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Kevin A. Nye
A veteran of multiple industries, Kevin A. Nye has applied more than 20 years of management and leadership experience to a consultancy designed specifically for the benefit of small businesses. Having served in roles in Supply Chain, Operations, and Regional management, Mr. Nye was previously the Chief Operating Officer of a regional steel company and is currently Director of Operations for a third-generation family-owned citrus packing company.
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Strategic Planning in Business
Table of Contents
What is business strategic planning, the strategic planning process in 3 steps, what is a business strategic plan, key components of a business strategic plan, business strategic plan example, strategic plan vs. business plan.
Strategic planning is key for success in business. By planning strategically for the future, a business can achieve its goals. It’s easier said than done, but the more you know about strategic planning, the better chance you have at succeeding.
Business strategic planning is the process of creating a business strategy and an accompanying business strategic plan to implement a company’s vision and achieve its goals over time. The main goal of strategic planning is to take a company from its current state to its desired state through a series of business actions.
The business strategic planning process usually consists of defining business goals, doing a SWOT analysis to assess the company’s business environment and developing a business strategy. The leadership team is in charge of business strategic planning, as it has a very important impact on the overall direction of a company.
To oversee the execution of a business strategic plan, managers need to manage time, costs and tasks. ProjectManager is a project planning tool that allows managers to plan, schedule and manage their team’s work. Plan your work with professional tools such as Gantt charts, kanban boards, task lists and calendars. Then track your progress in real time to stick to your strategic plan. Get started for free.
Strategic planning is very important, but it doesn’t need to be overly complex. Let’s simplify this process by breaking it down into three simple steps.
1. Set Business Goals
A business goal is simply an accomplishment that a company wants to achieve in the short, medium or long term. Business goals can take many forms such as increasing sales, revenue, customer satisfaction levels and brand positioning, among many other things.
2. Conduct a SWOT Analysis
The goal of a business strategy is to leverage the strengths of a business and minimize the impact of its weaknesses. Those two things are internal factors. The strengths of a company can become competitive advantages that can lead to business growth. There are many types of business strengths and weaknesses such as scale, speed, or R&D, just to name a few.
Threats and opportunities refer to external factors such as competitors or an untapped market. A successful business strategy considers all of these factors to define how a product or service will be created, marketed and sold, and a SWOT analysis is a great starting point.
3. Develop a Business Strategy & Strategic Plan
Once you’ve completed your SWOT analysis, you can create a business strategy that’s designed to help position your company in the market. Your business strategy guides how you produce, market and sell your product or service based on internal and external analysis.
Then, you’ll need a strategic plan to explain how you plan to execute that business strategy.
A business strategic plan is an implementation plan that’s meant to turn a business strategy into action items that can be executed over time. Business strategic plans are usually executed over the course of 3-5 years.
How to Develop a Strategic Plan
To develop a strategic plan, you should ask yourself the following three questions.
- Where Is the Business Now? Gather as much information on your business as possible including internal operations and what drives its profitability. Compare the business to competitors and note the similarities and differences in detail. This isn’t a day-to-day operational study, but a broader look at the business in context to itself and its environment. But don’t go crazy; stay realistic in terms of your business goals. Be detached and critical in your analysis.
- Where Do You Want to Go? Now it’s time to decide what your top-level objectives are for the future. Start with a vision statement , objectives, values, techniques and goals. Look forward to five years or more to forecast where you want the business to be at that time. This means figuring out what the focus of the business will be in the future. Will that focus differ from what it is now, and what competitive advantages do have you in the marketplace? This is where you build the foundation and initiate changes.
- How Can You Get There? Once you know where you are and where you want to go, it’s time to plan. What are the changes to the structure, financing, etc., necessary for the business to get there? Decide on the best way to implement those changes, the timeframe with deadlines and how to finance it. Remember, this is looking at the business at large, so consider major endeavors such as diversification, existing growth, acquisition and other functional matters. A gap analysis can be a big help here.
Once you’ve answered the above questions and have a way to achieve the long-term goals laid out in the strategic plan, the next step is making sure you have the right person to manage all of its moving parts. They must be analytical, a creative thinker and able to grasp operational detail.
That doesn’t mean the strategic plan is led by one person. It’s best to not do it alone; seek other opinions. The people in your organization, from bottom to top, are all great resources to offer perspectives from their standpoints. Don’t forget to take in the advice of stakeholders, including customers, clients, advisors and consultants.
To create a strong strategic plan, one must first have a strong understanding of the business that is to expand. How does the business work? Where does the business stand in relation to competitors in the marketplace? A strategic plan is built on the bones of the following foundational elements:
- Mission Statement: The mission statement describes what your company does.
- Vision Statement: The vision statement explains where your company expects to be in the future.
- Core Values: Guiding principles that shape your company’s organizational culture.
- Business Objectives: Consider using the SMART goal-setting technique . This simply means setting up specific, measurable, attainable, relevant and time-bound objectives that your company wants to achieve.
- SWOT Analysis: External and internal factors that make up your company’s business competitive environment.
- Action Plan: A plan outlining steps that will be taken to achieve the business objectives of your organization.
- Financials: A section that shows the financial performance expectations and the resources that will be required to implement the action plan.
- Performance Measurements: Performance indicators that will be used to measure the effectiveness of the action plan.
Never forget to check your strategic plan against reality. In addition to being achievable, it must be practical for your business environment, resources and marketplace.
Now let’s look at a simple business strategic plan example. This is a strategic plan for a small construction company.
1. Mission, Vision & Core Values
- Mission Statement: To build residential spaces that provide wellbeing for our clients.
- Vision Statement: To offer the best construction experience for our clients and expand our brand throughout the globe.
- Core Values: Sustainable innovation and respect for the environment.
2. Business Objectives
- Business Objective 1: Grow operating margin from 15% to 20% over the next year.
- Business Objective 2: Reduce operating costs by 5% over the next quarter
- Business Objective 3: Increase the number of new contracts generated by 10% over the next year
3. SWOT Analysis
- Strengths: Available financing, brand visibility and know-how.
- Weaknesses: Lack of PPE, human capital and expertise in construction areas such as plumbing, electrical work and masonry, which requires subcontractors.
- Opportunities: Lack of environmentally-friendly construction companies in the market.
- Threats: Larger construction companies compete for contracts in the area.
4. Action Plan
- Business Objective 1: To grow operating margin, new employees with plumbing, electrical work and masonry experience will be hired to cut down subcontractor costs. This must be done by the end of the first quarter.
- Business Objective 2: To reduce operating costs, the company will acquire property, plant and equipment. By doing this, the company will no longer rent equipment from third parties, which will reduce operating costs significantly in the medium and long term.
- Business Objective 3: To increase the number of new contracts generated, the leadership team will invest more in the PR, marketing and advertising departments. The company will also invest in key positions for the construction bidding process such as contract estimators.
- Financials: This section will explain in detail what are the costs associated with the work items in the action plan as well as the expected financial benefits for the company.
Strategic Plan Template
Our free strategic plan template helps leadership teams gather important information about their business strategy, which makes it the perfect tool to start shaping a strategic plan for your business or project.
A strategic plan is a type of business plan, but there are distinctions between the two. Whereas a strategic plan is for implementing and managing the strategic direction of a business, a business plan is more often the document that starts a business.
A business plan is used primarily to get funding for the venture or direct the operation, and the two plans target different timeframes in business history. A strategic plan is used to investigate a future period, usually between three-to-five years. A business plan is more routinely a year out.
A Different Intent
A strategic plan offers a business focus, direction and action to help the business grow from the point it presently resides to a greater market share in the future. A business plan, on the other hand, is more focused on offering a structure to capture and implement ideas that initially define a business.
With a strategic plan, existing resources are prioritized to increase revenue and return on investment. The business plan is different in that it’s seeking funding for a venture that doesn’t yet exist. Where a strategic plan is building a sustainable competitive advantage in the future, a business plan is designed to take advantage of a current business opportunity.
So, a strategic plan is communicating direction to teams and stakeholders in order to achieve future goals. A business plan isn’t talking to staff, which is likely nonexistent or minimal at this point. It’s speaking to banks and other financial supporters.
Strategic planning, like any planning, requires keeping a lot of balls in the air. That means having the right tool to plan, monitor and report on all the various tasks and resources. ProjectManager is online project management software that gives you control over every aspect of creating and implementing a strategic plan. Try it today with this free 30-day trial.
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Strategic Planning for Small Businesses 1 of 21 Strategic Planning for Small Businesses Dec. 09, 2015 • 2 likes • 1,332 views Download Now Download to read offline Business This is a presentation Joe Hines created for his meet-up group, Orange County Small Business Marketing Connection.
Strategic Planning for Small Businesses By Joe Hines on Dec 9, 2015 This is a presentation Joe Hines created for his meet-up group, Orange County Small Business Marketing Connection.
Simple Small Business Strategic Planning Tool. This presentation was given by Art Helmstetter at a Dayton Chamber of Commerce sponsored workshop to help small businesses learn how to develop a strategic plan for their business. For information or assistance contact www.b2bplanner.com.
Strategic planning in management is the process of documenting and establishing the direction of your small business—by assessing both where you are and where you’re going. So, what is the purpose of a strategic plan? And what does an effective strategic plan consist of? A company’s strategic plan consists of it’s: Mission Vision Values
Step 2: Developing a Vision. The second step of strategic planning is developing a vision. Using the information gathered in the previous step, you must develop a roadmap for the future. Remember, an organization’s vision is more than just a two-line statement on your website.
This is a strategic plan for a small construction company. 1. Mission, Vision & Core Values Mission Statement: To build residential spaces that provide wellbeing for our clients. Vision Statement: To offer the best construction experience for our clients and expand our brand throughout the globe.