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Wednesday, 20 September 2017 12:53 Written by

 

 

 

Developing a strategic plan for your business 

 

"There are 3 types of businesses…those that make things happen, those that watch things happen, and those that wonder what happened."

 

The importance of developing and managing a focused Strategic Plan cannot be overstated and is a determinant in the success or failure of many businesses.  Spending your time reacting to unexpected changes, instead of anticipating and preparing for them, leaves you off guard and having to use a great deal of energy playing catch up and managing crisis after crisis.  Simply coping with your immediate challenges leaves little time to anticipate and prepare for the next challenge.  It’s a vicious cycle that can lock you into a reactive position. 

 

Why is strategic planning so important?

 

Strategic Planning provides an opportunity to influence the future and assume a proactive position.  It provides focus, direction and purpose to your everyday business activities.  Strategic planning is not a short term solution, rather it is a long term commitment to ‘big picture’ goals which will ultimately change your current position.  A comprehensive Strategic Plan will also communicate your mission to everyone involved in your business and breaks down your big picture into actionable goals and objectives.  It can also help business owners and management teams determine where to spend time, how best to use human capital and where to concentrate funding.

 

I have a general idea of where I’m going so do I really need a structured process?

 

The short answer is…YES!

Most businesses will have some kind of plan and underlying strategy in place, even if a formal and documented planning process has not occurred.  Strategies and goals may come about by accident or through an evolutionary process in the business.  The strongest organisations though do not allow direction to be determined by accident.  A clear and focused plan, which is managed and modified regularly, is the hallmark of a successful business.

Developing and managing a Strategic Plan takes discipline, foresight and honesty.  You’ll need to look at your business like you’ve never looked at it before.  While the overall goal of strategic planning is to produce a workable plan to direct capital and resources, there is value simply in the process itself.  Taking time to step back and think about your business objectively is a beneficial process for your whole team.

 

Our tips for strategic thinking

 

Your plan will have a greater chance of successful implementation if you keep the following in mind:

  • If you’re going to take the time to do it, make sure you do it right.  Don’t develop a plan because common sense says (or we say) you should have one, because you’ll only get out of the process what you put into it.
  • Try very hard to forget about the way your business has always done things, and the way you are currently do things.  Strategic planning requires an open mind and objective thinking.  Start with a clean slate and think creatively.
  • You must be fully committed and understand how the plan will improve your business.  A clear picture of the end result will help you maintain your vision and give you the energy to keep the plan alive and operational.
  • Staff responsible for implementing the plan should be on board from the onset to ensure they feel ownership of the process.
  • To be an effective management tool, a plan must be used and continually reviewed.   After all your hard work putting it together, don’t put it in a drawer to be forgotten about.  Think of the planning process as a continuous cycle to be reviewed and adjusted each quarter.

 

Essentially, your plan is going to address the following 3 big picture questions:

 

Where are you now?

Before you can move forward you’ll need to take stock of your current position.  Getting an accurate picture of what your business currently looks like, and what the operating environment looks like, will provide the starting point for assessing what needs to be done in the future to reach your goals.

Where do you want to be?

To develop your plan you need to know exactly what you want to head towards.  Unless you know and understand your destination, and see it as achievable, you can get distracted or diverted by other events or problems that may occur along the way.  Clarity is key.  A clear direction and focus will lead to clear goals and action plans.

What do you need to get there?

Once you have identified the outcome you are trying to achieve you are ready to develop a plan to take you there.

 

 

Stage 1 – Analysis

 

The Analysis stage of the strategic planning process is an exploration of the overall condition of your business and the environment in which it operates. Essentially it paints a detailed picture of who you are right now. 

A thorough internal analysis will consider the strengths and weaknesses of your business, the financial performance, people and culture, operational limitations, current market position and the critical issues facing the organisation.

An external analysis should focus on your competitors as well as an assessment of market opportunities and threats, changing technologies, changing regulatory or legislative concerns, trends in the market and other influences on your business. 

You can use the following as a starting point for the factors to consider in this part of the process:

 

Internal Analysis

External Analysis

What are the strengths that contribute to the success of the business?

Who are your primary competitors?  What competitive advantage do they have?  What weaknesses do you think they have?

What are the weaknesses that exist within the business?

What are the potential opportunities for your business?

What would your customers identify as a weakness in your business?

What are the current and potential threats to the growth and viability of your business?

What would your competitors identify as a weakness in your business?

Are any of your competitors developing products or new markets which could be a threat to your business?

What are the critical issues facing your business today or in the near future?

Identify any technological changes that represent a threat or opportunity to your business?

How has your business been tracking financially over the past few years?

Is technology in your business changing rapidly and will your business be able to keep up with it?

Assess the quality of the people working for your business.  What is the level of talent?  In what areas are your people letting down the business or improving the business?

Are there any regulatory or legislative changes that might affect your business?  Think about both positive or adverse effects.

What are the operational limitations of the business in terms of technology, process, space, skills?

What market trends are affecting, or will affect, your business?

Assess the culture of your business.  What are the attitudes towards customers, employees, management, business growth, learning, skill development and process development?

In the markets currently served by your business, are there key customers or customer groups that aren’t doing business with you?  Are your competitors doing business with them?

What is the level of energy, innovation and creativity like in your business?

Are your customers’ buying habits changing?

 

Once you have thoroughly analysed and documented the current state of play it is time to move on to documenting who and where you want to be.

 

 

Stage 2 - Developing your vision and mission statements

 

Developing a vision and mission statement is an effective way to communicate to staff, customers, vendors and the general public what your business stands for and where it is headed.  The statements reflect the philosophy and principles that the business, and everyone in it, adheres to.

A vision statement is a short and inspiring statement communicating what a business intends to become or achieve at some point in the future.  It is a statement of values, and sometimes goals, which a business constantly strives towards but does not explain how it is going to achieve those goals.

A mission statement clarifies an organisations purpose, is longer than a vision statement, but still unambiguous and to the point.  A mission statement may include the following:

  • Your moral stance eg. “an environmentally friendly company”
  • How you want to be perceived as a company
  • Your primary business focus and the goals you are working towards
  • Who you target and who you care about
  • A very high level description of what you offer
  • How you expect to grow

For simplicity, vision and mission statements are sometimes combined into the one statement.  The most important feature of this statement is that it is honest, it is brief and that it means something.  Consider the following questions when developing your statements:

  • What is important to you?
  • What are you trying to achieve?
  • Who do you serve?
  • How do you want to be perceived?

 

Some examples of inspiring mission/vision statements:

 

The Walt Disney Company – mission statement

“The mission of The Walt Disney Company is to be one of the world’s leading producers and providers of entertainment and information  Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.”

 

Ben & Jerry’s Ice Cream – 3 part mission statement

Product Mission: To make, distribute and sell the finest quality all natural ice cream and euphoric concoctions with a continued commitment to incorporating wholesome, natural ingredients and promoting business practices that respect the Earth and the Environment.

Economic Mission: To operate the company on a sustainable financial basis of profitable growth, increasing value for our stakeholders and expanding opportunities for development of career growth for our employees.

Social Mission: To operate the company in a way that actively recognises the central role that business plays in society by initiating innovative ways to improve the quality of life locally, nationally and internationally.

 

IKEA - Vision Statement

At IKEA our vision is to create a better everyday life for many people.  Our business idea supports this vision by offering a wide range of well-designed, functional home furnishing products at prices so low that as  many people as possible will be able to afford them.

 

Google -  Mission statement

“Google’s mission is to organize the world’s information and make it universally accessible and useful.”

 

Amazon – Combined mission/vision statement

Amazon’s vision is to be earth’s most customer centric company; to build a place where people can come to find and discover anything they might want to buy online.”

 

 

Stage 3 - Developing goals

 

The next stage of the planning process involves setting meaningful goals to execute your plan. 

 

Goals and Action Plans

 

Setting and achieving goals is the common feature of successful companies and is a critical element in your Strategic Plan. When we set short terms goals we are breaking down our strategy (long term goals) into relevant, measurable and attainable elements.  Goals connect your business strategy to your results and are vital to keeping you moving in the right direction.

 

Helpful tips on goal setting

 

  • Goals must be attainable but don’t set goals that are too easy to achieve.
  • Goals must be easy to understand.  If goals need explanation then they are not clear enough so remember to keep it simple.
  • Goals should reflect the critical aspects of your business.
  • Too many goals will dilute the focus of the business, too few will not create enough focus.  Experts recommend that between three and seven goals should be developed.
  • If the achievement of a goal can’t be measured then it is not a good goal.
  • Great goals are outcome focused so consider what it is that you really want to achieve.
  • Consider what the consequences will be for not achieving the goal.

 

What kinds of goals should your business be setting?

 

Organisational goals can be thought of as a wish list.  They are established to accomplish your business’ mission or vision and are statements of an end result, achieved in a specified period of time at a specific level of quality.  Goals could be developed around some of these areas:

 

Market share

Growth

Diversification

Customer service

Market positioning

Image

Product / service development

Geographic coverage or expansion

Innovation

Productivity

Return on investment

Social responsibility

Technology

People

Ownership

Management and administration

Marketing

Competitiveness

 

 

Setting SMART goals

 

Keep in mind that great goals are SMART goals. A SMART goal is able to be translated into the key activities which are required to accomplish the goal.

 

Specific – so you know exactly what you are expecting to achieve

Measurable – so you can assess your progress

Achievable - so the goal is within reach given where you are now

Relevant – the goal is focused on the right thing and in line with your vision

Time-bound – so you have a deadline for completion

 

Turning your goals into actions

 

Once your goals have been developed, supporting action plans need to be put in place.  Action plans detail the specific steps you will take to carry out your goals and they assign responsibility and accountability to a member of your team.  In essence, your Action Plans define what must be achieved and by when.  Keep in mind that while one goal may result in more than one Action Plan, all Actions Plans should support a goal.

For example, a business goal may be to “improve the financial performance of the business.”  The goal can be measured, it is achievable and it is relevant.  An Action Plan, or a few Action Plans, could be developed around this goal to bring more focus and specificity to it. 

Some possible Action Plans for this goal are:

  • Reduce Accounts Receivable collection from current 56 days to 45 days by 31/12/17.
  • Reduce Inventory from current level by 10% by 31/12/17.

These example Action Plans show that the goal can be brought into focus by setting specific targets which will help “improve financial performance.”  The Action Plans are also easily measured and provide greater accountability by setting a date by which the targets need to be reached.

 

Action Plan Criteria

 

A good Action Plan sets a key activity required to accomplish a goal.  Keep in mind that Action Plans:

  • Provide a timetable for activities
  • Determine the resources required
  • Identify who will be responsible for carrying out the activity and set a date for this to occur by

Example action plan worksheet which you can use as a template for your business goals:

 

Business Goal:

“To improve the financial performance of the business”

Measure of success:

Reduce Accounts Receivable collection from current 56 days to 45 days by 31/12/17

Actions required to achieve this goal:

Investigate further payment options we can offer to customers

Responsibility:

Jane

Due Date:

31/07/17

Review time requirements for earlier collections process

John

31/07/17

Put in place a process for collections

Jane

15/08/17

Review training requirements for Accounts Receivable staff

John

15/08/17

Provide further training for Accounts Receivable staff

John

31/08/17

 

 

Strategic Planning Stage 4 – Document your plan

 

Once you have completed Stages 1 to 3 it is time to turn your hard work into a document that can be distributed to key personnel in your business for ongoing management and review.  Here is a checklist for what to include in your Strategic Plan document:

 

1

Internal analysis findings

2

External analysis findings

3

Vision Statement and Mission Statement

4

Your business goals

5

Action Plans for each of your goals

 

 

Strategic Planning Stage 5 – Execute and monitor your Plan

 

Congratulations!  You’ve put in the hard work to develop a Strategic Plan for your business but what really matters now is how well your Plan gets implemented and monitored.  This is where most businesses fall down in any planning process.  They start with good intentions, but lack the follow through to ensure a plan gets fully implemented and observed.

Instilling accountability is imperative and there are a couple of approaches to this which you might consider.  Written progress reports on a regular and pre-defined basis can be effective but perhaps the most effective method is to conduct periodic meetings to assess written reports and received verbal reports.

Ultimately, the key factor in successful implementation of your Strategic Plan will be your commitment to follow up and follow through.

Some questions to consider in your follow up sessions:

  • Are we doing what we said we were going to do?
  • Is what we said we were going to do still appropriate?    
  • How much have we progressed towards our goals?
  • What new information have we got and does it alter our plans? 

Your Strategic Plan is a vital asset in your business success plans.  That you have chosen to undertake this process is an indication that you and your business are committed to long term viability.

Developing a Strategic Plan is not difficult and does not need to be particularly time consuming.  In fact, keeping the process simple and keeping it moving will be a lot easier if the development process isn’t encumbered by unnecessary detail or endless discussion.

This article has been designed to assist your business in developing a Strategic Plan for the future.  It encourages you to make a rigorous assessment of where your business is now, and what options may be available in the short and long term.  If at any time you need assistance, or simply need clarification that you are on the right track, a Marsh & Partners advisor can guide you through any stage of the process.

Good luck and good planning!

 

 


 

 

 

 

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