A lot of entrepreneurs are unclear on what strategic planning really means, and how it can benefit their business. In its simplest form, a strategic plan is meant to help you determine exactly where you want your company to go over the next 3-5 years - and how it’s going to get there.
The last thing you want as a small business owner is to get lost in today’s competitive chaos. A well laid out strategic plan can improve your success by guiding you through the many challenges your company is likely to face.
Breaking Down Strategic Planning
A strategic plan is a big-picture plan that informs your day to day operations and helps you set goals. As a systematic way to chart your company’s direction, strategic planning provides structure and controls that let you take your business where you want it to go.
The components of a good strategic plan vary - and the smaller your company is, the briefer your plan is likely to be.
From a practical perspective, however, it’s the action plan portion of your strategy that allows you create business objectives, assign due dates to relevant tasks, and determine which of your team members will be responsible for what.
Strategic Planning Benefits
So why should your business bother with strategic planning? There’s a common misconception that putting a strategic plan together is only necessary and helpful for large companies. But in truth, any size business can benefit.
Strategic planning will not only reacquaint you with why you became a business owner in the first place, it will help you:
- Perform a SWOT analysis to gain a better understanding of your company’s strengths, weaknesses, opportunities, and threats,
- Use SWOT findings to create tactics that will improve your performance,
- Put those tactics into action by getting a plan down on paper, and
- Track and measure the results of your plan
By taking the time to evaluate your company’s position, resources, and competitors, you’re more likely to make better business decisions that also minimize risk.
What’s the Difference Between a Strategic Plan and a Business Plan?
It’s more than a matter of terminology: there’s actually a marked difference between a strategic plan and a business plan. As a comprehensive outline that includes a financial plan, a marketing plan, an operational plan – and a strategic plan – a business plan is a much broader document.
Structural components aside, however, the main difference between the two is that a business plan revolves around questions related to what you want to do with your business, while a strategic plan is more concerned with how you will do it.
Strategic Action Plan Steps
Laying out a strategic action plan is like producing a detailed roadmap that plots the path to your goals. Creating an action plan is a great way to reignite your entrepreneurial passion. And as a minimum, it will help you see beyond the quagmire of your day-to-day activities.
Whenever possible, you should take a team approach to strategic planning. Involving key employees will encourage them to take ownership of the plan they’ve helped to create, and may help you reach your goals faster.
Whether your objectives are financial or operational, here are the steps to take when developing an action plan for your organization:
- List all the actions or tasks required to achieve your objectives.
- Set a timeline for accomplishing each task, and decide who will be responsible for carrying it out.
- Identify and assign the resources needed to complete each task (money, personnel, special equipment).
- Establish a plan for following up on each task (internal reports, meetings, project software).
- Decide how you’ll measure your progress (completion of tasks, performance metrics).
In some cases, effective strategic planning may be difficult without the help of a professionally objective point of view. A seasoned business consultant can give you a fresh perspective, help you define your goals, and even keep you accountable to them.
How to Measure Your Strategic Success
Measuring the results of your strategic efforts is the only way to know if your plan is on track. KPIs (key performance indicators) are metrics your business can use to gauge performance resulting from the steps that you’ve taken.
How you measure your success will depend very much on your original objectives. But some common measurement areas include examining changes in your:
- Sales or client base,
- Revenue, profit margin, or cash flow,
- Customer conversions or reviews
Whatever criteria you choose to work with, keeping your metrics as simple as possible will ensure the results of your action plan are easy to follow up on and verify.
In terms of how often you should be engaging in strategic planning, a lot will depend on the nature and needs of your business.
Some companies make a point of reviewing their strategic plan yearly. Others limit their strategic planning sessions to the launch of a new product or service, the introduction of a local competitor, or an unexpected challenge to their cash flow.