Do small businesses need strategic planning?
Only a few businesses succeed by chance. For most, careful planning and disciplined execution of growth strategies move the needle. If you want your business to grow, you need to set priorities, focus on the available resources and ensure employees (along with all the stakeholders) are working towards common goals. In short, you need strategic planning.
Strategic planning is determining the required actions to achieve the goals outlined in your business plan. Without a documented strategic plan, you will be shooting in the dark, hoping to hit the target.
Key components of a smart strategic plan
A strategic plan is like a roadmap showing the path to reaching your business goals. Here are the critical components:
- Mission statement.
- Vision statement.
- SWOT analysis of your business.
- Action plan to achieve goals.
- Financial assessment.
Before we address the parts of a smart strategic plan, let’s touch briefly on the difference between a business plan and a strategic plan.
Difference between business and strategic plans
A business plan and strategic plan are different from each other. Simply put, a business plan covers ‘who’ and ‘what’ aspects of a business, while a strategic plan covers ‘how’ and ‘when.’
The business plan
Traditionally, a business plan contains information on:
- Who is running a business
- Who its competitors are
- Who its customers are
- What products/services it offers
A business plan is a tour of your business model.
The strategic plan
A strategic plan tells how you are going to achieve your goals, including the steps along the way. A strategic plan also identifies who will be responsible for each step and when it must be completed by.
In simple words, a strategic plan is an action plan for your business.
Now let’s dig into the elements needed for any good strategic plan.
1. Mission statement
A mission statement is a summary of why your business exists. It’s more than just a plaque hanging on the wall in your office.
A mission statement is important because it:
- Determines the direction of your business
- Provides a tool for decision-making
- Works as a basis for alignment of different sales and marketing plans
- Helps in shaping the overall strategy
Let’s look at the mission statement of the Adidas group:
“The Adidas Group strives to be the global leader in the sporting goods industry with brands built on a passion for sports and a sporting lifestyle.”
Isn’t it powerful?
Write down a clear, powerful mission statement for your business. Make sure it tells people why your business exists.
2. Vision statement
Unlike missions statements, which are rooted in the present, vision statements are future-based. They’re meant to inspire and direct employees rather than customers.
A vision statement works like the North Star, keeping everyone pointed in the right direction to achieve the common goals.
When you are writing a vision statement for your business, think big. Ultimately, what impact would you like your business to have on your customers, your community, your world?
Needless to say, a vision statement is a peek into the future with a positive outlook. It helps your employees know what they are working towards.
3. SWOT analysis of your business
The SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is an integral part of strategic planning.
Can you plan your sales and marketing strategies if you don’t know your strengths and weaknesses? Also, your efforts at growth will not yield the optimum results if you don’t take new opportunities and looming threats into consideration.
Following is what you can include in the SWOT analysis of your business:
Things your business does well, your unique selling proposition, skilled staff, etc.
Things your business lacks, things your competitors do better, resource or funding limitations, etc.
Untapped markets, less competitive segments, positive press/media coverage, etc.
Emerging competitors, change in regulations, negative press, etc.
Conduct the SWOT analysis of your business by jotting down everything that comes to mind under each category. It will help you make a realistic strategic plan that is most likely to achieve your business objectives.
4. Action plan to achieve goals
You have mission and vision statements ready, and you have done the SWOT analysis of your business. Now, it’s time to make an action plan to achieve your goals.
An action plan consists of the following main things:
- Which strategies you need to achieve each goal
- What resources you require (people, financial, etc.)
- When you will execute each step
- How you will measure the success of your efforts
When you are creating an action plan, you should make sure that it is clear, complete and current.
But don’t carve your action plan in stone. It should be flexible enough to adjust to any unforeseen business challenge.
5. Financial assessment
Once you’re done creating the mission and vision statements, doing the SWOT analysis, and making a killer action plan to achieve your business goals, you should check your finances. Do you have enough funds to execute the action plan?
Be it hiring people or running marketing campaigns, you need money to run growth strategies.
If you don’t have enough resources to execute your strategic plan, you have two options:
- Raise money
- Lower your targets
It is absolutely your call. Make an informed decision after weighing the pros and cons of both the options.
Tracking the results of your strategic plan
How do you know if your strategic plan is on the right track? The answer is simple: you measure it.
The action plan you create should have associated metrics to gauge the success.
You can divide your action plan into milestones (completion of steps) and performance measures (sales, profit growth, new customers, etc.).
Also, you can have separate milestones and performance measures for each department. This will help you track the progress easily and efficiently.
Performance measures can vary from business to business, depending on the goals and the strategic plans of each. You should choose the performance measures best suited to your organization.
Strategic planning is worth the effort
A strategic plan is a roadmap to success. So it must have goals and accountability. Merely building an exemplary strategic plan won’t make the cut.
Once you have a plan in place, you need to execute, track and review it from time to time to remove obstacles and make sure that you are still on the right track. Now choose your goals and make a plan to reach them!