Your strategic plan is like a map to you achieving your objectives. Without a solid strategic plan you risk taking “the long way round” or worse “coming to a dead end”
To understand why strategic planning is important for your small business it is first important to distinguish between objectives and strategies. Basically, objectives state, quantifiably, where your small business is (ideally) headed, while strategies state how you will achieve your objectives. This distinction alone should make it clear why strategic planning is so important to the success of your small business.
Probably the simplest explanation of the importance of strategic planning is that it will, again, force you to analyse and explore so many components of your business and business plan. Strategic planning is about understanding the big picture and knowing what you want for your business, and how you intend to achieve that. It is a process of:
- Exploring opportunities
- Identifying, analysing and evaluating options
- Developing a realistic plan to achieve desired results
Further, your strategic plan should be broken down into a variety of areas to cover any eventuality in your business. These include:
- Entry and exit strategies – for specific niches or markets
- Growth strategies – for increasing sales through, for example, advertising, better customer service, promotions and loyalty programs
- Concentration strategies – for recovery from a failed growth strategy
- Profit strategies – for capitalising on existing customers by increasing the average sale value or purchase frequency; or by increasing the effectiveness of existing assets
- Contraction strategies – for maintaining profitability, or increasing ROI, while decreasing investment
- Turnaround strategies – for saving a business with decline fortunes….after careful assessment that it is, in fact, worth saving
- Liquidation strategies – for abandonment of a business as painlessly and profitably as possible
By now it the importance and value of strategic planning should be apparent!
One of the most common methods for strategic planning is SWOT analysis i.e. examine your Strengths, Weaknesses, Opportunities and Threats. Essentially strengths and weaknesses are linked to your business; opportunities and threats to the market in which you operate. You will be well on your way to developing a sound strategic plan if you apply SWOT analysis to:
- Your business
- Your sales
- Your market
- Your competition
Having a clear strategic plan will allow you to further plan for timing, tasks and responsibilities within your business. All these factors contribute to a clear vision and a strong corporate culture which allows for you as the owner, and your staff, to work efficiently and effectively towards an end goal. By monitoring and reviewing your strategic plan at regular intervals you will be able to determine if objectives are being met and, if not, why not. This may lead to some changes within your small business, within the plan – or perhaps specific goals will be deemed unattainable or undesirable and scrapped.
Your strategic plan is like a map to you achieving your objectives. Without a solid strategic plan you risk taking “the long way round” or worse “coming to a dead end” – both situations from which you may not financially or psychologically recover from, particularly in the start-up phase of a small business venture. Ask yourself: How important is it to avoid that?
Make your plan logical and be sure that it matches your business’ strengths and market-place opportunities – it will make all the decision making so much easier.
All this analysis, examination and planning may seem boring, irrelevant or cumbersome but it will allow you to worker smarter and not harder, and will really, truly increase the likelihood of your business not only surviving, but also thriving and prospering. How important is that?