Every business should have a strategic plan, but strategic planning and management are not areas where most small businesses choose to invest much effort. Although the words “strategy” and “strategic” are often thrown around, many businesses operate without a defined, clearly communicated strategic plan.
This should really come as not much of a surprise, because strategic planning is a process with a defined scope that requires critical thinking for development.
Strategic Planning Process and Scope
The strategic planning process is the structured method that is used by businesses to develop a roadmap to achieve their long-term goals.
In this planning process the business owner and senior leaders define the vision for the future and identify goals and objectives. It also prioritizes the order in which these goals will be implemented.
Strategic planning usually spans three to five years (or longer) and evaluate mid- to long-term goals. The product of the exercise is a strategic plan which can be communicated to employees, customers, external stakeholders, investors, and business partners.
A strategic plan is not to be confused with a business plan which typically covers between one to three years and provides a roadmap to demonstrate the feasibility of a prospective new business to acquire investor funding. While strategy is discussed in a business plan, it is not broken down as it is in a strategic plan.
The Importance of Strategic Planning
A strategic plan provides guidance in the form of a roadmap on how to get to defined business goals. Businesses should periodically conduct strategic planning to assess the environment in which they operate.
These changes could include industry, regulatory, legal, competition, risks and business growth or other changes. to consider the effect of changing business, industry, legal and regulatory conditions. These changes should be reflected in the updated strategic plan with mitigation to ensure that the business is on track to get to its goals.
4 Elements Required For Strategic Planning
1. Vision and Mission: Strategic planning starts with vision and mission statements that provide the business with purpose and direction. The vision defines the future, while the mission describes the business and what it does now and where it wants to go.
2. Goals: Selection of goals require that they be SMART . This means that the goals should be specific, measurable, achievable, realistic, and time bound. Ensuring that goals are measurable is important because data generated can be used by decision-makers to evaluate how well the business is performing against goals and the overall mission.
A goal is a short statement of the desired outcome to be achieved over a long-time frame, between one to five years. These type of broad outcome goals focus solely on the desired end results but do not describe the methods used to get there. Objectives describe the actions or activities involved in achieving a goal within a shorter timeframe to reach a goal.
Process goals on the other hand incorporate specific objectives and are the SMART goals earlier referenced.
3. Align With Short-Term Goals: Strategic planning relates directly to short-term, tactical business planning and can help business leaders with everyday decision-making that better align with business strategy.
4. Review And Revise: Strategic planning helps business leaders periodically review progress against the plan and effect adjustments to changing conditions in the landscape and environment in which they operate.
5 Steps In The Strategic Planning Process
1. Identify Current Strategic Position
The starting point is to evaluate your current position because, without knowing where you are, it is impossible to calibrate to know where you need to go and how you will get there.
Typically, a SWOT (strengths, weaknesses, opportunities, threats) analysis is conducted to acquire relevant information. It uses industry and market data, including customer insights and current and future trends to identify issues that need to be addressed.
These are then aligned with the internal strengths and weaknesses of the business, external opportunities (ways your business can grow to fill needs in the market) and threats from your competition or environment.
As you generate this information, it will provide a clearer picture of the market share position of the business in the market.
2. Prioritize Objectives
Following the determination of your current position in the market, objectives are developed that will help you achieve your goals. These objectives must align with your vision and mission statements.
By asking critical questions such as which of them will have the greatest impact on achieving the vision and mission, which are the most urgent, for example, it is now possible to prioritize your objectives. This is a critical step in strategic planning and should never be rushed.
3. Develop Strategic Planning Framework
This step requires documenting the required tactics necessary to achieve your objectives with clearly defined responsibilities. There is no point defining responsibilities if they are not communicated to the personnel and throughout the business. Strategy mapping is a great tool for this step
4. Communicate, Implement and Manage Plan
First, communicate the plan to the entire business by sharing relevant documentation prior to kick-off of the implementation. Map processes, set up regular reviews with individual contributors and their managers and identify milestone check-in points to help ensure you are on track.
5. Review And Revise Plan
The final step in strategic planning is to periodically review (usually each quarter) and re-evaluate the progress made, or course-correct based on previous lessons learned. Progress can be tracked using balanced scorecards
At the end of each quarter identify which KPIs have been met and which have not and adapt your plan as necessary. Similarly, review them on an annual basis to ensure that you stay on track for success.
Strategic planning and management yield beneficial results for all businesses when properly conducted and are a highway to business success.