Strategic Planning For Small Business

What Is Strategic Planning?

Strategic planning is the process of evaluating the current state of a small business and determining its future trajectory. This planning method focuses on crafting a company's mission, vision, values, long-term goals, and action plans. By implementing a well-defined strategic plan, businesses can improve their growth and success, better prepare for future opportunities and challenges, and unify employees under common objectives.

Strategic planning has gained prominence among small business owners, who increasingly focus on long-term strategies. In a recent year, small businesses reported placing strategic emphasis in the following areas:

• 46% in sales
• 41% in advertising
• 36% in customer service

A well-executed strategic plan not only strengthens a company's ability to adapt to challenges and opportunities but also creates a sense of unity among employees. By understanding its mission, vision, and values, a business can better align its goals and objectives, leading to a more successful and prosperous future.

The 3 Step Strategic Planning Process

1. Discussion Phase

The discussion phase aims to gather extensive information, insights, and contributions from various stakeholders. Regular meetings with employees and staff involved in strategic planning should be established, with a well-defined agenda and objectives for each meeting. In addition to internal meetings, gathering input from external parties, such as vendors, investors, and analysts, can offer valuable perspectives on both your business and the industry.

A SWOT analysis can also be a helpful tool in this phase. SWOT stands for strengths, weaknesses, opportunities, and threats. Identifying these aspects can help prepare and inform your strategic plan.

2. Development Phase

The development phase focuses on constructing the strategic plan with all the input collected from the previous phase. A comprehensive strategic plan should include the following components:

• A vision statement
• A mission statement
• Goals and objectives
• An action plan
• Details on how often the strategic plan will be reviewed and updated

Collaborate with your team to set realistic and measurable goals and objectives for at least the next one to three years. It is crucial to define an action plan that effectively addresses these goals and continually assess if the action plan remains relevant to your strategic objectives.

3. Review and Updating Phase

Regular review and updating of the strategic plan is essential, and a designated individual should be responsible for this process and communicate any changes to the entire team. The strategic plan should be considered a dynamic document, and it is vital to set up a reminder or schedule for reviewing the plan, whether it is every few months, quarterly, or yearly.

During the review process, it is necessary to assess whether the plan is on track and evaluate if the goals and objectives need to be updated or adjusted. Engaging employees in the evaluation process can lead to more effective adjustments and help maintain the progress made.

Strategic Plan Examples

Examples for Businesses

Strategic plans for businesses generally encompass the company's mission, vision statements, goals, objectives, and corresponding action plans. Unlike a business plan, which primarily helps establish a new business and procure funding, a strategic plan focuses on leveraging existing resources for growth and sustained success.

For instance, the Canadian Soccer Association's strategic plan for 2014-2018 provides an in-depth analysis of the organization's current status, future focus, goals, objectives, and strategies to achieve them. Some common challenges faced by small businesses in 2021 include lack of capital or cash flow (23%), marketing and advertising struggles (15%), and recruiting and retaining employees (19%).

Nonprofit Organization Examples

A nonprofit strategic plan shares key components with a business strategic plan but often places greater emphasis on addressing potential internal and external challenges or threats. Nonprofit plans may outline ways to adapt to structural changes that could impact the organization. One example is the Minnesota Council of Nonprofits' strategic plan from 2010-2014, which specifies its vision, mission, community served, and goals for the four-year period. The plan also designates individuals responsible for executing the strategy.

Information Technology (IT) Strategic Plans

As the IT industry evolves rapidly, strategic plans in this sector should anticipate and address imminent changes. IT strategic plans often focus on shorter timeframes than other industries, such as the upcoming year or year-and-a-half. Involving a Chief Information Officer (CIO) helps to consider infrastructure upgrades that align with outlined goals and objectives. IT strategic plans may require more frequent updates to adapt to shifting circumstances and accommodate investments in new technology.

Marketing Strategic Plans

The primary objective of a marketing strategic plan is to boost sales and expand a company's customer base. Such plans often include marketing technologies, software, or online platforms to monitor progress towards goals, as well as specific marketing channels such as print or digital advertising. A crucial component of a marketing strategic plan is the budget, allowing businesses to pursue marketing objectives without overspending.

Strategic Planning Template Checklist

A strategic planning template can be highly beneficial for businesses as it helps cover various important topics and ensures a comprehensive plan. Templates can be created in computer software, Microsoft Word, Excel, or even downloaded from online resources.

The template should begin with an Executive Summary, giving a brief overview of the business and the time frame for the strategic plan, usually a three-to-five-year outlook. Next, dedicate a section to Your Company, which includes the mission statement, vision, values, and information about leadership.

The template should also encompass a Research section, detailing information about clients, customers, competitors, and the industry. Another section, Products and Services, should describe the products, pricing strategy, delivery systems, capabilities, and suppliers.

A key part of the template is the Measurable Goals section, highlighting realistic goals or objectives that the business aims to achieve within the set time frame. Include details on how progress will be measured for each goal or objective. The Action Plans section can either be within the Measurable Goals section or as a stand-alone group in the template, outlining how the business goals and operational plans will be achieved.

It is crucial to incorporate a SWOT analysis in the template, listing the identified strengths, weaknesses, opportunities, and threats and being honest about the business's current state. In the future, reviewing the strategic plan will allow for a comparison with the initial SWOT analysis to see what has changed.

Lastly, the template should have a Reviews and Updating section, which explains how often the plan should be checked (e.g., every few months, quarterly, annually) and who is responsible for reviewing and updating the strategic plan. This section also covers communicating any changes to the broader business.

Employing this strategic planning template checklist helps ensure a thorough, well-organized, and effective plan, guiding businesses towards their desired goals and successful strategy implementation.

Why Is Strategic Planning Important?

Effective Communication of the Strategic Plan

Strategic planning in a business environment necessitates involving employees, as they possess valuable insights into the daily functioning of the company. They can provide feedback on the current state of the business and suggest areas for improvement. Additionally, incorporating the perspectives of external individuals, such as vendors, can improve understanding of the industry landscape.

A flexible strategic planning process, as recommended by the U.S. Small Business Administration, fosters open dialogue, encouraging new ideas and thought processes among employees and external stakeholders.

Boosting Productivity

Involving employees in the strategic planning process promotes a sense of accountability, which in turn increases productivity. Whether they participate directly in the process or are informed of the long-term objectives afterward, employees feel more committed to helping achieve the set goals.

Recognizing Strengths and Weaknesses

During the strategic planning process, a comprehensive examination and analysis of the entire business is performed. This includes identifying areas where the business excels and areas that require improvement. This process, which incorporates employee input, creates opportunities for enhancement and risk reduction, ultimately strengthening the business.

Guiding the Business and Encouraging Proactivity

Upon completion of the strategic planning process, both the employer and employees gain a clear understanding of the desired future direction of the company. These discussions and the planning process itself place the business in an optimal position for future success.

Strategic planning allows the company to develop growth strategies and prepare for potential challenges and opportunities over the next few years. By anticipating issues the business may face and planning accordingly, the company is better prepared to navigate future obstacles.

Dispelling Myths About Strategic Planning

Several misconceptions surround the concept of strategic planning. Some may believe that it's time-consuming, only benefits large organizations, or could lead their businesses astray. However, strategic planning can support businesses of all sizes, and its advantages often outweigh perceived drawbacks.

There's no denying that strategic planning is advantageous, irrespective of a company's size. Both small businesses and larger corporations can benefit from ensuring their organizations are moving in the right direction.

To determine whether a company is on the right track, the initial stages of strategic planning involve research and dialogue. Decisions made during this process are not based on mere assumptions but on carefully compiled information resulting from conversations with employees and external sources.

Although the strategic planning process might appear intimidating initially, understanding its components and methods can simplify the task. This process may be time-consuming, but the investment returns when everyone in the organization works towards achieving set goals and objectives.

In addition, strategic planning does not inhibit creativity. Engaging employees to brainstorm and discuss ideas during this process merges everyone's perspectives, fostering innovative solutions.

It is essential to remember that strategic planning is an ongoing process, not a one-time event. The strategic plan is a dynamic document that evolves over time. Unfortunately, some businesses create a strategic plan and seldom, if ever, revisit it. Regularly reviewing and evaluating the strategic plan can maintain accountability and ensure the company stays on track to accomplish their objectives and visions.

In conclusion, confident and informed strategic planning can dispel common misconceptions and offer a clear pathway to organizational success.

What Makes Strategic Planning Successful?

Strategic planning is most effective when it is a collaborative effort between employees, management, and external partners. Engaging everyone involved helps ensure a shared understanding of the business's objectives and strategies.

One key to successful strategic planning is adaptability. Businesses must have clearly defined goals but also be prepared to adjust them in response to external factors such as market trends and economic shifts. For example, adapting to the growing trend of online shopping caused by the COVID-19 pandemic, numerous small businesses have embraced the need for digital presence.

A well-executed strategic plan leads to alignment and unity among team members. Each individual recognizes the company's strengths and areas for improvement and feels motivated to contribute to the business's growth and success. By integrating flexibility, collaboration, and a strong grasp of the organization's mission, vision statement, and competitive advantages, successful strategic planning leads to long-term growth and a positive impact on key stakeholders, including employees, customers, and shareholders.

When Should One Engage in Strategic Planning?

It's essential to begin strategic planning early, but not necessarily at the company's inception. Allowing the business to run for a few months can help gain insights into what works and what doesn't. However, if the organization has been operating for a while, it's never too late to initiate strategic planning.

Start by evaluating the current state of the company and envisioning its position in the next five to 10 years. Once the timing feels right, assemble the team and schedule regular meetings focused on strategic planning. Adopting a confident, knowledgeable, neutral, and clear tone while communicating in third person will help ensure effective execution. Employing formatting tools like tables, bullet points, and bold text can further enhance information presentation and comprehension.

Where Do Strategic Plans Go Wrong?

Sometimes, strategic plans fail to achieve their intended goals due to a variety of reasons. One such issue is setting unrealistic objectives, which may demoralize and discourage the team. A successful plan requires the utmost commitment from everyone involved, and if it isn't being utilized as the foundation for business operations, the team might lose focus on the company's direction.

Furthermore, thorough analysis of data and key performance indicators (KPIs) is crucial for a sound plan, as incorrect interpretations can lead to strategic issues. Assumptions must also be carefully examined to ensure the plan's feasibility and adaptability to potential changes in the market or business environment.

Three major reasons causing strategy implementation failure are:

• Poor communication: Inadequate information sharing within the team can lead to misunderstandings and inconsistency in executing the plan.
• Lack of leadership: Strong leaders are required to guide and inspire the team towards the strategic goals.
• Using wrong measures: It's vital to select relevant metrics for tracking progress, as relying on wrong measures can result in misguided decision-making and resource allocation.

Reviewing and Updating Your Strategic Plan

A strategic plan is a crucial and dynamic guideline to help a business thrive, and its regular review and update are essential to maximize success. It is crucial to adjust the review frequency depending on the industry's nature, with faster-paced sectors, such as technology, requiring quarterly check-ins.

It is recommended to revisit the strategic plan annually, at the very least. This process should involve examining the initial assumptions and assessing the business's current position concerning those assumptions. Circumstances may shift, and challenges or threats previously anticipated may not hold the same relevance.

Updating the strategic plan may be necessary to stay on track with set goals, considering that only 77% of small business owners have confidence in their ability to execute their strategy, and 95% still fail to achieve all their objectives. Do not hesitate to modify any part of the plan when external factors influence the business more than initially expected, which may result in adjusting objectives or goals.

Regular strategic plan reviews also present an opportunity to engage with the employees. Since they are invested in and contributed to the plan's creation, it is essential to provide them with a summary of the current business status. Discussions can highlight improvements or ongoing concerns, as well as address any changes in initial apprehensions.

After reviewing and possibly updating the strategic plan, share the outcomes with the team. This process allows for transparency regarding the business's status and reassures all stakeholders that progress is being made according to the plan. Additionally, encouraging employees to maintain focus on achieving the goals and objectives outlined in the plan can improve commitment and motivation.

Prioritizing the long-term strategy proves to be invaluable as well. As significant as having a robust business plan, long-term strategic planning can lead to enduring success. Supporting such an approach ensures that everyone involved understands the company's current situation, productivity increases as employees work to attain the business goals, and it helps in foreseeing and addressing potential issues that may arise in the future.

Frequently Asked Questions

Key Steps in Strategic Planning Process

The strategic planning process can be broken down into several key steps:

1. Assess organizational readiness: Evaluate if the organization is prepared for the planning process and identify possible challenges.
2. Set objectives: Define the organization's long-term goals and short-term objectives.
3. Analyze internal and external factors: Assess strengths, weaknesses, opportunities, and threats (SWOT analysis).
4. Develop strategies: Create strategies to achieve objectives and leverage opportunities.
5. Implement and monitor the plan: Execute the strategies, track progress, and adjust as necessary.

Importance of Strategic Planning for Organizations

Strategic planning is crucial for organizations because it:

1. Sets clear direction: By setting goals and objectives, strategic planning provides focus and clarity to steer the organization's efforts.
2. Enhances decision-making: Strategic planning allows for more informed decision-making and prioritization of resources.
3. Encourages proactive thinking: This approach helps organizations anticipate and prepare for future challenges and opportunities.
4. Improves operational efficiency: By aligning efforts around strategy, organizations can better utilize resources and eliminate redundant activities.
5. Facilitates communication and alignment: A strategic plan serves as a communication tool, encouraging collaboration and alignment across departments.

Different Types of Strategic Planning Models

There are several strategic planning models, including:

• Goal-based models: Focus on setting specific, measurable goals and developing strategies to achieve them.
• Issue-based models: Center on addressing crucial organizational issues and determining strategies for resolving them.
• Organic models: Emphasize flexibility and adaptability, allowing organizations to evolve in response to changing conditions.

Main Benefits of Implementing a Strategic Plan

Implementing a strategic plan provides several benefits:

• Improved focus and direction
• Enhanced resource allocation
• Increased stakeholder buy-in
• Faster decision-making
• Better measurement of progress and performance
• Higher likelihood of achieving long-term success

Strategic Planning and Marketing Initiatives

Strategic planning is essential for marketing initiatives as it:

1. Aligns marketing efforts with organizational goals: Ensuring that marketing initiatives support overarching objectives.
2. Helps identify target markets: Strategic planning can guide marketing teams in identifying, understanding, and engaging target audiences.
3. Sets marketing objectives: This process helps marketing teams prioritize goals and allocate resources effectively.
4. Enhances tracking and measurement: A strategic plan provides a framework for measuring the success of marketing initiatives against established goals.

Best Practices for Developing a Strategic Plan

Some best practices for strategic plan development include:

• Involving diverse stakeholders: Encourage input from all organizational levels and departments to ensure a well-rounded plan.
• Conducting thorough research: Understand the industry, market trends, and potential risks to make informed decisions.
• Communicating the plan: Share the strategic plan with stakeholders to encourage buy-in and commitment.
• Setting realistic goals: Establish goals that are ambitious but achievable, avoiding overpromising or underestimating resources needed.
• Continuously monitoring progress: Regularly track and evaluate progress towards objectives, adjusting as needed.