This is the second part of our series on growing your small business once your startup is established.
If you missed our series on how to start your own small business, you can go here to read the first article in that series.
The first part of this series on growing your small business can be found here.
This week, we are going to look at how preparing a long-term Strategic Plan as an overview of your strategic direction (where you want to end up and how you want to get there) can help you keep on track as you grow.
In your growth phase, you will meet many challenges and just as many decisions. Where will you open a store next? Who should you hire? Your supplier is going out of business – how do you choose a replacement? Should you rent your new premises or buy? Should you take on a partner?
Having a long-term Strategic Plan means that you have decided where you want to be in 5, 10, 20 years’ time and decided on the right strategies to get you there so that you will be happy with the consequences of your actions. A Strategic Plan gives an overview of your desired progress, not necessarily predicting the detail of every challenge and decision, but outlining the approach you will take to make your own way if you are faced with challenges.
A Strategic Plan is similar to a roadmap of a long journey. You can see which town you are in at the start, you can see the town you want to go to. You can see the direction you need to drive, and the towns you could stop at on the way.
However, this gives you an overview, rather than the detail you can fill in along the way.
You don’t have to make a decision which hotel you will stay in at every stop, but you can see which towns you will stop at on the way, and roughly how long you will take each step. This gives you the confidence to book the first hotel and identify which service stations to fill up at on that first leg. If anything goes wrong (breakdown, flood blocking the way, roadworks) you will still know which direction to take to the next stop on the journey and make the decisions to solve those challenges at the right time.
This is exactly how a Strategic Plan works:-
- You decide on where you want to take your business
- You identify where you are now, what capacity and capabilities you have to get to the goal
- Then you work out broad strategies (direction) to take, that will later be detailed into shorter-term, detailed, annual business plans.
How does writing a Strategic Plan help your small business grow?
It is important to realise that growing your small business is not a mechanical exercise, it is dependant on you, how confident you feel, and how motivated you are.
We are brought up to anticipate something new and exciting every new year. It doesn’t matter if it’s the new calendar year, or a new financial year, or an anniversary, or a new school year. We remember our childhood when each new season held something new for us to look forward to, something hoped for but perhaps unpredictable. That’s why we often spend the new year making up resolutions and goals or making up new plans. The new year unfolds ahead of us and it represents a new start so anything seems possible.
Yet we also sometimes feel anxiety, a little concern about how the year will actually unfold. This is a trained response because as we grow older and more experienced, we remember things that have not gone so well before; we remember resolutions and goals that fell by the wayside: “Can I really do it this year?”
This self-doubt can change your optimism and turn you into a fearful state of uncertainty. Allowing self-doubt to persist means you fall into a pattern of doubting all your decisions and you sabotage your success.
You can achieve what you want to if you stay positive, and back up your goal-setting with a clear roadmap on how to get to your goals. Being clear about your vision, and about the direction you need to take to get there will free your mind so that you can take day-to-day steps guided by this bigger picture.
When you envision something, it’s a dream; when you write down your goals it becomes clearer; but when you can see a direction recorded in a plan, it becomes achievable because you can map out all the little practical daily actions you need to take to get there.
In business, your goals are a combination of long-term, medium-term and short-term goals.
So, you need to have a long-term plan for setting direction in the bigger picture as well as a short-term plan with all the detail. In looking ahead you should prepare a Strategic Plan looking over a long-term of 5 to 10 years and then build your annual short-term business plans from there. The long-term goals cascade into medium and short-term goals that you can detail in your business plans.
Once you understand that, the strategic planning process really is a simple step-by-step process.
There are seven stages of strategic planning:
- Defining your vision or “end game”
- Understanding your current circumstances and capabilities
- Identifying the gap between where you are and where you want to go and creating strategies to bridge the gap
- Preparing to implement the plan
- Documenting and communicating the plan
It is important to place the work you are about to do into context and plan for how you should best involve others and gather information so that everyone involved is prepared and starting from the same page.
You should start by gathering some basic information such as the history and background of the business. While this may seem obvious to you, you may need to show your Strategic Plan to your bank or other external parties who will need an introduction to your history and experience. As well, you may ask for help from some employees or advisors like your accountant who will also need to be on the same page to give you useful ideas and advice. Now is the time to ensure that everyone who will be involved understands where you came from before you discuss where you want to go.
Next, spend a little time planning out the steps of the project.
You need to decide on the terms of the strategic plan, including how far ahead you wish to plan for. Also, what is the objective of preparing a strategic plan – for example, is it to set long-term direction, or present a business case for funding, or explore new opportunities?
Defining the Vision
Once you have prepared for the planning project, your first task should be to define your Vision.
This step will allow you to answer the question – where do you want your business to go and why? What do you want it to look like at the end of the day?
Write your Vision Statement and define it in quantifiable terms so that in future, you can actually measure how close you are to achieving your vision.
A clear Vision Statement can be examined so that you get from it what your customers want, how you will provide it to them, what systems you need to have in place to connect what they want with how you will provide it, and what your finances will look like.
This should allow you to cascade those descriptions into measurable characteristics you need in your business and quantifiable targets. For example, a Vision of selling the best mouse trap will involve innovation and quality control in production. Innovation will require the business characteristics of investment in research and development. Quality control in production can point to achieving measurable targets such as a 5% rejection rate at the quality control inspection.
Having a clear Vision Statement – that everybody understands and agrees with – will allow you to list your critical success factors so that these can later form your goals and objectives and measurements.
Survey your Environment
The next stage of strategic planning is to get to understand where you are now, in terms of your situation and capability.
You can do this through a series of interviews and workshops to look at your “strengths, weaknesses, opportunities and threats”. Strengths and weaknesses are characteristics of your business that you can fix. Opportunities and threats are externally stimulated characteristics such as those caused by politics, economic circumstances, social trends, technological development, legislative change and environmental trends. Analysis of these may result in identifying opportunities you can take advantage of, and threats you should plan to mitigate.
With this “deep-dive” information at hand, you can then identify your current situation in terms of:
- your legal context and situation
- your human resources
- your products and services
- your administration, records and finances
Bridging the Gap
In defining your vision and clarifying your current position, you should now have a good picture of the gap between your current position and your desired future position.
In order to really focus on the important areas rather than cause stress and chaos at what will inevitably be a very long list of gaps, prioritising all of these issues identified into Key Strategic Issues will focus your attention on what matters.
Key Strategic Issues are those issues that are major, high-level issues that you will need to resolve in order to progress to your vision. Resolving a Key Strategic Issue may resolve many lower-level issues that were also identified. For example, Key Strategic Issues are about improving overall customer relations rather than how to win over troublesome customer Mr Smith. If you have a system to improve overall customer relations, you may find that you resolve the situation with Mr Smith.
Once you have prioritised your Key Strategic Issues, these will help you in identifying the strategies that you need to implement in order to resolve them.
Writing your strategies will show you what your goals are, in fact, the strategies will in turn cascade into a series of goals and objectives.
Let’s say that you have identified a gap in the way you keep good relationships with customers – you handle ongoing communications poorly.
Your strategy might be to “Implement software that identifies key customers and schedules regular meetings and contact by the end of the year”
In turn, your goal may be to “Contact every customer at least four times a year.”
The objective for that goal may be to “increase our orders from existing customers by 25% by the end of next year.”
- result-oriented and
Planning for Implementation
Step 6 of the strategic planning process is to plan for implementation.
You should decide on how you will monitor and evaluate your actions, and provide scheduled time to analyse results and make amendments where necessary in the light of real-time outcomes. The military often says that a plan is as good as the first shot fired.
You should also prepare step-by-step action plans as required that document how you will implement the actions required to achieve objectives, and hence goals and strategies.
Identify the people responsible and the resources required so that you don’t set yourself and others up to fail. Map the plan into a master implementation schedule that you can continue to monitor and adapt.
Documentation and Publication
Finally, you can put all your work into a strategic plan document.
There are many ways to organise the information but we recommend the following:
- Executive Summary (Just a simple summary of key points of the plan, to be read when you are in a hurry)
- Vision and Values Statement
- Analysis of Current Situastion
- Key Strategic Issues
- Goals and Objectives
- Implementation and Action Plans
- Monitoring and Evaluation
So, to conclude, a key step to growing your business your way is to prepare your overview, big picture roadmap, your Strategic Plan.
This will guide you over the long term and help you to make short-term decisions so that you end up where you want to be purposefully.
Next week, we will continue to look at how you grow your business, by examining how to take this Strategic Plan and break it into a detailed annual Business Plan. You should not miss learning about this key planning exercise and how to do it. Make sure you get it sent directly to your inbox by entering your details here.
See you then!