This is the third part of our series on growing your small business after establishing it from a startup. If you missed our first two articles on Growing Your Business By Measuring Everything and Growing Your Business With A Strategic Plan, you can catch up by clicking on the links.
This series of “Growing Your Business” follows our earlier series of blog posts on “Starting A Small Business“. If you want to catch up on how to start your own small business I will put the links to those articles at the end of this post.
In this post I will discuss how, having set a long-term strategic direction for your business to grow, through your Strategic Plan, you can cascade shorter-term goals and actions from the long term strategies year by year. This allows you to establish more detailed annual targets and actions, while at the same time ensuring that you stay true to course on the way to building the business of your vision.
Here is an example of how this works.
Let’s say Jack and Jill started an interior design business. They clarified where they wanted to go by defining their business Vision as creating a commercial interior design business catering to small professional businesses. Such clarity allows them to concentrate on a specific target market, as well as the services aligned to that market.
In their 5-year Strategic Plan, they decided that they would first focus on businesses in the CBD of the city they lived in, before expanding to target customers in neighbouring cities.
To do so, they would build a team of commercial interior designers in the first 5 years, who would then become senior designers in charge of their own teams and looking after different cities.
They identified that their strategies in those 5 years were:-
- To market their services extensively to doctors and accountants, using introductions from Building Managers and Commercial Real Estate Agencies.
- Once their market size in doctors and accountants allowed, they would expand marketing to other professionals such as engineers, dentists, lawyers and so on.
- They would hire 1 experienced designer and 2 trainee designers and train the trainees to become senior designers within 5 years.
Their Strategic Plan gave them the broad strategic direction that would allow them to attain their vision for their business in 7 to 10 years.
But now, they needed to know exactly what to do next.
So, they looked at the shorter-term milestones they needed to reach in order to carry out their long-term strategies. They decided on the following in the first 12 months:-
- Partner with 2 key Building Managers
- Partner with 3 key commercial Real Estate Agents
- Win 5 large medical practices as customers
- Win 5 large accounting firms as customers
- Hire 1 trainee designer.
With the short-term goals in place, they could then detail the steps they had to take, almost on a day-to-day basis. So, for example, in order to partner with 2 key Building Managers, they decided they needed to:-
- Identify Building Managers who specialise in property rented by doctors and accountants and prioritise them in order of “best-fit”
- Prepare a “mutual benefit” proposal
- Contact them through LinkedIn or direct cold-call
- Negotiate an informal agreement to obtain referrals from them
In this way, Jack and Jill started with a clear long-term vision, wrote a Strategic Plan that showed them the direction they needed to take in order to attain their vision, then broke the broad long-term strategies into shorter-termed detailed steps to take in the first year. As each year ended, they would then assess their results and plan the next year’s detailed steps.
Why does this work?
Doing it this way, they can keep close to their Strategic Plan and use it as a measure for the year ahead. It clarifies all business decisions.
For example, say in year 2 they had the opportunity to partner with a real estate agent that specialised in residential property. It looks like a significant opportunity because the real estate agent says that they manage over a thousand rental properties for overseas owners who needed their properties redecorated after every tenancy that averaged three-year terms. This would require them to reduce their commitment to professional offices and hire 5 or 6 designers to cope with the extra work.
With their Strategic Plan in place, and a Business Plan that translated the most immediate strategic actions into detailed plans, they are able to objectively analyse the opportunity and perhaps come up with the following line of thinking:-
- They would need to divert from their vision of building a commercial design business
- The reason they had established that as their vision was because they had strong experience in commercial design, not residential design
- They wanted to expand nationally and this opportunity could actually restrict them to one large client in one city
- They would have to hire a lot of designers before they had acquired skills in people and large-scale project management
Having seen how far this could divert them from their vision and strategic direction, they can objectively make the decision to decline the opportunity.
What are the steps?
First, you need to write your long-term Strategic Plan.
As we saw in last week’s article, this need not be a complicated exercise. The objective is to define where you want to go, understand where you are now (in terms of capacity and resources), identify the gaps between what your current capabilities and resources are now and where you want to go, and then choose the strategies to get you across those gaps.
Having done that, you will have a clear vision that you can use as the measure of all your annual Business Plans (will doing these things help me to attain my vision?). You will also have a list of long-term strategies (things you have to do or achieve) that will create your vision.
When you write your Business Plan, the first step is to review those long-term strategies – what are the milestones within each of those strategies?
For example, Jack and Jill had a strategy of marketing their services to doctors and accountants using introductions from Building Managers and commercial Real Estate Agents.
This can be broken down into the following milestones:-
- In year 1, partner with 2 key Building Managers and 3 key Real Estate Agents and start to obtain introductions
- Still in Year 1, from those introductions, obtain 10 clients who are doctors and accountants
- In year 2, find another 5 Building Managers or Real Estate Agents to partner with and obtain 20 doctors/accountants as clients
- In Year 3, find 3 Building managers and Real Estate Agents in the neighbouring city and obtain 5 new doctors/accountants as clients in that city
And so on.
The milestones of each year can then be identified.
Choose 6 to 8 of the most critical, and write them as Goals for the next 12 months.
Just write them in the format: “Our goal is to (verb describing what you will do) in order to (objective) by (time).”
So, for example, the goal of finding partners to introduce clients might read “Our goal is to partner with 5 key Building Managers and Real Estate Agents in order to win 10 doctors and accountants as clients by June of next year“.
If you end up with more than 8 goals for the next 12 months, my practical experience is that you are over-reaching. It is far better to aim for something you can realistically achieve rather than a long list of “should do’s” that you will not have time to get to. You have the rest of your life to build a successful business – don’t try to do it in a year. If you have more than 8 goals, look to defer the less critical ones to the next year.
Next, write down all your internal Strengths and Weaknesses, and all the external Opportunities and Threats that exist right now, and may affect your business next year.
An example of a Strength may be “strong experience in commercial design”. An example of a Weakness could be: “We are the only designers in the business today”.
An example of an Opportunity might be that “technology has made design drawings easier to prepare speedily” and an example of a Threat might be “a large international interior design company is setting up in town.”
The objective is to compile a list of Strengths, Weaknesses, Opportunities and Threats that will either hinder you in achieving your goals or assist you in doing so.
Now you can identify some strategies on how to achieve your goals, if necessary by eliminating Weaknesses, building on Strengths, taking advantage of Opportunities, or mitigating Threats. In order to decide on strategies, review the SWOT analysis you prepared, along with the list of goals.
For example, if your strength is “highly experienced” but your weakness is “no other designers” and your goal is “to win 10 new clients” which will need at least 3 designers working the computer design system, then you may decide on this year’s strategy to “hire a trainee designer and use our experience to train them so that they can service 2 clients by the end of the year.”
Next, take each strategy and write down the steps you need to take to implement the strategy.
To ensure that you focus on the outcome rather than just taking an action, write next to each action what the required result should be. For example, next to the action “Advertise for a trainee designer” write down “The advertisement needs to ensure we find a designer who wants to be trained in commercial design”.
The activity won’t just happen so note who is responsible for making it happen.
And then, most important of all, write down a deadline for when the action should be completed and the outcome achieved.
When you have completed all the above steps, you can collate your work into a document. It doesn’t matter what the format of this document is as long as:-
- You can understand it in 6 months’ time
- It is clear and can be followed
- It outlines the reasons for your choices and decisions.
The document can be a series of chapters or just dot-points of key decisions or just a list of goals and strategies.
The last thing you should do is to prepare a budget based on your Business Plan. If you need help from your accountant, get that help. It is important that you quantify what your strategies will cost, and what revenue growth they may bring. The budget provides a numerical target for expenses as well as an income forecast.
As you can see, if you set a long-term strategic direction for your business through your Strategic Plan, you can use these long-term strategies to cascade into shorter-term goals and actions year by year.
This means that at the start of each year you will have established detailed annual targets and actions, while at the same time ensuring that you stay true to your chosen strategic direction and avoid diverting from that direction with every “new idea”.
If you want to find out how to implement your strategies, you can read this article here.
We offer a free online business planning course that you can follow using this link here. Our One Day Business Plan Online Program also can help you to write your Business Plan by providing you with a step-by-step process to follow through a series of video lessons and worksheets to complete.
Next week, we will continue our series on growing your business after startup. We will look at Growing Your Business With A Marketing Plan.
See you then!