When you start a new year, often you feel excitement tinged with a scent of anxiety.
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 gibbering wreck of uncertainty, but you mustn’t let it! 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.
Because that’s the secret – when you envision something, it’s only a dream; when you write down your goals it becomes a clearer idea; but when you back it up with a plan, it becomes achievable because you can map out all the little 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, to stop yourself being wracked by anxiety, frustration and self-doubt, you need to have a long-term plan as well as a short-term plan where all your short-term goals turn into medium-term goals, that finally attain your long-term goals. Having this short and long picture means that you can see what your every-day actions are building toward. You are not merely preparing a marketing plan in the next month. You are preparing a marketing plan that will help you increase sales in the next couple of years – and that will help you build your sales and marketing activity so that you can achieve multi-million dollar sales in 5 years or so. You can also see that the target of multi-million dollar sales is not just a goal on its own – having these multi-million dollar sales means that you can use the profits to expand into different states so that your vision of being the leading whatever-it-is business in the country can be achieved.
In looking ahead you should prepare a strategic plan (long-term) 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.
First, you define your vision. What kind of business is it – exactly – that you are dreaming of creating? Describe your business once it has achieved “success”. Start with your customers. Who are they exactly? Describe them in terms of at least demographics (age, gender, etc.), psychographics (lifestyle choices and buying preferences) and geographic location. How do they benefit from your business? Why do they keep coming back, what do you offer them that resonates? What kind of things do they say about your business?
Describe your people once you have attained “success”. What kind of employees are they? What are they skilled or experienced in and how does that help your business? How do you provide rewards and remuneration, and what do you get in return? What do they do in the business and how well do they do it?
Describe also the financial results once you have attained your vision, and describe the key business systems you excel in at that time.
As you can see, once you ask leading questions about your vision, you have started to describe the goals of your business.
The next step in strategic planning is to set out those long term goals. If you envisioned your customers saying that they kept coming back because your business provided them with an intimate service that they liked – then your goals have to include creating that type of service. If you envisioned your financial results to provide a 20% profit margin, then that is your goal. If you envisioned a self-functioning team that operates with little tactical management involved, then that is your goal.
Once you have your goals, you need to look at any key strategic issues that you have to deal with. These are long term issues that you need to fix over the long term so that you can get to your goals. For example, you may not have enough capital to employ enough people to provide an intimate service. So your funding is a key strategic issue that you need to fix in at least the longer medium-term before you can design an “intimate” service. Let your goals and a warts-and-all analysis of where you stand in the context of each of your goals guide you. Ask yourself, why can’t you simply achieve those goals today, or at least in a couple of months’ work? The answers should provide you with a list of issues you need to fix over the longer-term. You may find that many of these are structural issues like capital, difficulty in sourcing supplies and experienced staff, needing to build your capabilities, and so on.
In your strategic plan, you can now examine your issues and choose those that are key strategic issues. This means the half-dozen or so that are key (because resolving them will resolve a number of other lesser issues), and strategic (because they are big-picture, tending to be structural issues that will take time). Once you have chosen them, you need to match them to your goals so that you can write your long-term strategies. Remember, the objective of a strategic plan is to look a long time ahead, maybe 5 to 10 years, depending on how you define “long”. So, a strategic plan provides you with a high-level strategy, not detailed short-term actions.
Let’s take the example of your goal to create a self-functioning team that operates with little tactical management involved. Related key strategic issues may be lack of capital to source and train the suitably experienced people, and a lack of documented systems. Once you look thoroughly at this issue, you may find that your long-term strategy should be to create a whole system of systems and procedures so that you don’t need highly experienced people, but rather a team of people who can be trained to operate the systems and procedures and meet the stated quality objectives. Do not be tempted to detail the systems and procedures that you need to write – that is a task for the business plan as you break this, and other strategies into tactics that you can implement in a shorter time period.
Your strategic plan is therefore made up of: –
- A description of where you want to go (your vision) – so that you can always refer to it and be clear what you are working for, and so that you can use it as a measure about what is important to do (“does this decision help me achieve my vision or not?”);
- A list of long-term strategic level goals, that if achieved will help you build that vision;
- An understanding of the important issues that are holding you back, so that you can formulate solutions and keep them in mind (they are part of your measurement system: “Does this action help me to remove any of my key strategic issues as barriers or not?”);
- Your directional strategies – your plan of action that is chosen to ultimately achieve your vision of a successful business you can be proud of.
Having a strategic plan keeps you organised and removes self-doubt because you have that clear plan of action – you know what to do rather than just dream of it.
The strategic direction in the strategic plan means that you can measure yourself by developing medium-term milestones to see how well you are progressing or to make adjustments if you are not. At each step of the way, you know where you are in the context of what you are ultimately trying to achieve.
Having provided your self with a big-picture map, the strategic plan also allows you to break the journey into shorter-term timeframes so that you can work on the detail of each strategy.
You can cascade your strategic plan into annual business plans. This process is also simple – where you look at each strategy in the strategic plan and ask yourself what objectives you have to achieve in each, and what the milestones are for each of those objectives. Taking the example of the strategy to create a framework of systems and procedures to drive what your employees do in the business. The objectives may be to create the systems and procedures, and to train your current and future employees in following the systems and procedures so that you reduce management involvement by 75%. Examining these two objectives you might list the following milestones: –
- Prepare organisation chart
- Reorganise staff into the desired organisation chart
- Write urgent systems and procedures
- Train current staff in the new (urgent) systems and procedures
- Create a training program to train any new staff in the new systems and procedures
- Write the systems and procedures about sales order fulfilment and marketing
- Write the remaining systems and procedures
- Hire only staff capable of following the systems and procedures
In this example, you might decide that you can only realistically complete items 1 to 4 in the next year, especially as you balance this strategy with others you intend to start to implement.
Your annual business plan then might have a goal of “organising current employees to use systems and procedures on (urgent) workflows” and you can prepare your daily action plan based on working on steps 1 to 4 in the right order.
In this way, your strategic plan provides you with the knowledge of what you are doing at all times (and that it is indeed following the strategic direction toward your vision), keeps you organised as a result because you know what is of priority and what to do next, clears self-doubt because all the tasks can be broken down into actionable milestones, and eliminates gibbering-wreck overwhelm! All because you have a plan!
The key is to understand the relationship between the long-term and the short-term goals and how each relates to the others.
Some business advisors coach business owners to make goals, and then to map out their strategies for each goal. I think this is a mistake because it does not take into account the relationship between your goals, and whether they are short, medium or long-term goals.
For example, you might have a goal to expand the number of your stores across the country. You may also have another goal to build a strong management team. In this simple example, expanding your stores before you established your strong management team could be a recipe for chaos! Yet, some business advisors would have you working on these goals independently. If it transpires that while you are still building your management team, a number of opportunities in different states came up, working on these goals separately means that you may well jump on the opportunities and open a couple more stores while you are still finding the right managers. I don’t know about you but I think the resulting mess would make me a gibbering wreck!
Furthermore, building up your business goals is not like sitting down after Christmas lunch and listing your resolutions for the next year – lose weight, go travel around Europe, buy a new car.
Your business goals have to be co-ordinated so that in achieving them, you are building a successful business – in accordance with your vision of what is a successful business.
This means that your goals are centred around your vision. If your vision was of a small and intimate and highly profitable business, then don’t be seduced by others’ stories of expansion into other states, no matter how profitable that might seem.
All this means that you need to have at least a strategic idea of what it is you want to end up at (your vision) and a high-level strategic direction you need to move along. Preferably, you should prepare a long-term high-level strategic plan, from which you cascade goals and milestones into short-term business plans. Small business owners make the mistake of preparing either only a long-term plan, called a strategic plan, or only a short-term annual business plan. You need both.
However, if you are short of time, you can still make sure that your annual business plans set up the vision and strategic direction in a “bridging the gap” process, and then develop your action plans based on the shorter-term milestones that emerge.
My suggested process for an annual business plan without first writing your strategic plan is as follows: –
- Describe your vision – remember, to save you from being a gibbering wreck, you need to know what is ahead and that it’s all worth it;
- Analyse where you are now by using the strengths, weaknesses, opportunities and threats analysis;
- Combine the two analyses to write your goals, indicating which ones are long, medium and short-term – in this context, short-term is achievable in less than 12 months;
- Break the long-term goals into short-term (less than 12 months) milestones;
- Bridge the gap between your short-term goals and your current situation – ask what you have to do to go from the current situation to attain the short-term goals, and these become your strategies;
- Detail day-by-day action plans to implement those short-term strategies;
- Work on it every day; and
- Next year, do it again.
If you do it right, especially if you are guided in the right way, you can even do steps 1 to 6 in just one day.
If you want to know more about strategic planning, I have written a few articles about strategic planning, including the difference between strategic planning and business planning, and another where you can download a free Business Planning Process Flowchart (but do be aware that when I walk you through this flowchart, I make the complicated look easy because I take you through it step by step).
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