A small business and strategic planning – is that chalk and cheese?
“I’m not even sure I need a business plan,” you say. “Do I really need to look at the big picture when I’m in the trenches?”
Well, that’s really up to you.
With a plan – any plan – you can envisage where you want to go, and then prepare steps to get there, rather than staying “in the trenches” and seeing what you get if you just work harder.
But first, let’s be clear about what is a strategic plan, and what the difference is between a strategic plan and a business plan.
A strategic plan is a big picture story of where you want your organisation to go. It tells the story of that dream you had when you start your business and helps you work out what you have to do to achieve your dream – apart from just working more. It’s a long term direction-setting document. It typically covers a period of 5 to 10 years and the timeframe is not prescriptively detailed in its actions: it is based on less precise assumptions due to the less predictable long-term it is setting out and therefore it does not contain detailed step by step actions.
A business plan cascades from that and tells the day-to-day story of what you need to do within a much shorter timeframe to help you get to that big picture. It is a far more detailed story or document. It takes the strategies arising from your strategic plan and carves them into more predictable timeframes – typically one to 2 years. Since the timeframe is shorter, the assumptions can be more accurate and the options more predictable.
Imagine that you are planning a big holiday overseas to celebrate your wedding anniversary.
A strategic plan describes where you want to go, what you want to do to celebrate, how long you will be away, and may even describe how much fun you will have or what you will feel. Those are your “strategies”.
A business plan is the detailed planning of dates to book, visas to apply for, what to pack, hotels to book and maybe even meals on the day itself. It may even have a day by day itinerary. These are your “tactics”, both combining to describe how you will celebrate, and what you have to do to make it a success.
So, does your small business need a strategic plan or a business plan? Or nothing at all?
Put it this way – if you are “working hard” without a thought to what it is you really want to achieve in your life, what your business means in this context, then how can you really be successful? You’ll just keep working hard. And maybe you’ll make money. But will you make the profits you deserve, in the way you want to? Will working in your business give you satisfaction? Will working hard fulfil the feeling you wanted when you started your business?
My answer to all of those questions is “probably not”.
That’s because you didn’t spell out what you wanted as your ultimate destination. Not spelling that out meant you couldn’t describe what that would mean and what direction you should take – expand overseas or dive into internet trading? Hire staff and work in a team, or work by yourself? Which of these directions would give you satisfaction?
I believe you need a strategic plan as well as a series of business plans. A strategic plan should define your vision, mission and values so that you set the description of what your organisation will be like when you “arrive” at “success”. Then through a series of analytical processes looking at where you are now, a number of strategies are generated to “bridge the gap” between where you are and where you want to go. These strategies will tend to be broad, directional strokes like “we will increase the community services provided to old people” or “geographically we will expand our investments into other towns in the region” without identifying the services or the exact investments.
Then your shorter-term business plans will consist of a series of goals and objectives achievable within the shorter timeframe, but helping to move your organisation towards the longer-term strategic goals, and following the strategies from the strategic plan.
And both of these are within your reach!
The process is a formula. It’s like baking a cake.
First, make a list of all the big-picture things that affect your business. They are likely to include things like:
- All the legal contracts and registrations you have to abide by;
- a critical history of how you have performed;
- financial reports over the last 3 or 4 years;
- staff capabilities and histories;
- how your products or services are performing.
This is not a science project, you don’t have to research volumes – just think through all the big-picture items you are worried about or that you feel you need to think about. Apart from the financial reports, you don’t even have to be precise about this information, just gather your thoughts.
The next step is to schedule sufficient time to conduct the exercise. This is not a one, two-hour project. But it will be fun because, maybe for the first time, you’re asking yourself what you really want. The key is to have a guided process in place.
Next, sit quietly, after having thought through all those big-picture items and analyse your vision and the quantification of success.
Forget about “working hard” and be like a kid at Christmas – what do you really want? Describe your successful business. What does it do? Who does it serve? Who do you do it with? What are people saying about you and your business? How do you want to feel at the end of the day? Why do you want it? What will drive you to get to this state of affairs?
Once you think you have described your Vision, think about how you have described that success.
For example, you may have said to yourself that the business you want to build is one that really helps your customers. “Why, I want my customers to know that they’ll get their answer within a day!”
Well, if you said that, then a measure of your success is that customers are happy because they get what they want within 24 hours. This becomes one of your Long-Term Goals.
You may have said to yourself that the successful business you want to have is one that sells your products in every state. That becomes another Long-Term Goal.
A good description of your Vision will give you clues about what you have to do to “get there”, just like the good description of the overseas holiday we mentioned will give you clues about which type of hotel you need to book.
Then, you need to leave that picture and ideas for the Long-Term Goals to one side. That’s where you want to go. Now, you need to look at where you really are. What kind of situation are you really in?
The process is to analyse the current situation.
What are the things your business is strong in, and where is it weak? Be truthful in your analysis because you can’t improve unless you know what you have to improve from. Also, ask yourself what challenges or opportunities exist in the market today? What do you need to be wary of and what could you take advantage of?
Listing all of these strengths, weaknesses, challenges and opportunities should make you aware of what you need to fix, and what can help you fix it.
So now, understanding your current situation and knowing what you want to achieve, ask yourself, “how do I bridge this gap?”
Looking at where you are now with all your strengths and weaknesses, what do you need to do to work toward the Long-Term Goals you identified earlier?
For example, remember you had a goal to sell your products in every state? But right now, you only sell in your home state. You don’t have enough capital to expand – a weakness – but you have an excellent website and your strength is the way you interact online. So maybe the way to sell in every state is to first do it by improving your online sales.
That becomes your strategy to achieve that goal.
Going through this one item and one goal at a time, you should reveal to yourself a set of strategies that you feel comfortable with, and that will get you to your Long-Term Goals and therefore toward your vision. This is what we call strategic direction.
At the end of this, you should feel like a weight has lifted from your shoulders because it won’t stop you from having to work hard, but now, you know what you’re working for, and what you have to do to make it better. This is your long-term strategic plan.
The keystone is how you implement that plan – by following it and referring to it in every action, not by leaving it on a dusty shelf. By converting it into annual business plans or more detailed to-do items. For example, having decided to sell more online so that you can sell in every state, you need to work out how to do that. This may involve improving your website sales systems, it may involve more social media marketing and advertising, it may involve different products that ship faster and cheaper. Thinking each strategy through into detailed tactics will implement your plan.
Another part of why strategic plans are not followed is that there is no built-in monitoring and review process. Without a meaningful monitoring and review process, even normal scheduled tasks take on the feeling of a “must-do” rather than something you are glad to get to do because it means something. No wonder deadlines pass and soon deadlines don’t matter anymore.
Monitoring and reviewing are not onerous.
Take the strategic plan and expand it into shorter-term tactics (like the example above) and these become your simple business plans, but don’t make the mistake of reinventing the wheel every year – just refer to your strategic plan as the starting point!
Finally, your Strategic Planning should “start from the right place, and end up where you want to be”. A fitting quote to mean that there is a process to follow, and all you need to do is to follow it.
If you are preparing to start your own strategic planning process, what process will you follow?
Once you have your strategic plan, how will you prepare your business plans? We have an online learning-and-doing product to help you prepare business plans in one day. You can learn more here.