If you don’t know where your business is going, how will you know when you’ve arrived?
What is a Strategic Plan?
In order to determine where it is going, the organization needs to know exactly where it stands, then determine where it wants to go and how it will get there. The resulting document is called the Strategic Plan.
A sound Strategic Plan plan should:
- Serve as a guide for future business decisions
- Provide a basis for other, more detailed planning (including the Business Plan and Operational Plan)
- Adequately explain the business to inform, motivate and involve others
- Serve as a benchmark to measure progress
- Not be a static document, but rather serve to stimulate growth and further plan development.
A Strategic Plan is not the same as a business plan. The business plan is a long, complicated document that outlines the entire business. The Strategic Plan covers a shorter time frame and is much more focused on realistic and attainable goals.
Strategic Planning Basics
The strategic planning processes begins with a critical review of past performance of the business by the owners and management of that business. Strategic planning involves more than just budget predictions; some essential points to consider when doing the review and planning of your strategic plan:
- Consider where you want to be in the medium term (2-4 years)
- Owners/managers/directors must play a key role
- Remain focused on high-level activities
- Distinguish between cause and effect
- Remain detached, realistic, and critical (examine your business as an outsider would)
- Focus on direction, rather than day-to-day activities
To get started, begin by clearly identifying the current status, objective, and strategies of your business (or new venture). These can be used as the basis for a critical SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats). This analysis will then lead you to develop strategy for the following: Vision, Mission, Values, Objectives, Strategies, Goals, and Programs.
When writing The Vision for your business, consider what someone visiting from another planet would see or experience about your business. Use these images to paint a picture of what your business will look like in 3-5 years. Include details about physical location, size, products, markets, customers, employee levels, and other general activites in your Vision.
The Mission statement is a short statement of the purpose of a company. It is the Mission statement that provides the steering wheel for the organization by spelling out the business’s overall goal and providing a sense of direction. In writing your Mission statement, consider the nature of your business and the purpose and activities that your business undertakes. As an example, take a look at the famous mission statement from the Preamble to the Constitution of the United States:
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Your Mission statement should be as short and concise as possible; make sure every noun, adjective and verb is focused, realistic, and justified.
The Values are the softer-side of your mission statement. Values govern the operation of the business as it pertains to its relationships with customers, suppliers, employees, local community, stakeholders, and the larger society.
The basic objective of any business is to make a profit; your Strategic Plan needs to go beyond this basic objective and state explicitly the business’s Objectives in terms of achievements in the medium to long term. Include how these objectives relate to the expectations and requirements of all the major stakeholders, including employees, and how they reflect the reasons the business is in existence. Include product offerings, markets, technology, profitability, and growth in your Objectives.
The Strategies describe the plan of action that will guide the achievement of the Mission and Objectives that you have already outlined. The Strategies can apply to the business as a whole, or they can be specific to a more specific area, such as marketing.
Use your initial SWOT analysis to help identify possible strategies by building on strengths, resolving weaknesses, exploiting opportunities, and avoiding threats.
In order to meet your business Objectives, you need specific shorter-term goals that you can use as stepping-stones to reach your bigger Objectives. These Goals should be realistic, quantifiable, and achievable. Some factors to consider as your write your goals include market size and share, products, efficiency, utilization, and ultimately, profitability. Also, consider how your Strategies can be used to reach your stated Goals.
None of this planning would get you anywhere without implementation and that is where Programs come in. Your Programs will outline how your key strategies will be implemented, including resource allocation, objectives, time-lines, budgets, and performance targets.
The best Strategic Plans include values, strategies, goals and programs that clearly and consistently move the business towards its objectives. Spending a bit of time to go beyond the simple goal of making money will pay off with a clear road map showing your way to success.
Remember to write down your plan. And then review it periodically. Since Strategic Plans focus on the medium term, they are more likely to need revision than documents focusing on the longer term. Make yours work for you by reviewing it often.
Need some help writing your Strategic Plan? Try this Free Online Strategic Planner for creating a 3-page strategic plan for your business.