The importance of strategic planning for small businesses is undeniable. As a small business owner, you might think that it is not as essential to your venture as it is to a large corporation, but that’s where you are making a critical mistake! Strategic business planning is done even for small companies and helps them gain an edge over rivals that aren’t doing any.
This blog will discuss the importance of strategic planning for small businesses while briefly explaining the sequential process you need to follow to make a strategic plan.
Most small business owners tend to skip strategic business planning altogether, thinking it’s not that important yet. But that’s a mistake, as the importance of strategic planning for small businesses is irrefutable.
In order to be meaningful and effective, a strategic business plan for a small business needs to address three points:
1.Have a Clearly Articulated Strategic Mission and Future Vision for the Brand: To add to-dos to your strategic plan, you need to have a clearly defined purpose. It serves as the basis for your marketing, team efforts, and solutions to be aligned. This builds a consensus and promotes clarity among the various business functions.
2.Build a Clear Picture of the Current Position of the Business: Once you have a clear understanding of where your business stands, you will be able to better plan on how to take it where you need it to go.
3.Have a List of Actions that will Help You Connect the Now with the Future: When you need to stay aligned and focused on your strategic purpose, all distractions need to be minimized. You need specific, short-term corporate actions to help your business do that.
When you start off strategic business planning, the first time around, you will need to spend at least six to eight hours with your corporate executives to develop the initial draft of the strategic plan. Having a relevant and solid purpose statement ready at hand shortens the time it takes to devise the plan.
For people who are somehow not in a position to dedicate that much time in one go, they can take an incremental approach to this: break up the efforts into informal discussions and smaller meetings. In fact, having all the essential elements covered is much more important than following the process by the book.
Either way, you need to cover the following steps:
As mentioned earlier, having a clearly-defined purpose is key – you can’t get where you need to if you don’t have the intent clear from the get-go. Instead of having a run-of-the-mill jargon-filled generic purpose statement, you should have a simple one – one that would have an emotional impact on the employees. You could break it into two sentences or keep it concise with one sentence. Whichever way you choose, the purpose needs to serve as the basis for all strategic goals you define and the preceding actions that need to be taken to achieve them.
Picture strategic business planning as following a map: to determine where you need to go, you first need to understand where you stand. To understand the current strategic position of your business, you can conduct a SWOT – Strength, Weaknesses, Opportunities & Threats – analysis. Strengths and weaknesses are internal to the company and tend to relate to Processes, Systems, Costs, Sales, R&D, Finances, Products and/or Services, Operations, and Management & Leadership. Opportunities and threats, on the other hand, are external to the company, reflecting on issues that are related to Technology, Competition, Public Opinion, Legal/Political Mitigating Factors, Industry Dynamics, and Economic Mitigating Factors. Hold a meeting with important team members and leaders to figure all this out.
The goals and objectives you outline will help you determine which department(s) of your business you need to allocate your resources to. It’s a good idea to revise your goals till they fulfill the standard of a SMART (Smart, Measurable, Achievable, Relevant, and Time-Bound) goal. You can break the goal down into particular tactics or actions you take to achieve them. This will help you stay on track, avoiding unintended distractions in your strategic business planning.
By following the aforementioned process, you will be able to successfully devise a small business strategy that is effective and forms a one or two-page document. This should hardly take around six to eight hours of planning time for a small business. The objectives, SWOT analysis, and purpose statement all work together to help you reach agreement, focus, and alignment in your small firm.
Whenever possible, guide your business leaders to take ownership in achieving strategic tasks and goals; this promotes a sense of commitment among them. You should also revisit the plan at least once every month to measure the progress made and make whatever changes are required to stay on course. Adjustments are inevitable as change helps you move ahead.
Depending on the needs of your small business, you can repeat this strategic business planning process every year, bi-annually, or every quarter.
To sum it up, strategic business planning works wonders for a small business, helping it stay on track and avoiding potential mistakes and unintended deviation. This helps entrepreneurs gain an edge over market rivals. Small business owners are prone to ignoring strategic planning altogether, which is a deadly mistake. The time and efforts you invest in making a basic strategic plan at the initial stage of your business will help you reap the rewards over the long term. Also, small business owners don’t need to make a five-year strategic plan like a large organization. The stage their business is currently at would work better with a short-term plan that focuses on a six-month to a one-year plan.