Strategy
What Is Strategic Planning?
Strategic planning defines your business goals and objectives to know what order to run them in and what you need to bring, buy or do to see long-term results. So, basically, you know exactly where you are going with your business and have a point-by-point plan that tells you how to get there.
Sounds logical, right? The catch is that most self-starting businesses have skipped this step or, at best, have a vague idea of what they want, like, “Make loads of money” without any idea of exactly how to achieve that.
I get some hackles raised when I say stuff like, “Your business will fail without strategic planning”, because for those just starting out (and full of themselves because they are killing it) it looks like I’m wrong. Yes, you can launch a business and make money initially without any idea what you are doing and just make it up as you go, that’s the day-to-day stuff but, day-to-day stuff changes over time!
In order to run your business really well and bring in loads of money you need to know how to allocate your resources and prioritise your workload. The way to do that is through strategic planning…
Strategic planning isn’t about what you are making right now or what you can make tomorrow, it’s about how much you can make in three, five and ten years time and how much your business brand will be worth.
I get it, I really do because this exact thing happened to me with my first start-up. I was that arrogant kid thinking he was all that because he was making six figures. Everything was charging along, the money was coming in – what the hell did I need goals, visions and strategic planning for? The answer was pretty brutal.
My company Seight grew quickly (and chaotically). I had no strategic plan in place but I didn’t care because the money was rolling in. That meant I was blindsided by an economic crash and watched the falling dollar bring my business success crashing down in flames. I could have quit with my tail between my legs but I chose to rebuild. I got myself a coach to work on strategic planning (because I had no idea what I was doing,) and fast-forward 12 months and the company was doing record months in revenue. It’s that powerful.
This article is intended to help show you just how important strategic planning is for your business so you can find that sequence of steps that will keep the money pumping through for years to come.
Contents
What’s the definition of strategic planning?
Strategic planning is different to business planning because it focuses on long-term goals based on your business values. The plan you make using this information helps to ensure you allocate the right budget, equipment and personnel to make each goal possible. Strategic planning also takes risks into account and highlights possible alternative pathways to a goal and what the costs and resources will be so you can navigate a new strategy quickly and easily if your original plan doesn’t run as smoothly as expected.
The result of strategic planning is a clear and easy-to-share document that highlights what your company plans to achieve and how, which can be read, understood and followed by new and existing key stakeholders, staff members as well as clients and customers.
What are the benefits of strategic planning?
Strategic planning helps business leaders position their resources, capabilities, and objectives to back their long-term goals and remain competitive. Without it, you won’t have a way to evaluate progress, which also means you can’t make adjustments for improvement and growth.
Think of it as creating a roadmap for the future of your business. You need it to move quickly along your chosen route or take a time-effective detour if you hit a roadblock.
When you have a strategic plan you are better equipped to:
- Make informed decisions
- Allocate resources
- Tackle challenges
- Recruit staff
- Scale your business
- Match your service to your customers
- Have your team work towards the same goal in harmony
All these benefits help you steer your business with fewer distractions and get you where you are going faster.
Why is strategic planning important in business?
Strategic planning is important in business because it helps make sure you and your team are performing at the right level, at the right time to achieve what you want for your business.
Not having any kind of strategic planning in place is a big factor behind a faltering business. It’s something I love to work on with my coaching clients because it gets big results and my clients can see a difference in their trajectory straight away including:
IMPROVED DECISION MAKING
Analysing your current business situation gives you a chance to develop a comprehensive plan for the future. You can make decisions on purchases and chances with more confidence and speed because it’s clear which outcomes you want and what moves will get you to the end goal.
INCREASED COMPETITIVENESS
Something I see all the time is business owners sitting back and putting their feet up as soon as they hit six figures. The problem is their competitors aren’t lazy, they’re doing the work, listening to customer needs and evolving. Rather than the straight-line success they thought they were getting, stagnant businesses are actually sliding back as their competition forges ahead.
Strategic planning helps you stay competitive through regular evaluation and refinement of your goals and strategies. When your eye is on the prize you can see when you are off course, make corrections or accelerate by seizing new opportunities.
BETTER RESOURCE ALLOCATION
When goals are prioritised you can allocate your resources effectively to ensure you are using time, money, delegation and equipment in the most efficient and effective way.
IMPROVED COMMUNICATION
The only way everyone can work towards the same goals at the same pace is by clearly defining the business goals and objectives. As well as having a strategic plan document or media file that can be shared in a uniform way, as a business leader you’ll better know how to assign tasks and delegate workloads to keep goals on track.
INCREASED EMPLOYEE MOTIVATION AND ENGAGEMENT
Your team will love having clarity and direction but they’ll also get a real sense of purpose which really helps to keep your employees motivated and engaged. You’ll see better cooperation as well as improved overall performance and productivity.
ENHANCED RISK MANAGEMENT
Without a long-term plan, you’ll run headlong into trouble over and over. This means you’ll waste a lot of time and energy putting out fires that should have been avoidable. When you step back and consider the risks associated with decisions before you make them, you have plenty of time to put steps in place that mitigate trouble and reduce overall exposure.
Evolve to Grow
One of the key benefits of strategic planning is that it enables organisations to respond proactively to changes in the business environment. Your business needs to evolve to keep up with changing circumstances, including customer tastes and demands.
What are the steps for strategic planning?
There are seven key steps to move through in order to get the right information, which we’ll go into in detail below.
A snapshot of the steps looks like this:
- Conduct a situational analysis
- Develop a vision and mission statement
- Set strategic goals and objectives
- Identify and assess options and alternatives
- Develop a plan of action
- Implement the plan
- Monitor and evaluate progress
If you have partners, sponsors or a CEO, get them on board and bring them into the discussion so they can have input as you work through the steps.
Creating a strategic plan out of sequence might mean you have the wrong goals lined up, or that key stakeholders have been left out.
STEP ONE: MAP WHERE YOU ARE RIGHT NOW
Start by conducting a situational analysis. This will be a comprehensive review of your company’s current standings. Make a list that includes income, expenses, frequency of sales as well as your SWOT analysis (strengths, weaknesses, opportunities, and threats).
STEP TWO: DEVELOP A VISION AND MISSION STATEMENT
Your business will have a purpose and long-term aspirations (beyond making money), this is your mission. There will also be values that give it direction and determine how you do things and what vibe you operate with. Your vision and mission are a big factor in determining your ideal target market and communicating to customers in a genuine and emotive way. Defining these will help to focus your efforts and ensure that everyone is working towards the same goals with the same professional attitude.
STEP THREE: SET STRATEGIC GOALS AND OBJECTIVES
When you know where you are you can plot out specific, measurable and achievable goals for where you want to be in the future. Be really clear about what you want to see with your business. It’s not just about money, it’s about how much profit you are making. Make sure you also include goals that achieve your missions and vision, so look at how many people you want to reach or how many lives changed. You want your goals to be realistic but also challenging so you are motivated and inspired to chase them down.
STEP FOUR: IDENTIFY AND ASSESS OPTIONS AND ALTERNATIVES
You don’t want to hear this but things are not going to go according to plan. Think about what other directions you can make to reach your goals if plans A (and B) fail. Figuring this out now means you are making decisions with a clear head and won’t be clouded by emotion. You can act faster and stay ahead of the chaos if you know in advance who to contact and what to do.
Estimate the costs, benefits, and risks associated with each option to help select the best course of action.
STEP FIVE: DEVELOP A PLAN OF ACTION
It’s time to put the pieces of the strategic plan together, including outlining the resources and tasks required to achieve the goals. You can also determine who is responsible for each task and set timelines. Break the goal down into bite-size chunks that direct you to meet certain requirements and tasks each quarter, month, week and day to gradually make the goal come to life.
STEP SIX: IMPLEMENT THE PLAN
There is not much point in doing all the work if you don’t commit to taking action. This step is all about putting your plan into real-world action, including allocating resources, communicating the plan in detail and ensuring everyone is working together on their tasks to achieve the goals.
STEP SEVEN: MONITOR AND EVALUATE PROGRESS
Revisit and update your long-term plan regularly. This will help you to stay agile and respond to new circumstances quickly. Checking in and assessing performance and tracking goals also helps teams stay in touch around a common purpose and encourages collaboration.
Most businesses have more than one goal on the list. Number your goals in order of priority and make sure you allocate the resources you need to complete the biggest goals first. As each goal is completed you should have access to bigger budgets, more staff or a wider skill set to help tackle the next goal on the list.
What role does a Manager play in the Strategic Planning Process?
For many small businesses, the manager is also the business owner in charge of managing multiple processes that make a business tick. The business owner plays a critical role in the strategic planning process as they are the best-placed person to define the organisation’s goals and values as well as create a comprehensive plan to achieve them.
Don’t take on too much. Even though it’s your responsibility to manage, you don’t have to handle your strategic plan alone. Be proactive about approaching stakeholders and partners or ask a business coach or business community for help and advice.
In order to prioritise business goals, allocate resources and develop an achievable and realistic plan the manager must have a clear understanding of the:
- Company strengths, weaknesses, opportunities and threats (SWOT)
- Overall business environment
- Current market trends
How important is the manager’s role in the success of strategic planning?
The manager’s role in the strategic planning process is essential. Your leadership is needed to ensure that the process is comprehensive, inclusive, and well-organised. This is even more essential if your organisation has multiple stakeholders with different priorities because there is even more work to do to get everyone working together towards a common goal.
Strategic planning and long-term objectives
To achieve your long-term objectives and remain competitive you will need to undertake strategic planning for your business. Yes, it will take a little time to nail it all down in writing but once it’s done it’s fast and effective to revisit and modify, giving you a multitude of benefits including better decision-making and resource allocation, effective communication and fully motivated and engaged team members.
No matter what size or how established your business is, it’s essential that you have clearly defined goals and values as well as a mission and vision. With measurable and achievable goals in place, it’s a much easier step to create a comprehensive plan for how to achieve them and get the resources you need behind you.
By following these steps, business owners and managers can ensure that they are making informed decisions, working towards the right goals, and positioning themselves for success.
What is Strategic Planning? – Key Takeaways
Strategic planning is an essential process for businesses of all sizes. The purpose of strategic planning is to define the business goals and objectives in order to develop a comprehensive, targeted plan of action to achieve each one. The benefits and importance make the time spent building a long-term business plan well worth the effort.
Following the steps that analyse SWOT, the current business environment and market trends give managers and business owners the power to prioritise and delegate workloads and resources. They will play a critical role in the strategic planning process, leading the effort and engaging any stakeholders.
Let’s get started
Now that you understand the importance of strategic planning for business success, it’s time to start your strategic planning journey. If you get stuck with any of the steps, book a free call with one of our experienced, business-savvy sherpas who can guide you through the process and ensure that you get the most out of your strategic plan.
A well-designed strategic plan accelerates your business toward its desired outcomes so you remain competitive and continue to evolve and thrive. Take the first step today and start your strategic planning journey!
What is Strategic Planning? – FAQs
Q: What exactly is Strategic Planning?
A: Strategic planning is a roadmap for the future that ensures the organisation stays focused and on track towards vital goals. It takes into account any immediate or possible strengths, weaknesses, opportunities and threats as well as a business’ vision, objectives and values. This helps business leaders make decisions on the best way to allocate resources to reach goals quickly.
Q: What are the steps involved in the Strategic Planning Process?
A: The strategic planning process typically involves: defining the company’s mission, vision, and values; conducting a SWOT analysis; setting SMART goals; setting action steps that will see a goal completed; completing those steps to get closer to goals as well as measuring and tracking progress. To be effective a strategic plan needs to be available to all staff members and stakeholders and be regularly reviewed and updated.
Q: Why is Strategic Planning important?
A: Strategic planning is important because it helps ensure that a company is moving in the right direction and has the resources needed to achieve its goals. It keeps every team member focused and on track to make the most of opportunities and avoid potential threats.
Q: What is the Business Owner’s role in the Strategic Planning Process?
A: The business owner plays a critical role in building and maintaining a strategic plan as they will be aligning the plan with the company’s mission and goals. Their involvement, engagement and communication will set the pace and lead others to be motivated and passionate about what they can achieve.
Q: How does Strategic Planning benefit a business?
A: Strategic planning benefits a business by helping get tasks and goals completed faster, allocating the right staff members to work tasks, giving business owners more agility and flexibility to make decisions quickly and focusing budgets and resources in a way that is most advantageous to the company.