Every business, regardless of size and industry, should prepare for the future with strategic planning — otherwise you may find your company buffeted around by the winds of change.
If you clearly define what future success could look like by painting a picture that most people understand and buy in to, it gives everyone a common vision and goal. Then, they are on the same page, pulling in the same direction, which allows your company to focus on what’s important.
“A good strategic plan allows people to constantly ask, ‘Is what we’re about to do consistent with our plan and important in relation to our plan?’ And if it isn’t maybe we shouldn’t be investing a lot of time and energy on that,” says Larry Goddard, CTP, managing director of SS&G Parkland.
Smart Business spoke with Goddard about what you need to know about strategic planning.
How does a strategic plan differ from a regular business plan?
If a business plan is done correctly, it is a strategic plan. However, strategic planning does require research, analysis, and a comprehensive outlook that considers customers, markets and competitors.
What components need to be included?
First, establish the mission — why the company exists and whom it serves. Then, set out the vision, which is where is the company heading. Next, define the strategic initiatives — the major things that need to be accomplished in order to achieve the mission and vision. The last piece is action plans, the detailed steps involved in achieving the strategic initiatives.
A couple of important strategic issues to keep in mind are looking for markets that are conducive to success and having a compelling value proposition.
Strategic plans typically span 10 years, with more detail and precision in the earlier years. It’s easiest to think of it in time buckets of one year, two to three years, four to six years and seven to 10 years.
Who should be involved in the creation, and how much time does it take?
Strategic planning usually involves five to 10 senior managers. But it’s also a good idea to include a few non-senior managers for a fresh perspective of the business and its opportunities.
After doing some preparation and analysis of your markets, products, customers and competitors, you can set up several days to develop 90 percent of the plan.
Once the bulk of the plan is finalized, the team just needs to hold quarterly reviews to evaluate the progress with benchmarks and goals. In addition, this is the time to assess changes, both internal and external, to decide whether to update the plan. It takes a balance; you don’t want to ignore a major shift in conditions, but if you change too frequently, the business could lose focus.
Where do you see businesses falter in their strategic planning?
The biggest mistake is letting problems, new opportunities or success — distractions — get in the way of the plan. For example, a company might lose a major customer and go into a tailspin, completely forgetting about the plan, while firefighting to figure out what to do. Or a company may pick up a new $5 million account, causing employees to put all their energy into bringing on that account.
The other impediment is not making it part of daily life. If strategic planning is something you do once a year or every two years, it’s not going to work. It has to become the guide for everything you and your employees do every day.
So, does that mean buy-in is important?
Absolutely. The most important goal of a strategic plan is maintaining stakeholder buy-in, which includes employees, owners, suppliers, customers and lenders. However, employee buy-in is the biggest ingredient for success. If you can get your employees on board, half the battle is won.
To get that buy-in, be careful how you communicate the plan. Try holding town hall meetings with smaller groups, where the plan is presented not as a fait accompli but as a draft. Then, allow employees to give input, so they will feel that you respect them and listen to their ideas. Your employees need to see the plan as realistic and exciting, so they are more likely to stick around and be part of your long-term success story.