Businesses thrive on certainty, and yet, the future is never certain. That’s why smart businesses plan for the future as best they can through strategic planning. You can’t know what will happen, but you can know what you want and where you want to be when it happens. Both are points that can be mapped, and once you have these destinations on the horizon, then you can use tools to survey how to get there.
By planning strategically for the future, a business can anticipate potential unknowns and embark on a journey where they’re most likely to achieve its goals. It’s easier said than done, but the more you know about strategic planning, the better chance you have at succeeding.
What Is a Strategic Plan?
A strategic plan is a strategy that’s devised to achieve overall goals set by a business, accounting for resources, market restrictions, stakeholder demands and more. A strategic plan sets its sights on the future, where the business wants to be, not where it currently is. This means having to step back from the day-to-day operations of a business.
Which Businesses Need Strategic Planning?
Strategic planning is a key function for any business that wants to remain vital and successful. However, it is likely most important for growing businesses. Growing a new business is full of risk, but knowing where the business is going and how it’s going to get there is a way to mitigate that risk.
If businesses are successful in growing, their strategic plans will have to respond by getting more sophisticated. Continuous growth is difficult, but a strategic plan can help make it more accessible to rally the leadership and resources necessary to support it.
Successful strategic planning sits on the collection and analysis of a wide range of business-related data. Knowing intimately how your business works internally, and the current and developing conditions in your market is crucial.
What’s the Difference Between a Strategic Plan and a Business Plan?
A strategic plan is a type of business plan, but there are distinctions between the two. Whereas a strategic plan is for implementing and managing the strategic direction of a business, a business plan is more often the document that starts a business.
A business plan will be used primarily to get funding for the venture or direct the operation. So, the two plans are targeting different timeframes in business history. A strategic plan is used to investigate a future period, usually between three-to-five years. A business plan is more routinely a year out.
A Different Intent
A strategic plan is offering a business focus, direction and action to help the business grow from the point it presently resides to a greater market share in the future. A business plan, on the other hand, is more focused on offering a structure to capture and implement ideas that initially define a business.
With a strategic plan, existing resources are prioritized to increase revenue and return on investment. The business plan is different in that it’s seeking funding for a venture that doesn’t yet exist. Where a strategic plan is building a sustainable competitive advantage in the future, a business plan is designed to take advantage of a current business opportunity.
So, a strategic plan is communicating direction to teams and stakeholders in order to achieve future goals. A business plan isn’t talking to staff, which is likely nonexistent or minimal at this point. It’s speaking to banks and other financial supporters.
Key Components of a Strategic Plan
To create a strong strategic plan, one must first have a strong understanding of the business that is to expand. How does the business work? Where does the business stand in relation to competitors in the marketplace? A strategic plan is built on the bones of the following three foundational elements:
- Where Is the Business Now? Gather as much information on your business as possible. This includes internal operations and what drives its profitability. Compare the business to competitors and note the similarities and differences in detail. This isn’t a day-to-day operational study, but a broader one that looks at the business in context to itself and its environment. But don’t go crazy; stay realistic in terms of your goals. Be detached and critical in your analysis.
- Where Do You Want to Go? Now it’s time to decide what your top-level objectives are for the future. Start with a vision statement, objectives, values, techniques and goals. Look forward five years or more to forecast where you want the business to be at that time. This means figuring out what the focus of the business will be in the future. Will that focus be different than it is now, and what competitive advantages do have you in the marketplace? This is where you build the foundation and motivate the change you want to grow.
- How Can You Get There? Once you know where you are and where you want to go, it’s time to draw the line that connects them. What are the changes to the structure, financing, etc., that are necessary for the business to get there? Decide on the best way to implement those changes, the timeframe with deadlines and how to finance it all. Remember, this is looking at the business writ large, so consider major endeavors such as diversification, existing growth, acquisition and other functional matters. Gap analysis can be a big help here.
Never forget to balance your strategic plan to correspond with reality. It must be practical for your business environment, resources and marketplace; it must be achievable. Consider using the SMART goal-setting technique.
Essentials of the Strategic Planning Process
While there’s no standard way to write a strategic plan, it should include the following:
- Analysis of internal drivers, strengths, weaknesses, opportunities, etc.
- Analysis of external drivers, such as market structure, demand levels and cost pressures.
- A vision statement, a simple statement that defines where you want the business to be in the future.
- Top-level objectives, being major goals that must be achieved to meet the vision, such as a new customer, product, service, etc.
- Implementation plan, as in what are the actions necessary to achieve the top-level objectives.
- A summary of resources, including financial requirements, staff, site, equipment, etc., is necessary to successfully complete the strategic plan.
How to Develop a Strategic Plan
Once you’ve answered the above questions and have a way to achieve the long-term goals laid out in the strategic plan, the next step is making sure you have the right person to manage all of its moving parts. They must be analytical, a creative thinker and able to grasp operational detail.
That doesn’t mean the strategic plan is led by one person. It’s best to not do it alone; seek other opinions. The people in your organization, from bottom to top, are all great resources to offer perspectives from their standpoints. Don’t forget to take in the advice of stakeholders, including customers, clients, advisors and consultants.
In terms of structuring the plan, there are many ways to do so. But whatever structure you decide on, be clear in advance, so everyone knows how the strategic plan will proceed. Communication is critical. People must be aware of what is expected of them. The best way to do this is by creating a planning document in order to get the process right. Not only that, it offers a space in which you can collect all the details of the strategic plan. It should include a consensus of those involved with drafting the strategic plan, be supported by the key decision-makers and be acceptable to other stakeholders.
Don’t Forget These Strategic Planning Issues
A strategic plan can be large, and it’s easy to lose track of some essential parts. Some of the following issues might need to be addressed sooner than you might think.
The Business Owner
Don’t overlook the future role of the business owner. That person might have to change what they’re responsible for. For example, they might focus on a smaller number of responsibilities or solely on the strategic plan, while another takes over the day-to-day operations.
The location of the business is another consideration not to lose sight of. Relocation can offer a real competitive advantage. Small businesses might be located at the convenience of the owner, but as they grow it often serves the business to locate closer to its customer base.
Then there’s the ownership structure. As the business grows, the old structure might no longer suit the greater range of the business. The owner might have to give up power in exchange for equity in the business to allow it to have the leadership it requires to respond to the new business environment.
Good luck, and don’t forget to monitor the strategic plan as its executed to make sure it is progressing as planned.
Strategic planning, like any planning, requires keeping a lot of balls in the air. That means having the right tool to plan, monitor and report on all the various tasks and resources. ProjectManager is a cloud-based project management software that gives you control over every aspect of creating and implementing a strategic plan. Try it today with this free 30-day trial.