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Developing a Strategic Plan
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Posted On: Friday January 30th, 2004 at 12:00am EST
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SUMMARY
Developing a strategic plan will help you identify how your business can realistically secure opportunities given the company's environment and existing resources. If your business is to succeed and grow, it is essential to dedicate the time in identifying how to best position your company to meet existing resource demands.
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CAPSULE
Poor planning and lack of planning are repeatedly cited among the top reasons for business failure.
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Defining Your Business
The first step in the strategic planning process is defining the ultimate purpose and the specific targets or objectives of your business. Try not to define your business too narrowly, or you may miss new growth possibilities and even leave yourself open to competitive challenges that make your business vulnerable. Once you have defined your business, develop the firm's basic philosophy. Will you build your business through risky ventures or cautiously expand from a solid foundation? How will you choose to conduct business with customers, prospects, suppliers and competitors? Clearly defining your business's philosophy will lead to the development of a consistent business culture.
Establishing Goals
The next step is to set clear goals to guide management decisions consistent with its mission. Goals help to reduce uncertainty by clarifying what the organization is pursuing and will influence how the strategic planning will proceed. It is important to involve your employees in this process, as it will improve their understanding of and commitment to the firm. Accomplishing a goal requires establishing and achieving several specific objectives directly related to the strategic plan. When setting objectives keep the following in mind:
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Quantify and target the results to appropriately measure outcomes. |
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Define the objectives based on available resources and the realities of the business.
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Establish performance reports and milestones to measure progress toward the objectives. |
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Formulate objectives in clear and concise statements. |
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Modify your objectives to meet changing conditions and priorities.
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Analyzing Environmental and Industry Trends
In developing your strategic plan, you will need to consider the broader business environment to help monitor emerging threats and opportunities. Several trends in the economy, market, and competitive landscape, may affect your business prospects. Examples may include demographic shifts in the population, the rise of electronic commerce, and regulatory and social challenges. By assessing your existing business resources you may adopt various approaches to the changing business environment.
For instance, to help attract more business during slow or challenging times you may decide to develop advertising and pricing strategies. In addition, as a manager you should assess and utilize your employees' diverse skills to help develop and grow the business. Forecasting is an approach that all businesses can use when anticipating environmental changes. Although many trends and changes are very difficult, if not impossible, to anticipate, keep an eye out for technological breakthroughs in your industry, new and potential competitors' plans and operations, changes in the cost and availability of raw materials, and shifts in consumer taste. Any of these situations may force you to reallocate resources, delay goals, and cut back business operations.
Developing an Information System
The most important consideration in developing an effective approach to planning is the way you gather, screen, analyze and use information that may affect your business. Many businesses take an informal decision making approach when it comes to collecting information about the business and its environment. Developing a good information system is a dynamic process that starts with determining what information you will need to collect and the best way to obtain it. Employees should be involved as they can provide insights and perspectives that you may not have considered. When setting up your information system, you will find that much of the information generated will be found in the documents that you use to conduct everyday business. Other sources may include industry trade journals, newspapers, annual reports, and Internet sites. Condense, analyze and organize the collected data in a form that you and your employees can use to make effective decisions. Whether you rely on an electronic (i.e. database) or a manual system, such information should be stored for easy retrieval.
Assessing Your Business Internally
Identifying the resources that give your company a competitive advantage is critical for any successful business venture. For example, patents, trademarks, distribution systems, employees, or strategic partners can often yield competitive advantages. Once you have realistically assessed your strengths, it is equally important to recognize your weaknesses. Which product lines or activities are generating sales? Which are stagnant or declining? Based on your determinations you are in a better position to develop a strategy that will have a fair chance at succeeding. Action steps may include capitalizing on opportunities, neutralizing weaknesses, and taking advantage of available resources. When you have a clear grasp of your own strengths and weaknesses, you can develop a strategic plan with a strong chance of success.
Implementing the Strategic Plan
Implementation is the most challenging part in the strategic planning process. The most common timeframe for a strategic plan is one to five years. The key task is to effectively communicate and get input from your employees as much as possible in the planning process. By involving your employees and tying their individual goals to the plan they will have a solid grasp of their role in the implementation process. Successful implementation also depends on a realistic schedule that factors in training time, periods of low productivity, and slowdowns.
Set up quantifiable measures for monitoring performance and progress. Developing measurement and control systems will help you assess progress toward full implementation and correct organizational oversights. You can set performance standards for profits, units produced, quality of goods, and worker productivity. The standards are determined early in the strategic planning process as you set clear operative goals. Effective measurement systems are crucial if you hope to encourage consistent performance that will lead to the realization of your strategic goals. |
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