All the way back in Lesson #7, I wrote about how to write a business plan, including the key components that are needed to attract investor attention. However, that was more of an external document to use with third parties like venture capitalists or banks. Building an internal, long-term strategic plan for the business that will use decision-making to guide management is different. It is a lot more detailed and can take months to create. Here are the key components for building a killer strategic plan for your business.
Assess Industry, Competitor & Customer Trends
The first step of any strategic planning starts with studying the overall market that you are operating. How large is the industry? How quickly is it growing? Who are the key competitors? How well-funded are they? What moves are they making? What are pricing trends? What products or services are your customers asking for? Any macro-economic trends at play? Any government regulation issues? You cannot set an effective plan for your business unless you truly understand what you are up against from an industry and competition perspective. Think about this as an “external” evaluation of overall market trends that impact your business.
Complete a SWOT Analysis on Your Business
A SWOT analysis critically evaluates your company’s Strengths, Weaknesses, Opportunities and Threats. Strengths can be in your staff, customer base, market position, financial resources, sales channels, products, profitability, growth, etc. Weaknesses can be in your staff, market position, margins, financial resources, competitive vulnerability, missing products, customer complaints, missing sales channels, etc. Opportunities can be to enter complimentary markets, form alliances, raise funds, launch new products, pursue M&A activity, exploit customer weaknesses, etc. Finally, threats can be around the economy, losing key staff, lack of financial resources, limited cash flow, disintermediation, falling prices, etc. Think about this as an “internal” evaluation of your business.
Define Your Mission and Vision
Once the external and internal evaluation is complete, you are in a good position to begin crafting your high-level mission statement and vision statement. Your mission statement speaks to “why do we exist?” Something like “our mission is to replace expensive offline market research with equal quality insights from social listening”. Your vision statement speaks to “what are we offering and where are we heading”. And, all good vision statements should be quantifiable and timebound. Something like, “We plan on driving $50MM in revenues from our industry-leading social listening platform within three years”. These are the “North Star” statements that will guide all detailed decisions from there.
Define Your Corporate Business Goals
Once you know where you are heading, at the 30,000-foot view, and what you are up against from an industry and competition perspective, now you are in a position to start drilling into specific business goals that will enable you to achieve that vision. Your goals are the specific outcomes you are trying to achieve. This can include things like changes to product offering, sales and marketing strategies, financial resources, operational efficiency, employee culture, financial targets and beyond. Whatever high-level things need to happen to make your vision a reality.
Drill Down to Department-level Objectives
As we continue to “peel back the layers of the onion,” we now need to decide what specific objectives and initiatives will help the company achieve each of its business goals. This is typically done department-by-department within the company. This could include setting specific objectives for the product team, sales and marketing, operations, technology, finance and human resources. For example, a business goal might be to “improve company morale” and a specific objective of the HR department to support that goal might be to “launch new employee benefits”. You should limit all department-level goals to the handful of items that the department can rally around in a given year. Additionally, these objectives need to be made SMART—Specific, Measurable, Achievable, Results-Focused and Timebound.
Determine Staffing, Budget and Financing Needs
Once all the departmental needs have been defined and quantified, you are then able to aggregate them up into one centralized corporate plan, organization structure and budget. If you don’t have the full financial resources you need to achieve the plan, you have one of two choices: (i) lower your targets to a level you can more easily afford; or (ii) raise the capital required for you to achieve you full plan.
Often times, it is helpful to engage an outside business coach or advisor, like Red Rocket, to help facilitate these internal discussions between the managers building the plan. They can help keep the process organized and keep managers focused on the stuff that really matters. They can also help to break any ties or mediate any disputes between managers with different opinions. Because at the end of the day, if all managers are not 100 percent onboard with the resulting strategic plan, it will not be achieved.
Image Credit: CC by Jean-Louise Zimmermann
