Most small business owners are familiar with the concept of business planning. Many, however, aren't as familiar with strategic planning, and there's a big difference between the two. Ensuring that your company reaches its full potential requires that you understand this difference and devote the proper resources to each type of planning.
Strategic planning looks at the “big picture" — your company's goals, mission, vision and values. It involves defining strategy and making decisions about how resources will be allocated toward pursuing this strategy. Strategic planning analyzes all the potential opportunities available to your company and then narrows these down to the ones that make the most sense for you to spend time and money pursuing.
Business planning focuses more on the tactics and tasks that must be accomplished in order for the strategic plan to be implemented.
Taking the time to create a thoughtful strategic plan can result in many potential benefits for your company, including:
Strategic planning is an ongoing process, not a one-time event. It usually starts with an in-depth planning session attended by executives, managers and key department heads. If possible, this planning session should take place at an offsite location so you can minimize work distractions and help everyone better concentrate on the task at hand.
It often makes sense to have an outside facilitator help plan and lead the strategic planning session. This person can offer the fresh perspective of someone outside the day-to-day operations of your business, since it can be hard for insiders to “see the forest for the trees." Ideally, your facilitator should have expertise in your industry in order to share best practices that similar businesses have implemented successfully.
Follow these five suggestions to help you as you draft a strategic plan for your company.
You can't set a strategic course for your company's future if you don't know where you stand at the beginning. Analyze the current state of your industry and marketplace and make an honest assessment of where your company stands: Are you a market leader, laggard or somewhere in between?
Based on this analysis, you can start to set priorities for moving forward. Part of this process is articulating your vision, mission and values for the company, as well as setting concrete and measurable goals for the future.
You need to determine if you have the right employees in the right roles, doing the right jobs and performing the tasks for which they are best suited. Or as Jim Collins put it in his classic management book "Good to Great," you need to “get the right people on the bus, the wrong people off the bus, and the right people in the right seats."
Segment your customer base by profitability so you know which customers you earn the most money by serving, which ones you earn the least on, and which ones (if any) you're losing money on. Then plan your strategy based on how you can acquire more high-profit customers and fewer low-profit and unprofitable customers.
Growth usually doesn't just happen - it has to be carefully planned for and strategized. Take all the information and insight you have gathered in the first four points and use it to create a blueprint for how your company will achieve growth in the future
Strategic planning is an ongoing process. Plan to meet with your executives and key managers at least once a year to review your strategic plan and make changes as new developments and circumstances dictate.
This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.