Strategic Planning Made Simple Part 1
Whether you’re looking to dramatically expand your current business or simply improve operations and the bottom line, strategic planning is an essential activity for successful business owners and managers. But if you have no business training or background, you may feel inept about the particulars of this key component. In this three-part article series, we simplify the strategic planning process, making it more accessible for small business owners and new corporate execs alike.
Ideally, strategic planning would be conducted annually, usually about three to four months prior to the end of the fiscal year. This allows time to begin to implement the plan no later than the start of the next fiscal period.
Step 1 – Mission and Objectives
Unfortunately, for some companies, the mission statement is nothing more than ink on paper, as opposed to a real driving force for the forward momentum of the company. The mission statement should include a founding principle upon which the company was created, and remains the foundation for all that the company does. The mission statement is an unchanging purpose, set from a visionary perspective.
Part of strategic planning involves getting back to basics – evaluating the company’s mission statement, not with the intention of changing the mission, but rather, for the purpose of focusing the key business activities on the foundation of the mission statement. For example, if your company’s mission statement is to provide better solutions, are you doing that? If not, it’s time to innovate. If your company’s mission statement includes integrity in an otherwise challenging industry, are company executives, representatives, and policies acting in accordance with this mission? Take a hard look at the founding principles and make necessary changes to align actions with mission.
Along with evaluation of the mission statement comes objectives – specific, measurable targets or goals. In other words, what is the company trying to accomplish? Unlike the mission statement, the objectives may change from time to time, but with the same general purpose. For example: gaining market share, becoming (and maintaining status as) the industry leader, national or global recognition, awards (perhaps for safety, innovation, etc.) and other objectives related to market share, reputation, or the company’s position in the industry.
Objectives should be specific and measurable, and action items in the firm’s strategic plan should be designed to accomplish these broad objectives. For example, if “being positioned as an innovative leader within the industry” is one of the firm’s objectives, then specific action steps would be related to research and development of innovative products, services or technology, testing and evaluation, marketing and public relations to gain positive press for the new innovations, etc.
Step 2: Environmental Scanning
Essentially, the environmental scan includes an internal evaluation of the company, an analysis of the industry (including market trends), and evaluation of the competition.
Perhaps the most commonly used internal evaluation is simply the SWOT analysis. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. This is a quick and easy tool for evaluating the overall assessment of the company’s current status. Strengths and weaknesses are internal factors, while opportunities and threats are external factors. Strengths and opportunities focus on enhancing what is already working for the company (what can only strengthen the company’s position), while weaknesses and threats emphasize what needs to be changed or altered in order for the firm to remain competitive.
An external evaluation of the company focuses more on the industry itself: advancements or changes in technology; legislative/regulatory issues; market trends and shifts; market opportunities and threats; consumer buying habits; changes with regards to verticals or suppliers; the economy itself; and other outside influences that impact the company.
The third element of environmental scanning involves a thorough evaluation of the competition. This can be tricky, as it is difficult to set aside preexisting opinions about the competition. Sometimes it may be necessary to hire an outside firm to perform competitive analysis in your industry. However, at the very least, competitive analysis would include:
– a complete list of your competitors, from strongest to weakest with regards to their ability to effective solve your customer’s problems
– brutally honest list of strengths and weaknesses for each competitor, including your firm
– a rating system that ranks your company against the competition. Ratings would include price, efficacy, speed of delivery, ease of use, customer relationship, product leadership, innovation, etc.
This step will allow you to see how your company measures up in the marketing place, and where improvement or focus is needed.
Strategic planning can help propel your business forward with clear goals and objectives.…