6 Commonly Asked Questions About Strategic Planning
In simple terms, strategic planning is a procedure of establishing a direction for the business. It is normally done by assessing where the company currently is and where it wants to be. It gives a chance to record vision and mission statements as well as long-term goals of the company and the action plan required to achieve these goals. A properly written strategic plan allows the growth and success of the company as it tells the employees of the company how to respond to opportunities and challenges provided by the market.
However, despite all the benefits that strategic business planning provides, the vast majority of small businesses do not have it in place and do not focus on long-term strategies. According to the survey conducted in 2018 among 1,005 business owners, only 63 percent of them plan only a year or less in advance. The following sections of the article focus on depicting the key elements of strategic business planning that every business owner should know.
What is strategic planning?
As was mentioned before, strategic business planning is the process of establishing a long-term direction of the business. The future success of the company highly depends on effective strategic planning. It involves a thorough evaluation of the business and establishing realist, long-term goals and objectives. Therefore, it leads to the creation of the formal document that will depict the company’s vision and mission statements, its values as well as long-term goals and objectives for the company.
When it is time to make strategic planning?
The answer to this question is quite straightforward. The sooner you start the better. However, it should be also said that there is no urgent need to do that during the first weeks of the company. It is recommended to run the business for the first few months first and observe the way it works and what should be modified.
Although, if you have been owning a business for quite some time, it is still not too late to make use of strategic planning. It is never too late to assess where the company currently is and where you want it to be in the coming 10 years.
What makes this planning successful?
Without any doubt, proper strategic planning cannot be done without an effort from the team as well as your vendors. It is crucially important to get insights from all the parties involved in your business. In this way, you will be able to establish more realistic goals. You should also make sure that your strategic plan is flexible enough. Your company should be able to adapt to changes that the market can present. It is important to understand that it might be the case that it will take longer for the goals to be achieved. Thus, it is essential to recognize the issue and make changes according to that.
Successful strategic business planning gives a chance to have everyone involved in your business be on the same page with specific goals and directions. Every employee of your company should understand what can make the business stronger and what needs to be done in order to accomplish that. In the vast majority of cases, every employee of the company will want to contribute to the growth and success of the company.
What can go wrong with strategic planning?
A lot of people have a misconception that strategic planning is a one-step process. It is not true and this type of planning is an ongoing commitment of the business owner and the employees of the company. Even if you have already created a strategic plan and have set all the long-term goals and objectives, it is not finished yet. In order for the plan to work, it needs to be implemented. Without a proper implementation plan, strategic business planning is useless.
Apart from that strategic plan is most likely to fail if the goals and objectives are not realistic. Every business owner wants to see its company reaching high goals but if you set an extremely ambitious growth rate, it could possibly put your employees down.
Another element that can lead to the failure of the strategic plan is a lack of commitment. The entire team of the company should be focused on accomplishing the plan. If the plan is not used on a regular basis, employees of the company can lose sight of the direction of the company and its goals.
The most common reasons strategic business planning fails are:
- No implementation plan in place
- Lack of commitment
- Lack of leadership
When the plan should be reviewed and updated?
You need to keep it clear: the strategic plan is not something that you do once and put it on the shelf to collect dust. It is rather a living document and it requires reviews and updates. The frequency with which the plan needs an update depends on the way your business operates. For instance, if your business operates in a fast-changing industry and can be easily affected by external factors, the plan has to be reviewed and updated on a more frequent basis.
In the vast majority of cases, a strategic plan is typically reviewed and updated every year. During the process of reviewing the plan, you need to evaluate the direction and the goals that you have already established and assess where the company is taking the right measures in order to achieve those goals. It might be the case that what you assumed would be the challenges and opportunities to your business a year ago might be not the same in the current settings. Thus, as a business owner, you should not be afraid to make modifications to the plan. It might be also required to change the goals and objectives if external factors have a huge impact on your business.
After the plan has been reviewed, it is very important to share any modifications with your entire team. Even if no changes were not made, it is also critical to share this with employees in order to confirm that they are on the right track. It is also a chance to encourage your team to work harder to achieve goals and objectives in the strategic plan.
What is the process of strategic business planning?
The strategic business planning process involves three key phases:
- Discussion: this phase involves gathering as much information, opinions, and inputs as possible. It will be highly beneficial if apart from your employees, you will invite the vendors and all external parties that have an impact on your business
- Development: after all the information has been gathered, it is time for the development of the plan. The plan typically consists of five main elements such as vision statement, mission statement, goals, objectives, and implementation plan.
- Review and update: this is a critical part of the strategic planning process. You should address how often the plan will be reviewed and updated if needed. You can delegate the task of reviewing, updating and sharing the changes to someone from your team. However, if you do so, you need to make sure that this person is well aware of all the aspects of the business and he/she clearly realizes how these changes can affect the business.
The major goal of this planning process is to make sure that everyone who is involved in the business is aligned with the company’s goals and objectives as well as the creation of a formal strategic plan document.