Quoting Laurence J. Peter:
"If you don’t know where you are going, you will probably end up somewhere else."
For a business owner, this sounds like a good reminder of the importance of having a strategic business plan. How else will your business end up where you want it to be?
Business strategy seems to be a particular problem for SMEs. Research conducted by Kent Business School found that about half of SMEs surveyed said they had no business strategy or plan, and on closer inspection, only 10% of those who said they had a plan could actually produce one! The conclusion is that "95% of SMEs don’t know where they are going”.
Why have a strategic business plan
So why don’t SME’s have long-term business plans? I think that there are two key reasons:
- A business strategy is perceived as “something complicated that only big companies do”.
- It’s particularly easy for small business owners to get stuck in the day-to-day detail of running their business, and not make the time for thinking strategically.
Research, supported by common sense, says that businesses with a strategic plan grow faster and are successful for longer. The alternative is reactive daily decision making, with the risk that, before you know it, another year has flown by, and your business hasn’t progressed as much as you had intended.
As a business owner, it’s important to always keep sight of the bigger picture – what are you trying to achieve for your business, and for yourself?
Your business strategy sets the direction for your company and provides a roadmap to get your business from where you are now to where you want to be. It should also provide context to help your team make the right day-to-day decisions.
Are you thinking strategically?
Ask yourself the following questions:
- Am I clear on my business (and personal) goals, from now until exit?
- Have I identified the key steps needed to reach my goals?
- Do I have plans in place to achieve these key steps?
- Do my team understand these goals and plans, buy-into them, and know what their specific role is?
- Am I tracking progress against these plans every quarter, every month?
- Am I adapting my plans to reflect changes in my sector?
If you can answer “Yes” to all these questions, then you must be one of the 5% of SME’s successfully working towards a long-term plan – congratulations! If not, perhaps it’s time to start thinking strategically and so read on!
Starting your strategic plan
It’s important to remember that strategy is an ongoing process, not a one-off or annual task, but don’t let that put you off getting started. Try this three-step approach:
1. Create time to think strategically – yes, you are very busy, but you have to find a way of dedicating some regular time to thinking strategically, whether this is 15 minutes a day, an hour a week, or half-a-day a month. Schedule and commit time that takes you away from the day-to-day challenges and allows you to focus on the bigger picture.
2. Follow some sort of strategic planning process – I suggest keeping it simple to start with, try answering the following questions:
a. What’s your Purpose and Vision? i.e. what problem does your business aim to solve, and what do you want to achieve
b. Why do your customers buy from you?
c. What are your business strengths and weaknesses?
d. What key steps do you need to take to achieve your vision?
3. Execute the plan – this is where most businesses fall-down. Prioritise your key steps and plan what needs to be done, by when, and who is going to do it. Make sure that roles and responsibilities are clear and understood, and that people are given space to take on the extra activities. Monitor progress against the plans and adapt where necessary.
Top Tip: Throughout the process, you should get input from others, both within your team and externally, including your Financial Director who can provide valuable insights and advice. Not got one of your own? Talk to Michael about having your own part-time Finance Director who will have practical experience of developing and implementing business plans and can bring an external viewpoint and experience of different sectors.