Tuesday, May 3, 2011

Starting a Business-The Importance of Having a Strategic Plan

A recent survey found that companies with a written strategic plan had 100% higher profits than the other companies. The companies with strategic plan had annual revenue growth of 6.2% as opposed to 3.8% of the other companies. But what is a strategic plan and why should you as an entrepreneur have it.
Strategic planning is the process of deciding where you want to go and how you are going to get there. It is not an operating plan or your next year’s budget.

Strategic planning is about expanding into new markets, creating new products, disposing of current unproductive products and moving out of markets that are not profitable.
Strategic planning is about the future. It is an effective method to competitively position your company for the future.
Most business engage in some form of planning such as financial planning, new product planning, succession planning, systems planning and the like. However strategic planning is not about one part of the company but about the whole company.
In the strategic planning process, the company analyses its strengths and weaknesses and examines its current and potential opportunities and also threats to the company. Based on the information from this analysis and examinations, the company then develops its own strategy. The strategy developed then becomes the basis for supporting strategies for its various departments and units.
Objectives and goals are set and a review process is instituted to trouble shoot, update the goals and revalidate the assumptions.
To make sure that something actually happens, implementation of the strategy is very important.
This is the most difficult part of the process and where many companies falter. To ensure that the strategy is implemented:
  • Build an accountability system for the implementation of the plan
  • Have a review process to ensure implementation
  • The company has to have ownership of the plan. Outsiders can only help in facilitation of the process but it has to be owned by the company.
  • Include a wide range of people from line managers, to customers to suppliers.
  • You as the CEO have to be on board and behind the plan.
Finally strategic planning is not going to destroy what you have made but rather to build on what you have already created. Strategic planning process will: improve customer satisfaction, increase revenue, increase profits, improve resource allocation, enhance employee morale and improve return on investment and assets. Strategic planning helps you communicate the business goals with the employees. It helps differentiate your business from competition and ultimately helps your company anticipate and survive change.

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