Does your Small Business have a Strategic Plan?

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In my capacity as the Lead Plug at Small Business Consultants, I provide pro-bono services to Micro and Small Businesses. Over the last two years, a common pattern I have noticed when engaging with clients is the absence of a business or strategic plan. Whenever I request for a Business or Strategic Plan to enable me diagnose a struggling business, 7 out of 10 proprietors are always surprised. Some insist that it is simply a micro or small business; hence do not require a plan, some have it only in their head, while others have honestly never considered it.

Building or growing a business goes beyond just opening and closing the doors of your office. There must be a guiding light to enable you sustain your operations as a micro-business or break into the small and medium enterprise space. This guiding light can be described as your business or strategic plan.

A U.S. Bureau of Labor Statistics revealed that about 20% of small businesses fail within the first year. By the end of their fifth year, this number increases to 50%. Once you hit the ten-year mark, only 35% of small businesses remain operational. Although the report did not indicate that this failure rate is as a result of the absence of a strategic planning process is not the sole reason for these failures, it is certainly a contributing factor.

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Small businesses are usually started by a small number of owners or sometimes single owner and usually with no formal procedures and operations. Owners usually manage small businesses with little skills and knowledge to the extent where the growth stage is critical requiring a clear vision and mission for success. At this critical and vital stage, strategic business planning is needed for small business transitional growth.

A lot of SMEs are unable to define and execute a proper strategic plan. This is usually because most small SMEs do not understand strategic planning and the role it plays in business management. The small business strategic plan must communicate the vision and mission of owners to employees and customers.

In simple terms, a strategic plan is a roadmap used to identify a business strategic goals and objectives, as well as what needs to be done to achieve them. It enables you to gauge your company’s performance, strengths and weaknesses over time. For your employees, the process can foster an increase in productivity — contributing to the success of the business.

Factors to Consider when Developing your Strategic Plan:

a. Include the right people: Include as many trusted and strategically thinking individuals strategic planning process.

b. Gather the data: Segment reporting by demand, customer, product categories, etc. Surveying your strategy participants is also a useful way to gather information and rank strategic issues by importance.

c. Focus on growth and value: Focus on how you will grow the business, and in particular what product or service innovations will improve the customer experience. Develop the company by doing the most important things, according to your long-term objectives.

d. Think of strategic planning as a process and not an event: Whether you engage in strategic planning annually or quarterly, it must be a repeatable process. It takes time to develop and implement a strategy, more time for the world to react and turn in the right direction.

Credit: StrategyBlocks

Developing your Strategic Plan

Step 1: Analyse Your Current Position

Small business strategic planning begins with analyzing your current strategic position. This involves understanding the external and internal environment of your organization and identifying your strengths, weaknesses, opportunities, and threats (SWOT analysis). Carrying out a political, economic, social, technological, legal, and environmental a (PESTLE analysis) helps you identify the potential opportunities and threats in the external environment of your organization.

Step 2: Developing a Vision

Using the information gathered in the previous step, you must develop a roadmap for the future. Market conditions change on a daily basis and you must adapt accordingly.

Step 3: Developing a Mission Statement

Most Small Businesses fail to understand the difference between the vision and the mission statement. A company’s vision represents its long-term plan and where they want to go. A mission statement, on the other hand, identifies the purpose of the company. It helps answer questions such as what the company does, who its customers are, what value they hope to provide, etc. Essentially, it helps determine how you plan to accomplish your vision.

Step 4: Establishing Organizational Values

In order to accomplish your mission, you must establish some organizational values. These core values will define the culture of your organization. They will help establish how employees are expected to behave and what they must strive to achieve.

Step 5: Risk Assessment

Risk assessment is very important in strategic planning. This is an extension of the weaknesses and threats identified earlier in the first step of the planning process. You must be constantly aware of the risks and roadblocks that stand in the way of your goals and objectives.

Step 6: Developing a Small Business Strategic Plan

So far, you have identified your strategic position in the market as well as your vision, mission, and the risks associated with your plan. You are now ready to develop a strategic plan for your small business.

In order to develop your plan, you must consider the following:

· What strategies will have the greatest impact and help achieve the vision and mission of the company?

· Which types of impact should you prioritize?

· Which objectives need to be achieved urgently?

· What tactics should you employ to execute your strategies?

· What resources do you have available? How should these resources be allocated?

· How will you measure the progress of your strategic plan?

You must use your vision, mission statement, and organizational values as a reference when selecting strategies. This helps you discard any initiatives that do not further the progress of your organization and help improve your strategic position.

Step 7: Executing and Managing Your Strategic Plan

Once you have developed a strategic plan for your business, you can move on towards implementing it.

Step 8: Reviewing the Strategic Plan

In the final stage of the strategic planning process, you must review your strategic plan and make changes accordingly. Reviewing your strategic plan involves analysing the amount of progress made and the current performance of your team.

If you observe any changes that influence your strategic position, revise your strategic plan and implement it accordingly. This helps to ensure long-term success.

Still having issues developing yours? Send an email to plug@seunmaiye.com

A vision-driven and goal-oriented individual. I am the spark that brightens your team. Interests: Electric-Power Management, Economics, Business & Management.