Growing a business means taking many decisions about the way you want to expand your operations. Creating a strategic plan is a key component of planning for growth. It will help you prepare a realistic vision for the future of your business and in doing so can maximise your business' potential for growth. Show
A strategic plan should not be confused with a business plan. A business plan is about setting short- or mid-term goals and defining the steps necessary to achieve them. A strategic plan is typically focused on a business' mid- to long-term goals and explains the basic strategies for achieving them. This guide sets out the basics of the strategic planning process. It explains how to go about drawing up a strategic plan, it highlights some important issues to bear in mind and it shows how to turn from planning to implementation.
The purpose of strategic planningThe purpose of strategic planning is to set your overall goals for your business and to develop a plan to achieve them. It involves stepping back from your day-to-day operations and asking where your business is headed and what its priorities should be. Why strategic planning matters more to growing businesses Taking the decision actively to grow a business means embracing the risks that come with growth. Spending time on identifying exactly where you want to take your business - and how you will get there - should help you reduce and manage those risks. As your business becomes larger and more complex, so strategy formulation will need to become more sophisticated, both to sustain growth and to help you muster the leadership and resources you need to keep your business developing. To do this, you will also need to start collecting and analysing a wider range of information about your business - both about how it operates internally and about how conditions are developing in your current and potential markets. The difference between strategic planning and writing a business plan The process of strategic planning is about determining the direction in which you want to take your business. It involves setting out your overall goals for your business. By contrast, the purpose of the business plan is to provide the detailed roadmap that will take you in your desired direction. Your strategic planning and your business planning should be complementary, but effective strategy development requires you to shift your focus from the day-to-day concerns of your business and to consider your broader and longer-term options. The three key elements of strategic planningDeveloping a strategy for business growth requires you to deepen your understanding of the way your business works and its position relative to other businesses in your markets. As a starting point, you need to ask yourself the following three questions:
While the second question - Where do you want to take it? - is at the heart of the strategic planning process, it can only be considered usefully in the context of the other two. You should balance your vision for the business against the practical realities of your current position and changes, such as increased investment in capital and other resources that would be required to implement your vision. A strategic plan needs to be realistically achievable. Getting started with strategic planningAs with any business activity, the strategic planning process itself needs to be carefully managed. Responsibilities and resources need to be assigned to the right people and you need to keep on top of the process. Who to involve Try to find people who show the kind of analytical skills that successful strategic planning depends upon. Try to find a mix of creative thinkers and those with a solid grasp of operational detail. A good rule of thumb is that you shouldn't try to do it all yourself. Take on board the opinions of other staff - key employees, accountants, department heads, board members - and those of external stakeholders, including customers, clients, advisors and consultants. How to structure the process There is no right or wrong way to plan the process of strategic planning, but be clear in advance about how you intend to proceed. Everyone involved should know what is expected of them and when. For example, you may decide to hold a series of weekly meetings with a strategy team before delegating the drafting of a strategy document to one of its members. Or you might decide to block off a day or two for strategy brainstorming sessions - part of which might involve seeking contributions from a broader range of employees and even key customers. Getting the planning document right The priority with strategic planning is to get the process right. But don't neglect the outcome - it's also important to make sure you capture the results in a strategic planning document that communicates clearly to everyone in your business what your top-level objectives are. Such a document should:
Build your plan on solid strategic analysisStrategic planning is about positioning your business as effectively as possible in the marketplace. So you need to make sure that you conduct as thorough as possible an analysis of both your business and your market. There is a range of strategic models that you can use to help you structure your analysis here. These models provide a simplified and abstract picture of the business environment. SWOT (strengths, weaknesses, opportunities and threats) analysis is probably the best-known model and is used by both smaller and bigger businesses in the for-profit and not-for-profit sectors alike. STEEPLE (social, technological, economic, environmental, political, legal, ethical) and Five Forces analysis are two other widely used models. SWOT A SWOT analysis involves identifying an objective of a business or project and then identifying the internal and external factors that are favourable and unfavourable to achieving that goal. These factors are considered using four elements:
STEEPLE There are other models you can use to assess your strategic position. STEEPLE analysis, for example breaks the business environment down into the following components: social –e.g. demographic trends or changing lifestyle patterns technological – e.g. the emergence of competing technologies, or productivity-improving equipment for your business economic – e.g. interest rates, inflation and changes in consumer demand environmental – e.g. changing expectations of customers, regulators and employees on sustainable development political – e.g. changes to taxation, trading relationships or grant support for businesses legal – e.g. changes to employment law, or to the way your sector is regulated ethical – e.g. ethical and moral standards governing policies and practices STEEPLE analysis is often used alongside SWOT analysis to help identify opportunities and threats. Five Forces The Five Forces model aims to help businesses understand the drivers of competition in their markets. It identifies five key determinants of how operating in a given market is likely to be for a business:
What a written strategic plan should includeThere is no set blueprint for how to structure a strategic plan, but it is good practice to include the following elements:
You may also want to consider adding an executive summary. This can be useful for prospective investors and other key external stakeholders. Some important strategic planning issues to considerGrowing a business can pose some considerable personal challenges to the owner or manager, whose role can change dramatically as the business grows. Effective strategic planning involves considering options that challenge the way that business has been done up to this point. It may be that decision-making in some areas will be handed to others, or that processes which have worked well in the past will no longer fit with future plans. It can be tempting for owners or managers to overlook alternatives that are uncomfortable for them personally, but to disregard your options on these grounds can seriously compromise your strategic plan and ultimately the growth of your business. Examples of the kind of issues that tend to get overlooked by growing businesses include:
In the final analysis, it is the owner of the business who decides the strategic plan. Growing a business is not something done "at all costs". However, an honest assessment of the options allows for any decisions made to be as informed as possible. Implementing a strategic planThe plan needs to be implemented and this implementation process requires planning. The key to implementation of the objectives identified in the strategic plan is to assign goals and responsibilities with budgets and deadlines to responsible owners - key employees or department heads, for example. Monitoring the progress of the implementation plan and reviewing the strategic plan against implementation will be an ongoing process. The fit between implementation and strategy may not be perfect from the outset and the implications of implementing the strategy may make it necessary to tweak the strategic plan. Monitoring implementation is the key. Using key performance indicators (KPIs) and setting targets and deadlines is a good way of controlling the process of introducing strategic change. Your business plan is another important tool in the implementation process. The business plan is typically a short-term and more concrete document than the strategic plan and it tends to focus more closely on operational considerations such as sales and cash flow trends. If you can ensure that your strategic plan informs your business plan, you'll go a long way to ensuring its implementation. Remember that strategic planning can involve making both organisational and cultural changes to the way your business operates. Original document, Strategic planning, © Crown copyright 2009 Our information is provided free of charge and is intended to be helpful to a large range of UK-based (gov.uk/business) and Québec-based (infoentrepreneurs.org) businesses. Because of its general nature the information cannot be taken as comprehensive and should never be used as a substitute for legal or professional advice. We cannot guarantee that the information applies to the individual circumstances of your business. Despite our best efforts it is possible that some information may be out of date. As a result:
What are the 5 essential components of strategic planning?Effective strategic planning elements overview:. Defining your Vision.. Crafting your Values.. Determining desired Outcomes.. Declaring explicit Accountability.. Establishing leading KPIs.. What are the 4 elements of strategic planning?The 4 Steps of Strategic Planning Process. Environmental Scanning. Environmental scanning is the process of gathering, organizing and analyzing information. ... . Strategy Formulation. ... . Strategy Implementation. ... . Strategy Evaluation.. What are the 4 strategic processes?The four phases of strategic management are formulation, implementation, evaluation and modification.
What are the 5 stages of strategic planning?What is strategic planning?. Define your vision.. Assess where you are.. Determine your priorities and objectives.. Define responsibilities.. Measure and evaluate results.. |