The majority of business owners manage their strategic planning process by making annual sales and revenue forecasts towards their financial year end, for one to five years. Is this you? Have you also identified how well the functional areas in your business interact and whether they are appropriately proportioned to the whole? If you have then you are doing more than most. This article explores what a strategic plan really is, the importance of having one and the impact of not having one in your business. The aim is to equip you with some of the tools needed to support positive change within your company.
Planning is the bedrock of any business
The appetite for planning is often lost, early on, and seen as a time consuming and costly activity that contributes minimal value. Usually, this is because the focus switches to managing one unforeseen challenge after another replacing the plan with quick thinking tactical manoeuvres just to keep afloat.
Often people lose sight of the enormous value in the process of creating the plan, rather than the end result, the plan itself. Business planning is at the foundation of most new start-ups, without which, most would have failed to leave the starting blocks. Reviewing what you planned and then after some time, analysing the gap, offers the greatest value of all to the business. This paves the way for learning development and growth to occur. Ongoing strategic planning and reviews are therefore, essential.
Do you struggle to grow the company profitably beyond a certain level?
If so, you are probably focusing most of your attention on servicing only the ‘current’ needs of your business. Many MDs I talk to really want to focus on defining the future of their company, yet they are frequently distracted from doing so, because most of their time is spent supporting their team on day-to-day activities and the future of the business remains way down the list of priorities.
The game-changer requires investing time and resource in planning the future direction of your company, as well as designing business change that moves the business towards it, while investing in managing the day-to-day activities too. Using these business dynamics will ensure you drive your company forward over three time horizons, ‘today’, ‘tomorrow’ and ‘future’, continuously transitioning for profitable performance, no matter what the economic trading conditions.
The link between company culture and the strategic plan
To foster a motivated, proactive, forward-thinking and creative workforce, you need something to align behind and work towards collectively. This is what an active strategic plan for your company will provide. Without one, you will unwittingly create a culture of reactive thinking that centres around managing and improving cash flow, servicing existing clients, securing new sales revenues and reworking costly errors. Even with the most determined and committed workforce, the lack of a defined future, reward, progression and growth will eventually take its toll.
Frustration sets in and staff turnover rises, adding further impact and cost to your business. Where this trend continues, a blame culture can ensue, communication can break down and the company can become functionally fragmented, developing a ‘them vs us’ attitude. A strategic planning initiative, with ongoing review, can ensure your company thrives rather than survives.
How the strategic plan transitions the business
To grow profit consistently, you must continually scale effectively and that means continuously managing the phases of increasing or improving your capacity in order to fulfil client expectations; as well as, continually managing the volume of new sales orders. Well-established businesses with exceptional technical capability that deliver high quality solutions can still struggle to grow. However talented they are, they struggle to continuously service new work either because they are not fully utilising existing resources or, they only realise they have reached existing capacity levels once it is too late; resources become stressed, work backs up, errors and reworking increases, margins reduce and all of which increases the risk of damage to the company’s reputation.
An active strategic plan provides a route map out of the grind of ‘today’, transitioning the business through a series of growth steps or ‘tomorrows’ that enable the business to scale-up in increments, generating advance capacity that supports your company to realise anticipated future value.
Planning for growth
Gaining a detailed understanding of how your resources are currently utilised as well as their maximum practicable productive output is essential. It is also important to gain a detailed understanding of where workflow disrupts resource performance. From here you can calculate when and how much you will need to scale up the business.
Scaling up requires financial investment, a disciplined approach and perseverance but it is worthwhile, pays handsomely and is a better option than spending hard-earned cash in the area of new business sales, which at some point will flood your existing capacity, overwhelm your delivery capability and cost you dearly.
If you do not get this right and your competitors do, then they will easily deliver a similar product to the customer at a much better price and still make a healthy margin, whilst you play catch-up!
Without an active strategic plan, the future business success you desire will continue to elude you and the daily grind of firefighting and undesirable performance results will forever be your reality. Understanding your business capacity ‘today’ coupled with defining the ‘future’ vision provides two points in time. You know where you are currently and you know where you want to be, what is left to do is map out the route and journey that you and your team will take. This will identify ‘the tomorrows’, a series of planned step changes that need to take place to grow the business from where it is today, to realising the future state.
This is your strategic plan and without one, delivering profitable growth will be by chance rather than by design.