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Strategic Planning for success

The New Oxford English dictionary defines Strategy as ?A plan of action or policy designed to achieve a major or overall aim?

In our last newsletter we discussed two separate research projects by Harvard and Yale Universities. These found that the 10-15% of graduates leaving having already formed life goals and plans, although not in writing, were 20 years later earning on average twice as much and had double the wealth compared to the vast majority with no objectives.

Only 3% of leaving graduates had considered and set out their goals in writing. Yet 20 years later, this small percentage had greater wealth and far higher earnings than the other 97% added together!

Perhaps goal setting comes naturally to the most successful among us. Maybe goal setting is the reason for their success. Most likely it is a combination of the two, but whatever the case, research shows clearly that goal setting is an essential component of success.

In business, the process known as Strategic Planning is often undertaken by larger organisations over many months at considerable cost. However the underlying principles and methodology are equally appropriate, and can be adapted to SME businesses.

But where does the SME business owner start? What are the pillars underpinning Strategic Planning for success? Certain factors are critical.

1. Remove interruption for a day
Thinking about where you are now, setting longer term goals (at least 5 years), and preparing detailed action plans requires a clear head and no disturbances. Take time out from the normal working day, fix a date, book an outside venue, take no calls.

2. Ensure all owners/key decision makers are present
To be successful, a strategic plan requires common vision and objectives. This can only be arrived at if all who have a say in running the business are in attendance.

3. Use a skilled facilitator
The benefit of using a skilled facilitator will more than outweigh the cost. With the facilitator maintaining structure, keeping things moving, asking the right questions, and minimising disputes, participants will get the most out of the day.

4. Set out personal and business objectives of each owner
Personal and business objectives of each owner should be openly discussed to ensure these are aligned. Matters raised can come as a surprise even between long standing colleagues. Differences must be addressed, even if it leads to an exit for one owner.

5. Establish consensus on business objectives
Write down the agreed business/strategic objectives. While some goals may be shorter term, the overall vision concerns how the business will look in 5 years time or longer, always assuming the owners do not want to exit or dispose of it before then.

6. Break down goals
Desirable goals are often challenging, to the extent of appearing unachievable. Splitting these down into smaller chunks makes success more manageable.

7. Consider every area of the business
A Strategic Planning session must consider all aspects of the business and how these need to develop for the overall plan to work. These include products/services, the market, customers, suppliers, systems, personnel, finance and location.

8. Prioritise and devise action plans
Prioritise the smaller goals with reference to ease of implementation, cost and likely impact. Then list the actions required to complete each goal.

9. Create accountability
Assign responsibility and timescales for actions to bring accountability to the process. Where no management team exists, and the business is run entirely by the owner/manager, review meetings with a business mentor/adviser are recommended.

10. Ensure regular review
Goals and action plans must be monitored regularly, normally on a monthly basis. Lack of progress, problems and opportunities can be identified at an early stage, and action plans updated to ensure the business remains on track with its objectives.

Planning lets the business follow a predetermined path. The result is that the business owner feels in control. Regular review and monitoring means surprises are kept to a minimum and while no outcome is certain, and various forces will try to deflect the business from its chosen path, chances of achieving objectives are vastly increased.

In most cases, challenging goals cannot be achieved by the owners alone. Many people need to contribute ranging from employees, customers, suppliers and also third party stakeholders such as banks. Good communication, a positive attitude and culture, and appropriate reward are therefore just as important considerations.

Finally, bear in mind Strategic Planning is not a one-off exercise. A 5 year strategic plan should be a 5 year rolling plan and the discipline of undertaking Strategic Planning must be exercised every year to retain the benefits.

Most SME businesses do not plan and do not maximise potential. Starting to plan and taking control offers the probability of making the top 15% of companies in the sector. Follow the steps above, do it well, and just maybe the top 3% can be yours!

Trevor Wilson, The FD Group

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