By Vicki M. Daughdrill
Small Business Resources LLC
It's a new year. The economy appears to be improving somewhat, evidenced by job creation, improved manufacturing output, increased construction spending and the continuing rise in the stock market, despite some wildly fluctuating periods. In January 2009, the Dow Jones Industrial Average Index stood at 9,015; in January 2010 it was 10,583; in January 2011 it was 11,697; and in January 2012 it rose to 12,397.
Businesses have spent the last two years holding the course, maintaining the status quo or simply staying afloat. Now is the time to take a focused look at your company and develop a strategic plan for the next three to five years.
The economy is predicted to continue to grow slowly in early 2012, making this an ideal time to position your company to take advantage of the anticipated economic uptick.
Strategic planning is the formal evaluation of the company's future course of action. It is a process that answers four questions:
A strategic plan is an outline or road map of future plans. It is a process - not a document - to help companies focus on the areas of their businesses that generate the greatest level of profitability and achieve the most success at reaching their goals. Frequently, a strategic planning session will result in a document a company can use to guide its actions and measure and evaluate its success.
The strategic plan should be reviewed, revised, updated and amended on a regular basis, depending on market conditions, the economy and the owner's personal situation. It should never be intended as a fixed document that cannot be adjusted or modified.
Business owners and managers sometimes are so absorbed with day-to-day business operations that they fail to focus on the company's ultimate objectives. Conducting a strategic planning process can help decision makers see the big picture and develop longer-term strategies.
While a strategic plan cannot prevent business failure, it can provide a recipe for success and a foundation for the company's business, a definite "must have" in today's commercial environment.
There are countless benefits to conducting strategic planning sessions, including the following:
In addition, many financial institutions now require a strategic plan be submitted as part of the loan application process.
Strategic planning includes an understanding or development of a company's mission and vision, recognition of its ethics and values, and identification of its strategic direction. The planning focuses on analysis, planning and identification of tactics.
A mission statement is a powerful tool to clearly define your company's reason for existence. It is the articulation of how your dream is going to become a reality. It sets the tone, defines the path you will follow and acts as a guiding principle for your company.
Your mission statement tells your customers exactly what your company stands for, believes in and what you intend to achieve (for more information, see "Creating a mission statement," by Vicki M. Daughdrill, The Green Sheet, Jan. 10, 2005, issue 05:01:01). As for vision, the big-picture concept focuses your thoughts, feelings and actions toward realizing that vision (for more information, see "Creating your business vision," by Vicki M. Daughdrill, The Green Sheet, Dec. 13, 2004, issue 04:12:01).
Additionally, recognition of your company's core ethics and values is essential, as they drive the business culture, establish priorities and determine what strategies will be employed.
There are several methods for determining which strategic planning process will work for your company. These include organizing objectives by hierarchies, utilizing the "top rank objective," evaluating goal congruency, and setting short-term, medium-term and long-term goals.
Once you determine which method best suits your company, the next step is conducting the strategic planning process. Here is a simple, step-by-step guide to assist you in starting the process for your company.
2. Review and analysis. It is essential to review the present status of the business. A look back over the past one to two years will help you evaluate the trends facing your business. Conduct a thorough SWOT (strengths, weaknesses, opportunities, threats) analysis.
Ask yourself these questions about the period:
3. Planning. During this phase, set the goals for your company for the next three to five years. While planning this phase of the process, consider conducting a needs assessment of both staff and employees to determine what needs and issues can be addressed during strategic plan preparation.
Remember, a goal must be SMART - specific, measurable, attainable, realistic and timely. A goal that states, "Increase profitability," is not a goal. A goal statement that reads, "Increase profitability by 10 percent before Dec. 31, 2012," is an actual goal.
As you work to develop your goals, consider these items:
4. Establishing tactics. Each of the methods identified above utilizes establishing tactics or detailing individual steps the company will take to meet its goals. These tactics are the day-to-day projects, tasks and activities required to achieve the planned goals.
Yogi Berra said, "If you don't know where you are going, you will wind up somewhere else." By developing a strategic plan, you can be sure you know exactly where you want to take your company, identify the goals you want to meet, and establish the strategies and tactics necessary to attain them.
Vicki M. Daughdrill is the Managing Member of Small Business Resources LLC, a management consulting company. E-mail her at email@example.com or call her at 601-310-3594.
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