Strategic planning is a business management activity that involves formulating and implementing strategies, and evaluating their impact on organizational objectives. In other words, a strategic plan outlines where a company is going and how it will get there to achieve a specific “vision.” The strategic planning process progresses through a series of steps that should align with a business plan to ensure optimal results. A well-written strategic plan can contribute to a business’s long-term success and present new opportunities for growth. It can also help a business learn how best to respond to challenges.
How Strategic Planning Works
Through strategic planning, businesses can look beyond the immediate future to determine how to reach particular goals. Strategic planning differs from a business plan although the two terms are often used interchangeably. While a business plan is typically broader and encompasses an operational plan, a marketing plan and a strategic plan, the strategic plan involves the business as a whole. A strategic plan typically includes an executive summary, a company description, value statements, a strategic analysis, an explanation of strategies, an action plan, budget and monitoring methods.
The strategic planning process is generally carried out in a team environment that consists of key players within the business. The business owner or president of the organization typically leads the team. Although there is no right or wrong time to perform strategic planning, it is usually done at certain times throughout the life of the business, such as when a business first opens, when preparing for a new venture like a product launch, when the market changes or when the business environment changes. When performed at the right opportunities, a strategic plan can serve as a powerful leadership tool to align resources and engage stakeholders.
A strategic plan should also be reviewed and updated at least every two or three years, or more often if significant changes occur within the business. It can also be advantageous to perform strategic planning at specific times of the year. For example, a small business that undergoes annual planning cycles may choose to reevaluate its strategic plan during the third quarter of the fiscal year. This allows the business to use any data collected throughout the previous months to set goals for the next fiscal year. Since the strategic planning process generally takes longer for larger businesses, it may be necessary to start in the second quarter.
Establishing Direction Allows Proactivity Rather than Reactivity
Many companies tend to use reactive business strategies which are those that respond to an unanticipated event only after it has occurred which forces businesses to act quickly to minimize damages. When a business adopts proactive business strategies, they are better equipped to anticipate possible changes and can take the necessary precautions to lower their risk of experiencing unanticipated events. While it is important to have some reactive business strategies in place to handle unexpected situations that may occur, businesses should aim to use proactive strategies that allow for making decisions freely and not out of a necessary response to an unexpected situation.
When businesses develop a strategic plan, they are able to look towards the future and prepare for all types of events. Strategic planning allows companies to anticipate challenging scenarios that could happen in the future, giving ample time to prepare for these events before they arise. When businesses are proactive, they are also able to take advantage of new trends in the market and stay ahead of the competition.
Strategic planning also helps businesses better define in which direction their business should go to achieve maximum growth. Through the strategic planning process, businesses can establish realistic goals that align with their mission and values. A strategic plan can provide the foundation for a growing business and can be useful for setting necessary boundaries for more effective decision-making. Think of a strategic plan as a roadmap to improve overall operational efficiency.
Establishes Long-Term Goals
Strategic planning can be a useful tool for establishing and achieving long-term business goals and objectives. When long-term goals are established early, management and employees can maintain focus on achieving these goals and work together to hit milestones along the way. A strategic plan provides guidance throughout each stage of business development and reminds staff of what goals need to be achieved to create a profitable company.
Long-term goals can differ from business to business and may include increasing profits by a certain percentage, moving to a larger facility or hiring new staff to grow the business. In addition, there is no set timeframe in which long-term goals must be achieved although the norm is between two and five years. Each long-term goal should consist of several short-term objectives or milestones. For example, if the long-term goal is to increase profits by five percent over the next four years, short-term objectives may include conducting market research, updating the business website or reducing overhead costs.
Situations can change over time and a strategic plan may need to be altered to meet new conditions in the workplace or the market. Evaluate the strategic plan at least once per year to determine if changes need to be made to the short-term objectives or the time frame in which the goals are estimated to be completed. Some businesses will find that as they grow, they discover new long-term goals that may take precedence over the existing goals in the strategic plan; by prioritizing long-term goals, businesses can achieve growth at a faster rate.
Work with BBG
Creating a strategic plan can have a positive influence on a business and its employees. Strategic planning encourages businesses to establish direction and clearly define the purpose of the organization. It also allows businesses to make wise decisions and invest their time and money into ideas that will generate profits. It can even mean greater job satisfaction for employees by promoting job roles that are purposeful and add value to a company. To learn more about strategic planning or for assistance creating a strategic plan for a business, reach out to the experienced benefits consultants at Business Benefits Group.