Small business owners mistakenly believe that the size of their business negates the need for strategic planning but the opposite is actually true. Its inherent size is actually what makes strategic planning more important, because it can be means for a small business to gradually evolve into a huge and thriving multinational corporation.
What is Strategic Planning and Why is it important?
Strategic planning is a process for determining and aligning a business’s goals and objectives with its long term vision. Through evaluation, research, discussion, and goal setting, the strategic planning process helps a business owner or leadership team and the employees understand the current state of your small business and where it’s headed in the future.
What Small Business Owners Need to Know about Strategic Planning
Planning is one of the five important functions of management, but it’s arguably the most important of all because it’s the first function that any manager or business owner should focus on. Planning sets the vision & mission of the organization, goals and direction for the company. Without appropriate planning, the other functions may be impossible to achieve.
A business can’t, however, benefit from just any kind of planning. It must be strategic in essence, to be effective. Strategic planning is a methodical process of deciding where you want your company to be in a given time frame and what you propose to do to get there. Along with this planning is looking forward to make predictions about the market and the industry.
There are different ways to let your company benefit from strategic planning so don’t worry about following the so-called rules. Whatever works for your company is good enough.
Elements of Strategic Planning
Internal and External Assessment of Strategic Planning – A coach of a basketball team won’t be able to map out an effective play if it doesn’t know its players well, which team it will be playing against, and other related factors. The same can be said for any business manager. Before you can start working on the details of your strategic plan, you must first focus on compiling data about the external and internal environment of your company.
Outside your business, politico-legal, economic, and socio-cultural factors can affect how your business will fare in the next few years. Inside, factors such as management style and the type of workforce you have can also help or hinder your company from attaining your goal.
Setting Your Company’s Goals – Small or big, the important thing is for your business to have goals. If you can be satisfied with small and short-term goals then that’s good; if you secretly desire for bigger goals then that’s even better. To know if the goals you plan to achieve are indeed workable, determine if they adhere to the SMART rule – specific, measurable, attainable, realistic, and time-bound.
Rule of Majority – Of course, as owner or manager of a business, you reserve your right to approve or veto any suggestion but as much as possible, allow the rule of majority to stick. Plans can only come to fruition if everyone in the company works together and you can assure yourself of their cooperation by showing them that you care about what they think.
Developing an Action Plan – Finally, it’s time to concentrate on the nitty-gritty of your strategic plan. List down possible and specific courses of action then choose what all of you deem as most suitable. Make sure that you set a definite schedule or timetable for everything but give allowances for unexpected delays and concerns. Set a budget as well.
Persistent evaluation and accountability are essential, maybe even more so for a smaller business. By keeping your pulse on key metrics and data, you can pivot or adapt to new circumstances as they come up, but before they may be detrimental or disastrous to the business.