It may seem like an obscure concept for many entrepreneurs and it's definitely had some overexposure in the business press. However, strategic planning is absolutely essential for anybody doing business today, whether you're a big or small player.
Why? Simply put, strategic planning determines exactly where your organization is going over the next year or more and how it's going to get there. A strategic plan is a coordinated and systematic way to develop a course and direction for your company. Basically, if you don't have a strategic plan, it's akin to navigating unknown territory without a map. And without a map, you're lost in a highly competitive business environment that will inevitably throw these challenges your way: increasing globalization, unpredictable investment patterns, more demanding clients and the dizzying speed of technology. A rule of thumb is that if there's uncertainty on the horizon, which there always is today, the greater the need for strategic planning.
What does it generally include?
Keep in mind that strategic planning usually involves a number of steps and people use a myriad of terms. You'll find vocabulary such as organic strategic planning, issues-based planning and goals-based planning. But in the end, the terms aren't that important. Since no two businesses are alike, the process you choose to do your strategic planning should fit the nature of your business. You can adapt it to suit your needs. For example, if you're a small firm, a brief strategic plan might be appropriate. If you're a bigger company, a more detailed plan on various aspects of your organization may be more effective.
What's important is that you have a document that outlines where your company is going, so that everybody in your business is working with the same information. Ultimately, strategic planning helps to gauge what an organization is, what it does exactly, and why it does it, with a focus on optimizing your future potential.
- It's not a business plan - don't confuse a strategic plan with a business plan, which is a much broader document and includes a strategic plan, a marketing plan, financial plan and operational plan.
- Prepare and define the scope of your planning by reviewing your motivation, costs and means.
- Analyze your strengths, weaknesses, opportunities and threats through a review of your company's internal environment and looking at external factors such as competition and demographics.
- Formulate strategies by looking at exactly what strategies and tactics you take as a result of the above factors.
- Implement your strategies by assessing your resources and getting your plan on paper.
- Communicate the plan by getting your message out to your key players.
- Measuring your success by tracking your progress and motivating your employees to keep up their efforts.
Who carries it out?
Your strategic planning should be carried out in a team environment that involves key players in your business. Generally, it's headed by the president of the company, who gets input from employees or a specific team assigned. The team identifies key factors for the strategic analysis and participates in that diagnosis through, for example, interviews. The team is also involved in the formulation of the strategic direction and action plans.
When is the best time for strategic planning?
The scheduling for the strategic planning process depends largely on the nature and needs of your organization. For example, if your business environment changes rapidly, strategic planning is essential to keep afloat and should be carried out at least once a year. A rule of thumb is to be disciplined and ensure it happens regularly.
Generally, it should happen:
- When you start a business
- If you're preparing for a new venture such as a product launch
- If markets are changing
- If the business environment (laws, regulations, business practices) is changing
How will it benefit you?
Strategic planning will help you:
- Define the purpose of your company and set realistic goals.
- Communicate those goals to your players.
- Ensure employees better use resources.
- Measure your progress and find means to fill gaps.
- Build a consensus in your company about where your organization is going.
- Increase productivity by ensuring that employees know where they're going and what's expected of them.
- Capitalize on your strengths.
- Overcome your weaknesses.
- Take advantage of business opportunities.
- Defend against threats to your organization.
Content in this section is provided in partnership with the Business Development Bank of Canada. BDC provides entrepreneurs with financing, venture capital and consulting services. To find out more go to BDC.ca.
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