Do you have a strategic plan in place for your business?
Many small business owners become so preoccupied with the chaos of day-to-day operations essential to running a profitable business, they don’t take the time to invest in a strategic planning process. In fact, one of the main roadblocks stopping small businesses from finding success is a lack of clear goals and objectives.
You may have an idea of how you want your business to grow, but in order to get there you need to:
- Define your mission.
- Set clear objectives.
- Determine the strategies to achieve these objectives.
- Identify the tactics required to implement these strategies.
What Is Your Mission?
What is the purpose of your business? Why does your business exist?
Answering these questions will help you articulate what you want your business to become. For example, your mission may be: “To become the top marketing agency for small businesses in the nation, with 100,000 clients across North America.”
Once you have your mission in place, you can begin strategizing how you will get there.
Short Term vs. Long Term Goals
As a small business owner, it may be difficult to know what you’re doing next week, let alone 5 or 10 years from now. In the strategic planning process, it’s important to think about strategy in three time horizons.
Long-term: The most abstract, setting long-term goals can be an ambiguous exercise. For planning purposes we think of “long-term” as a 5-year time horizon. Ask yourself where you will be as a business in 5 years. Try to quantify objectives such as revenue and net income, number of clients, markets served, position relative to competitors. These are aspirational goals in nature, but helpful in creating focus.
Medium-term: Less abstract than long-term goals, medium-term planning seeks to establish both qualitative and quantitative goals for the next three years. What will your business look like in three years? Revenue, margins, net income and related financial goals are important to establish. Other tangible objectives can cover areas such as number of employees, number of office locations, etc. Qualitative goals could include the type of products you want to make or sell, or even the markets you want to serve. Try to get as concrete and specific as possible, while being realistic.
Short-term: These speak to goals and objective for the immediate year and should be very tangible. Short-term goals and objectives really help steer the company for the next 12 months.
Strategic planning takes a lot of effort and small business owners don’t have the time to put a new strategy in place every year. When you establish your goals, make sure that long-term, medium-term and short-term goals are connected. For example if your goal is to grow revenue by 50 percent in five years, you must consider where will you need to be in three years, and what that means in terms of short-term revenue growth. By identifying long-term goals from the start, your short-term goals should fall into place.
Strategy Development: The Plan to Achieve Your Objectives
Strategy is really about identifying options and making choices. If revenue growth is a critical objective, what are the most viable options for your business to do this? You could expand into a new geography, or you could create new products. Which of these options make the most sense and why?
How do you choose between these options? In traditional strategic planning processes choosing between options is often done on a cost benefit analysis. How much will something cost and what do we expect the payoff to be?
Don’t Confuse Tactic With Strategy
Placing a newspaper ad is not a strategy, it’s a tactic.
Tactics are the operational building blocks that support your strategy. If your strategy involves market expansion, you need to determine the best tactics available to make this happen. For example, your tactics might be: increase marketing spend, grow your sales team, open a new office, acquire a locally-based company, etc.
A common mistake small business owners make is jumping right into tactics without thinking through their strategic options.
Stay Focused on the End Goal
By investing in your strategy, you’re investing in your business’ long-term success. Continue to evaluate your plan along the way. Schedule regular meetings to assess where you stand in terms of meeting your objectives; what’s working and what adjustments need to be made? Expect obstacles, but most importantly, expect results.