When you run a business, having a clear, concise goal matters, and that is where strategic planning comes in. Strategic planning is vital to a business as it provides a plan on a company’s direction and summaries measurable goals.
Strategic planning influences a business’ decision making and is also used for evaluating progress and changing approaches when changes are needed in a company. Strategic planning is done based on a company’s objectives, then back up realistic goals that are thoroughly researched to produce quantifiable targets for evaluating results.
Apart from that, having a strategy allows organisations to cultivate a clearer understanding of their own organisation and their industry and what’s required for them to succeed. It helps organisations understand their fundamental capabilities, identify and address weaknesses and diminish risks. It also helps organisations better design themselves to ensure that they are focusing on the right things and optimise their delivery of the best performance, productivity and profit both in the present and in the future.
In 2013, The Alternative Board’s (TAB) Small Business Pulse Survey shows that business owners who claim they have a high-quality strategic plan are more likely to “forecast sharp increases in profits and sales revenue over the next year than are owners who lack a strategic plan.” The survey also discovered that 9% of small business owners have a strategic plan that they would describe “excellent,” 16% of business owners assess and update their strategic plan regularly where as 22% of business owners have no written plan at all.
What is a strategic planning?
A strategic plan is a written document that contains important information from the basics of your business background to the thorough details of how to run it. It not only explains your company’s goals but details why they’re important. Apart from that it also contains ways to improve performance in your organisation.
Some of the other contents include new products development ideas, potential operations expansion, new market segments and strategies to appeal to them, and ways to potential organizational problems in the future. A good strategic planning should contains all the weaknesses and strength of a company, its threats and ways to overcome it as well as its potential.
There are a few reasons why strategic planning is important to a business.
Strategic planning lists down specific goals for a business. A good strategic planning helps a company figure out its SMART goals. These are goals that are specific, measurable, achievable, realistic and timely. This does not only gives a company direction, but it also gives an organisation a way to measure their progress. Instead of writing, “Be the most successful pet store in Malaysia,” a SMART goals answers all the questions. Example, “Gain 30% ROI from sales in Malaysia by November 2017.”
It is easier to set up and assess a detailed plan on getting 30% ROI than just generally “be successful.” Not only can you measure it, but it will also give your team members a clear deadline on when it has to be done by.
Evaluating your progress
Strategic objectives are done based on the best information you have at the time of writing your strategic planning using the most realistic assessments of what your business potential is. As a business progress and starts achieving goals, new goals will be evaluated to fit in a growing company. If you already receive your 30% ROI in the first 4 months, instead of the original 6 months’ timeline, you would want to understand how you achieve your goals quicker and hopefully duplicate that strategy for future sales.
On the other hand, if your team is a bit slow on achieving your goals, you would want to identify the source of the problem, either find a way to overcome it or eliminate the source of the problem.
Having a strategic planning not only helps you evaluate your progress, but it also outlines the process of evaluating, ensuring that everyone in the business organisation follows the same system.
Communication is very important no matter the size of your organization and strategic planning provides you with a clear process of how to communicate information.
If you are a business owner, it is easy for you to understand your own mission and vision, and how you plan on executing it. Unfortunately, not everyone in your team will have the same idea. Having a strategic plan details what you have in mind and not only how it will be executed but also why it is executed. Team members will optimise in results when they understand why they are doing what they are doing.
Not only that, it details the communication channel. Who has the final say when a crisis happens and the CEO is not available? Do everyone reports straight to the CEO or is there a hierarchy of communication?
Having a strong communication system ensures your business is run smoothly at all times.
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