Building a strategic plan for your business sounds like something intricate and expensive. A luxury that only big companies can afford. At least, that’s how I felt when I first heard the term.
I could clearly picture a meeting room filled with top-notch executives (dressed in their finest garbs) at their headquarters. I could almost hear them screaming, arguing, discussing, and frantically writing a strategic plan.
But what I pictured cannot be further from the truth.
A company’s strategic plan is the tool that any sized businesses need to reach their goals.
Putting it into practice doesn’t have to be an overwhelming task, nor do you need to wear your best suit to do so.
In this article, we will explain to you precisely what a company’s strategic plan is. We will also guide you through the steps you need to take to build one for your business.
What is strategic planning?
A strategic plan is a written document that details the direction of a business. It establishes its goals and explains how to achieve those goals.
In other words, a strategic plan is a guide to make your business grow.
Strategic planning is like creating a map. There is a destination (the objectives and goals for your company). You can also see the best route to get there (the steps your company must take to guarantee its success).
What should a strategic plan include?
Let’s summarize what your strategic plan should include:
- Basics of your business (like name, sector, size, etc.)
- Competitive advantages
- Goals and Objectives
- Action plan
- Customer’s profile
11 Steps for Effective Strategic Planning for Small Business
You already know why strategic planning is essential to your business, but the question now is: how to create a strategic plan?
The following steps explain how to make your strategic plan.
1. Define your competitive advantage
Think hard and long about what makes your business special. To do so, ask yourself these questions:
What makes your company better than others?
What makes it different?
Why do your customers prefer your products or services rather than those offered by your competitors?
The answers are what we call “competitive advantage.” You’ll have to define it when starting to build your company’s strategic plan.
2. Prepare your pitch
We are talking about the kind of speech known as the elevator pitch. This pitch has to cover your business model and how you plan to meet your customers’ needs.
Think that’s easy enough?
You will have to do it during the lapse of time you could spend in a hypothetical elevator. The goal of an elevator pitch is to give everyone a clear and concise idea of your business.
3. Establish your company’s mission
Here is where you sit and write down in detail your company’s purpose. Your company’s mission works as a guide for the daily operations of your business. It’s also the starting point to make future decisions.
The mission should answer these questions:
What exactly is our business?
What do we do for our customers?
What motivates us to work?
4. What’s your vision?
It’s crucial that you also establish your business’ vision. This is what you envision your company being in the future. Your vision should answer these questions:
What kind of impact do I want my company to have in my community?
What do I expect to achieve in the future?
How can my business help improve people’s lives?
5. Carry on a SWOT analysis
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.
A SWOT analysis lists the parts of a business that you can improve and the already strong ones. It allows you to pinpoint growth opportunities. It helps you to identify what elements you have to develop to enhance your company’s performance.
6. Write down your company’s goals
Write three to five goals that illustrate your company’s mission. Each one must be clear, measurable, and quantifiable.
These goals exemplify your company’s strengths. They serve to mitigate possible weaknesses, to make the most out of every opportunity. They also help you identify the elements that could threaten your business.
Not sure what goals to include? Here are some examples:
Increase sales and increase profits
Offer new products and services
Acquire new types of consumers
Use digital platforms
Improve online customer service
Create a customer database
Invest in employee education
Improve employee retention
7. Include Key Performance Indicators
The Key Performance Indicators (KPIs) are quantifiable values. A company uses KPIs to define its performance concerning the established goals.
A Key Performance Indicator must have verified information. In addition, they should be able to put the company’s goals in context.
8. Establish your customer’s profile
To build your customer’s profile, answer questions such as:
What motivates your clients?
What do they need?
What characteristics define them?
What added value can you offer them?
What can your business do to attract more clients?
9. Analyze your company’s sector
Carry on an analysis of the industry your company belongs to. Find out if the market is increasing or if there are any growth opportunities. Next, make a list of your competitors, including their strengths and weaknesses.
10. Integrate your team
For this step, make sure you can count on the human resources needed to carry on the actions detailed in your plan. Make a list of all your team members. Finish with an outline of the professional profile of prospective employees that could help you achieve your goals.
11. Never stop planning!
You must make a habit of your strategic planning. First, make sure everyone in your company knows the plan. Set meetings to check the progress of the plan. If your business didn’t achieve the goals, make adjustments to correct the course of your company. This will help you adapt to changes in the market.
Review and adapt your strategic plan at least once a year.
How to revise your business plan to increase your profits
Why is strategic planning important to a small business?
Strategic planning helps your company improve its performance. It brings ideas on how to restructure it and thus reach its highest potential. A well-designed strategic plan allows you to identify new opportunities or challenges. Also, it points out the best ways to face them.
Now you know why a strategic plan is vital for your business.
But you may be wondering, “how do you develop a strategic business plan?” The following model details what you should do to build a strategic plan, step by step.
Characteristics of a successful strategic plan
A successful strategic plan is easy to identify because it has particular qualities:
Understands your situation
A business’ strategic plan considers the situation of your company. If you do not consider where you currently sit, you will not know how to reach your goal.
A strategic plan that people cannot understand is useless. Make sure you clearly describe your plan and the strategies that need to be followed so that everyone in your business can understand them.
It is good to have huge goals, but it’s also crucial that they are realistic goals.
For example, you can’t have a short-term goal of becoming an international company when you just started your business; that would be a long-term goal.
By having a realistic plan, you’ll be able to achieve your goals.
A good plan is not only transparent and realistic but also actionable. The plan must detail what needs to be done and how.
Uses the strengths, values, and culture of your business
The cornerstone of a good plan is your own business. To achieve this, you have to understand your business perfectly.
Focuses on leadership
To help your business succed, you have to be a leader and not just a boss. A good plan will go nowhere if the leader doesn’t set the example.
Needs follow-up and feedback
If you don’t measure the results of your strategic plan and adjust them, you will get nowhere.
Do not take your plan as a commandment but as a living guide that you can improve based on the results obtained and the feedback others give you.
So, don’t forget to evaluate the strategic plan and analyze if your business achieved the goals or why they weren’t achieved.
10 objectives of good strategic planning
Are you still not convinced if a strategic plan is what your business needs? These are the objectives of strategic planning or, in other words, its benefits:
- Helps businesses to grow, evolve and adapt
- Allows you to evaluate your business
- Gives detailed instructions to help achieve the goals
- Gives a sense of direction and purpose
- Tells each area and member what they need to do
- Enables growth and increases profitability ratios
- Allows the company to extend its longevity
- Spotlights the company’s situation to find better growth-paths
- Can improve the return on investment (both money and time)
- Can build investor confidence
Types of strategic plans
You can apply strategic planning to any area of your business; it is not something exclusively administrative. There are several types of strategic plans:
- Human Resources
The plan you decide to create will depend on the needs of your business and your goals.
Now You’re Ready to Write a Strategic Plan!
A company’s strategic plan doesn’t have to be perfect or even finished to put into practice. After all, it’s a dynamic document that you should update as your company grows or the market evolves. In any case, it’s always better to have a draft of a plan than no plan at all!
At Camino Financial, we always strive to fulfill our motto, “No Business Left Behind.” That’s what drives us to write articles like this to help business owners grow and thrive. So if you want to receive more free tips and resources that will help you better manage your business and your finances, why not subscribe to our weekly newsletter?
What’s the difference between a strategic plan and an operational plan?
The strategic plan usually has medium or long-term objectives and strategies.
The operating plan, or Annual Operating Plan (POA), is more short-term, usually not more than one year. It includes the daily, weekly, or monthly actions to achieve the business objectives.
How to implement a strategic plan?
If you were clear and realistic when writing your plan, implementing it will not be difficult for you.
If, on the other hand, you don’t know how to implement your plan, you should review it and make adjustments so that it’s actionable.
How to make a strategic marketing plan?
A strategic marketing plan has very similar steps to the ones listed in this article:
How can I get capital to put my plan into action?
If you created your strategic plan and realized that you need capital to put it into action, don’t worry.
You probably need a small business loan. At Camino Financial, we specialize in helping businesses that want to grow and improve their profits.