Why Strategic Planning is a Smart Business Plan

Why Strategic Planning?

In today’s competitive market, many business owners remain unsure about why strategic planning is important. Yet, if you have ever embarked on any activity without a plan, you would appreciate proper planning. The business world today is just too unforgiving for anyone to enter blindly. Many businesses fail within the first few years because they lack proper business strategy. This is further reiterated in the fact that about 30 percent of businesses fail within the first two years, while about 50 percent fail within the first five years. You may be thinking, “there are many other things that affect the success of a business.” While this is true, if you really think about it, you will see that it all comes back to inadequate planning and execution.

What is Strategic Planning?

Strategic planning is a management activity used in an organization to define its priorities, direction, and strategy. It involves ensuring that stakeholders and employees realize the importance of the company goals, and are working together for the realization of the set goals and objectives. Suffice to say, it ensures everyone is on the same page. An effective strategic plan contains details on the where the organization is going and the steps that would be taken to reach the set goals.

Benefits of Setting a Business Strategy

It important to understand How Strategic Planning Helps To Streamline Your Business.  Knowing the many benefits of having a solid business strategy during the planning stage of your business is also key. Let’s look at some of these benefits.

It gives you a sense of direction

Before you embark on any business, you need to set a foundation that will keep the business going especially over the first few years. With strategic management, you can coordinate the various resources and actions of the organization in line with the business strategy. This way, you are sure that every step you take is geared towards the vision and strategic goals of the business. This is referred to as strategic alignment. A strategic plan serves as the foundation your business needs for success and growth.

It helps you remain proactive

If you engage in discussion with any successful business person, you will realize that staying proactive is a lot more beneficial than being reactive. Strategic planning helps you anticipate potential unfavorable scenarios in the future of your business. This allows you to take preventive measures or – in a case where it is unavoidable – prepare adequately for the eventuality.

Many new businesses cannot handle the effect of some unfavorable market scenarios. It is, therefore, not smart to only have a reactive plan for every problem.

It increases the profitability of your business

Of course, the goal of every business is to make a profit. Consequently, it is essential that you pursue means that will increase the market share of your business. Through a dedicated business strategy, you can get valuable insights into consumer segments, product and service offerings, and market trends that may affect the success of your organization.

Having a proper strategic plan will help you reduce unnecessary spending in tackling problems while helping you take advantage of valuable insights into the market. Then, your profit margin will increase rapidly.

Tips for Setting Strategic Goals and Objectives

Many business owners, especially new ones, believe they don’t have to go through the thorough process of setting a strategic plan. The reality is many people believe it is boring and takes too much time, and even when they go through the process some fail to execute. The reality is, about 90 percent of organizations fail to successfully execute their strategies. So what is the answer? From my experience, I have found that some of the answers lie within the lack of shared values, commitment, resources, training, implementation, and understanding. Below, I will provide a simple way of looking at strategic planning.

Setting Goals

The first thing to remember is that goals are usually longer term outlook that ties to a big-picture vision. It describes the final destination – your end-goal. Goals are typically broken up into objectives and action plans for management and execution.

Objectives

The first thing to note is that objectives are SMART, meaning they are specific, measurable, attainable or achievable, relevant or realistic, and time-based.

Measurable

You should be able to measure the progress that is being made to get to your destination. They also respond to the “who, what, when, where, and how” to achieving your goals. When drilling down to your objectives and action plans, always remember your “why” to ensure that you stay aligned with your strategy. Here are a few tips that will make it easier to set objectives before making them into actionable items.

Be specific

It is essential that you make your goals as specific as possible. You don’t want any form of ambiguity among your employees and stakeholders. Everyone involved needs to know exactly where the company is going and how it is going to get there. This improves the productivity of all the parties involved because they know exactly what to do at every given time.

Make it attainable

Nothing is more demoralizing for a team than an unrealistic goal. It is okay to be optimistic while setting your goals, but you need to know the point where optimism reaches unrealism. To get the buy-in from your employees and colleagues, you need to set goals that are right in front of their eyes. Planning for an unreachable goal is the first step towards failure.

Make it time-based or time-oriented

Putting a time-frame on your strategic goals is an excellent motivator. Any goal that is not time-based doesn’t seem as urgent as one that has a set period, and as such, allows for a more lackadaisical attitude from the parties involved. Therefore, ensure your strategic goal is time-based to get the level of enthusiasm required from your employees.

It is essential that you carry your team along in any plan you make. You see, approximately 95 percent of a typical workforce doesn’t understand the strategy of its organization. I have come across this challenge many times when I consult with companies on Strategic Project Management and Organization Assessments. There has to be a plan that addresses shared values.

Final Thoughts

There is a popular saying, “failing to plan is planning to fail.” This covers the importance of strategic planning perfectly. Having a strategic management system will help you stay relevant in the business market as you grow your business. It gives you a sense of direction, helps you remain proactive, and increases the profitability of your business. Let me also remind you that many of the challenges new businesses face can be avoided with a proper strategic plan in place.