Strategic Planning - Vitally Important for Small Business

Rate this:
By - 30 June 2009

If you’re a small business owner, you’ve probably heard the saying “people don’t plan to fail, they fail to plan”. It’s almost become a cliché. There’s a reason for that – it’s true! Whether you are operating a very small home based business or you work from commercial premises, you need a strategic plan. If you were taking a four week overseas holiday, you’d most likely plan it carefully and have an itinerary – so you knew where you were going and when!

 

Yet surprisingly, few small business owners have an itinerary or a ‘strategic plan’ for their business. Holidays are short. A business is usually a long term endeavour. Do you agree that your business is more important than a holiday? If so, then you’ll understand how important strategy planning is.

 

When you first opened your small business, you may have prepared a business plan that identified the type of products or services you would offer, your strengths and weaknesses, your major competitors, business costs, where you wanted to position in the marketplace and what you expected your turnover to be over the first year or two.

 

What’s the difference between business planning and strategy planning? A business plan is generally undertaken at the beginning of a new venture. A strategic plan focuses on business development over time – it’s a plan for growth or expansion of a business.

 

What does Strategic Planning Cover?

 

Your strategic plan should document your strategies for growing your business. The first thing to identify is where you want your business to go. Do you want to increase your turnover to a certain level or be ‘numero uno’ in your industry? Once you have established what you want to achieve, you can then plan how you are going to get there and over what period of time. Your strategic plan should include your goals, your planned strategies to reach them and a time line.

 

For example, say you have a small work-from-home operation with about five regular clients you provide services to. You want to increase that to fifteen regular clients as you believe that will give you sufficient income to resign from your day job and employ your spouse as well. Having identified that goal, you now need to identify ways of reaching it.

 

What products or level of service will you need to offer? Where will those new clients come from? How will you approach them? How will you convince them that you are better than your competition? Can you reduce your business costs to increase your profit margin? Last but certainly not least, when are you going to take those steps?

 

Your strategies may include identifying ways of diversifying your business to offer more, or a marketing and advertising plan. Your strategic plan should also consider the nature of your business and identify any foreseeable changes that may occur. For example, are you providing a service or product that is likely to grow in popularity or decline?

 

If one particular product or service is likely to decline in the coming years, how will you replace the income from that product or service? If more competitors are entering your market, how will you stay ahead of them? While you’re strategy planning, consider how your plans will impact on your business costs.

 

Monitoring and Updating Your Strategic Plan.

 

Developing a strategic plan is of no use whatsoever if you toss it into the bottom of the filing cabinet and forget about it. Your strategic plan is the map of where you and your business are going, so you need to refer to it occasionally. If you’ve taken a wrong turn since you last looked at it, you can adjust your path accordingly. Reading your plan occasionally will remind you of your business goals and help motivate you to achieve them.

 

Once you’ve developed your strategic plan, don’t feel you cannot alter it if your goals change or circumstances in your industry alter. Things change. That’s life. Keeping up with those changes is what strategic planning is all about!

About the Author

George Butler
Raj Aryan has varied interest in the field of business. In particular, he has a keen interest in SME's and the challenges these businesses face. He has written numerous articles about small business.