Strategic planning is crucial for the success of any business, irregardless of its size. For small businesses, strategic planning can be the key to growth and profitability. In this article, we will discuss what strategic planning is, why it’s important for small businesses, and provide an example plan with graphs and tables describing the process of creating and implementing a strategic plan.
Small businesses are lacking in this key area, which is why more than 90% of them fail after the first 12 months. There is no clear goal, structure or plan to grow and develop the business. These business owners think everything will work out, all the problems will be solved, and money will just keep rolling in.
It doesn’t work that way… You need to build a strategy, plan out your journey, make key decisions about what goals you want to achieve, and create targets to check you’re on the right path.
What is Strategic Planning for Small Business?
Strategic planning is the process of defining a company’s direction and making decisions on allocating its resources to pursue this direction. It involves setting goals, determining the actions needed to achieve those goals, and mobilising the resources necessary to implement those actions. A strategic plan is a roadmap for the future of a business that outlines its goals, strategies, and action plans.
Why is Strategic Planning Important for Small Businesses?
Strategic planning is essential for small businesses because it allows them to:
- Focus on their long-term goals: A strategic plan helps small businesses focus on their long-term goals and objectives, rather than just day-to-day operations.
- Allocate resources effectively: By identifying and prioritising goals, a strategic plan helps small businesses allocate resources more effectively.
- Make informed decisions: A strategic plan helps small businesses make informed decisions by providing a clear understanding of the market, customers, and competitors.
- Adapt to changes: A strategic plan enables small businesses to adapt to changes in the market and business environment.
You should be planning whether you own an existing one, your starting your own, or your buying a business.
Examples of Strategic Planning for Small Businesses
The following is an example of a strategic plan for a small business. The following steps are crucial in your planning and success in this type of analysis.
The process of strategic planning works in all sectors and industries of all sizes. Just because you have a small operation should not discourage you from performing planning exercises.
Step 1: Conduct a SWOT Analysis
SWOT Analysis stands for Strengths, Weaknesses, Opportunities & Threats. For any idea or process you want to implement it is necessary to complete a SWOT analysis to see if the strengths and opportunities outweigh the weaknesses and threats.
For example, if you were building a business surrounding a product that you wanted to sell… And you had built a strong brand with lots of interest and a great team. But you were still very much in the start up phase, your SWOT analysis might look like this:
| Strengths | Weaknesses | Opportunities | Threats |
| Experienced & Skilled Staff | Limited Marketing Budget | Growing Demand for Product | Higher Competition |
| Strong Brand Reputation | Limited Product Line | Expansion into New Markets | Global Economy Downturn |
| High-Quality Products | Dependance on Local Suppliers | Introduction of New Products to Consumers | Government Regulations Surrounding Products |
You can see how in depth the analysis can be when conducting a SWOT. From the table you are looking to find:
- What is a strength of your current position and how it will benefit you in this new mission.
- Any weaknesses you business has that could impact the success.
- Opportunities that exist or could arise from implementation of the idea.
- Any threats that you can foresee if you launch the process.
Step 2: Define your Mission and Vision
The next step is to define the businesses mission and vision. The mission statement should outline the purpose of the business, while the vision statement should describe what the business hopes to achieve in the long term.
Don’t overthink it, this is what customers will tend to think of when they see your brand so it must appeal to them.
The following are examples of mission & vision statements for the product seller from the SWOT above.
Mission Statement:
To provide high-quality products that meet the needs of our customers old and new.
Vision Statement:
To become the leading provider of innovative products in the industry.
Step 3: Set Goals and Objectives
The next step is to set specific, measurable, achievable, relevant, and time-bound (SMART) goals and objectives based on the SWOT analysis and mission and vision statements.
SMART goals are as they suggest… Smart. Defining these parameters as they relate to you goals helps ensure that your objectives are attainable within a certain scope of time. This process eliminates generalisation and guesswork, it sets a clear timeline, and makes it easier to track your progress and identify missed milestones.
An example of a SMART goal statement might look like this:
Our goal is to {objective} by {time or deadline}. {Key team members} will achieve this goal by {steps you will take to accomplish the objective}. Achieving this goal will {result or benefit}.
You could develop your goals into a table as such and create your objectives and Key Performance Indicators (KPIs) as you go. Then you’ll be ready to write your SMART goal statements:
| Goals | Objectives | KPIs |
| Increase Market Share by 20% | Launch a new product line | Sales revenue |
| Improve Customer Satisfaction Ratings by 15% | Enhance customer service | Customer satisfaction ratings |
| Increase Online Presence | Improve website traffic and engagement | Website traffic and engagement metrics, marketing cycle station analysis |
These KPIs will act as measures. Hence you want to monitor these factors to see if what you are doing to reach your goal is working.
Step 4: Develop Strategies and Action Plans
The next step is to develop strategies and action plans to achieve the goals and objectives.
Based on the table above, we will now work on a strategy to increase the KPIs so we can reach our objectives sooner.
| Goal | Strategy | Action Plan |
| Increase Market Share by 20% | Expand Distribution Channels | Develop partnerships with retailers and wholesalers, also reach out to online influencers to advertise products |
| Improve Customer Service Satisfaction Ratings by 15% | Enhance Customer Service | Implement customer service training programs for staff and improve usability/response time of online portals and web-chats |
| Increase Online Presence | Redesign Website & Social Media Channels | Increase mobile usability and SEO on website and develop a content plan for social media that increases views and link clicks |
Step 5: Allocate Resources
The next step is to allocate resources, including human resources, financial resources, and time, to implement the strategies and action plans.
Look at how much it will cost to either outsource the work, or how much time you will spend on it. This should give you a good idea on the value of time it will take. But also look deeper:
- How much will any necessary machinery or parts cost?
- Will you need to invest in staff training or new team members?
- Is advertising an option?
- Traveling time and costs associated with travelling
- Will you need to outsource a portion of the tasks?
Think beyond the financial resources as well, your time is valuable… But what people always forget is that you are taking away time from other tasks that need done. So when you are allocating your time or someone else, you need to think about who will take on the processes they are usually responsible for.
A good example of resource allocation is below:
| Goal | Strategies | Resources Required |
| Increase Market Share by 20% | Expand distribution channels | Financial resources: Additional staff to manage retailer relationships, travel costs to new customers. Software costs: New customer relationship management system to keep high levels of services to retailers. |
| Improve Customer Service Satisfaction Ratings by 15% | Enhance Customer Service | Financial resources: Cost of training programs for staff members. Outsourcing resources: Developing costs to improve customer portals and web-chats. |
| Increase Online Presence | Improve Website Traffic & Engagement | Infrastructure resources: Improve servers and web hosting. Financial resources: Increase advertising budget to drive traffic. Outsourcing resources: Additional SEO & web design support to increase engagement. |
Step 6: Competition Analysis
The final step in this process is to assess your competition to figure these three key factors:
- If I complete my Strategic Plan, will it influence my position within the market positively enough to warrant the resources used?
- Have my competitors already done or tried similar plans?
- Have the plans my competitors completed work?
The focus on your competitors is key. If you want to increase online presence as the examples above suggest, see if your competitors have made efforts to increase their online presence.
If you can see any changes in their webpages, social media or otherwise that has increased traffic or engagement… Look at what they did and pick your ideas from that. On the other side, if they have changed things that negatively impacted performance, stay away from those aspects.
Having hindsight would be great when implementing a plan, so use others experiences to influence your decisions… It might just not be worth increasing your online presence at this time, as you may find when searching for your competitors.
Additionally, it’s important for small businesses to have a clear understanding of their competitive landscape and to continuously evaluate their strategies to remain relevant and competitive.
Strategic Planning Models
There are a lot of different planning models out there but I thought I’d take the time to explain a few of my personal favourites.
Balanced Scorecard Model
The balanced scorecard model is a performance metric used to identify, control and improve a businesses processes and outcomes.
David Norton and Robert Kaplan invented the procedure in 1982 after taking previous metric performance measures and adapting them to include non-financial data. You can read their book “The Balanced Scorecard—Measures That Drive Performance.”
This kind of model is used in profit making companies, non-profit companies, charities, and even government agencies.
The balanced scorecard involves measuring four main aspects of a business:
- Learning and Growth
- Business Processes
- Customers
- Finance
This allows the users to compile all the information into a single report, to provide data into service and quality as well as financial performance, and to help improve efficiencies.
McKinsey 7S Framework
Introduced in the 1970s, the 7S framework was the most influential thought experiment in thinking about a businesses effectiveness.
As in the past and present, organisations have structures such as CEO – Managers – Employees… But who really knows who is doing what, and who reports to whom? As businesses grow in size their structures become complex, hence they lose their coordination.
As in the book “In Search of Excellence: Lessons from America’s Best-Run Companies”, Robert H. Waterman and Thomas J. Peters describe how their framework maps the factors that influence an organisations ability to change. The lack of hierarchy among these factors suggests that significant progress in one part of the business will be difficult without working on the others.
The framework revolves around segmenting teams into stations, then finding how each stations relates to another. Hence, if you know the connecting factors, you can find a way to improve one and other in the same way.
Porter’s Five Forces
Porter’s five forces is a model that finds and analyses five competitive factors that shape every industry and helps the business owner determine an industry’s weaknesses and strengths.
Five forces is usually used to identify an industry’s structure to figure out corporate strategy and structure.
This model can be used in almost all segments of the economy to understand the level of competition within the sector, as to enhance your company’s longterm profitability. You can find Harvard Business School Professor Michael E. Porters book “Porter’s Five Forces: Understand Competitive Forces and Stay Ahead of the Competition” on Amazon.
Porter’s Five Forces are:
- Competition in the industry
- Power of suppliers
- Power of customers
- Potential of new entrants into the industry
- Threat of substitute products
By analysing your competitors nature and power, you can quickly figure out if the industry is ripe for investment. Five forces analysis can be used to guide business strategy to increase competitive advantage.
Sum Up
A strategic plan is not a one-time exercise, but rather an ongoing process that requires regular review and revision. As the business environment changes and new opportunities and challenges arise, the strategic plan may need to be updated to reflect these changes.
By following a structured approach to strategic planning and regularly reviewing and updating the plan, small businesses can set themselves up for long-term success.
Conclusion
In conclusion, strategic planning is a critical process for small businesses to achieve their goals and objectives. By following the steps outlined in this example plan and using tools such as SWOT analysis, SMART goals and objectives, and graphs and tables to visualise progress, small businesses can create and implement an effective strategic plan. Remember to allocate resources, monitor and evaluate progress, and continuously review and update the plan to ensure long-term success.
FAQs
What is strategic planning?
Strategic planning is the process of developing a long-term plan that defines an organisation’s goals, objectives, and strategies for achieving those goals. It involves assessing the current state of the organisation, identifying opportunities and challenges, and developing strategies and action plans to achieve the desired future state.
Why is strategic planning important for small businesses?
Strategic planning helps small businesses to align their resources and efforts towards achieving their goals. It provides a roadmap for the future, helps to identify potential opportunities and challenges, and enables the business to adapt to changing circumstances.
What are the benefits of strategic planning for small businesses?
The benefits of strategic planning for small businesses include improved decision-making, better resource allocation, increased employee engagement, better communication and collaboration, and improved performance and competitiveness.
What is SWOT analysis and how does it relate to strategic planning?
SWOT analysis is a tool used to assess the strengths, weaknesses, opportunities, and threats facing an organisation. It helps small businesses to identify their internal strengths and weaknesses and external opportunities and threats, which are then used to inform the development of strategic objectives and action plans.
What are SMART goals and how do they help in strategic planning?
SMART goals are specific, measurable, achievable, relevant, and time-bound objectives that help to ensure that strategic planning is focused and effective. SMART goals help to ensure that objectives are clear, achievable, and aligned with the overall strategic direction of the organisation.
What is the difference between a mission statement and a vision statement?
A mission statement defines the purpose and values of an organisation, while a vision statement defines the desired future state and the long-term goals of the organisation. A mission statement provides a sense of direction and purpose, while a vision statement provides a sense of inspiration and motivation.
How do you identify and prioritise strategic objectives?
Strategic objectives are identified through a process of analysing the internal and external environment of the organisation. Prioritisation is based on a variety of factors, including the importance of the objective to the overall strategy, the feasibility of achieving the objective, and the resources required to achieve it.
How do you develop strategies and action plans?
Strategies and action plans are developed by identifying the key strategic objectives and then identifying the specific steps required to achieve those objectives. Strategies and action plans should be SMART and aligned with the overall strategic direction of the organisation.
How do you allocate resources for strategic initiatives?
Resource allocation is based on a variety of factors, including the importance of the initiative to the overall strategy, the feasibility of achieving the initiative, and the resources required to achieve it. Resources should be allocated in a way that maximises their impact and effectiveness.
What are some common challenges in strategic planning for small businesses?
Common challenges in strategic planning for small businesses include lack of resources, lack of expertise, resistance to change, and difficulty in prioritising objectives.
How do you measure progress and evaluate the success of a strategic plan?
Progress is measured by tracking key performance indicators (KPIs) related to the strategic objectives. Evaluation is based on a variety of factors, including the achievement of the objectives, the impact of the initiatives, and the effectiveness of the strategies and action plans.
How often should you review and update a strategic plan?
A strategic plan should be reviewed and updated on a regular basis, typically annually or bi-annually. The frequency of review and update depends on the pace of change in the internal and external environment of the organisation.
Who should be involved in the strategic planning process?
The strategic planning process should involve key stakeholders, including senior leadership, employees, and external partners. It is important to involve those who have a stake in the success of the organisation and who can provide valuable insights and perspectives.
How can you ensure employee buy-in and engagement in the strategic planning process?
Employee buy-in and engagement can be ensured by involving employees in the planning process, communicating the strategic plan clearly and regularly, providing opportunities for feedback and input, and aligning employee goals and objectives with the overall strategic direction of the organisation.
What are some best practices for strategic planning for small businesses?
Best practices for strategic planning for small businesses include involving key stakeholders in the process, focusing on the most important strategic objectives, developing SMART goals and action plans, allocating resources effectively, measuring progress and evaluating success, and communicating the plan clearly and regularly.
How do you incorporate risk management into strategic planning?
Risk management should be integrated into the strategic planning process by identifying potential risks and developing contingency plans to address them. Risk management should be an ongoing process that is monitored and updated regularly.
How can technology help in strategic planning for small businesses?
Technology can help in strategic planning for small businesses by providing tools and platforms for data analysis, collaboration, and communication. Technology can also help in tracking and measuring progress towards strategic objectives.
How do you balance short-term and long-term objectives in strategic planning?
Short-term and long-term objectives should be balanced by developing a strategic plan that includes both short-term and long-term goals. Short-term objectives should be aligned with the long-term vision of the organisation and should contribute to achieving the overall strategic direction.
How do you communicate the strategic plan to stakeholders and employees?
The strategic plan should be communicated clearly and regularly to stakeholders and employees through a variety of channels, including meetings, presentations, and reports. Communication should be tailored to the needs and interests of each stakeholder group and should focus on the key messages and priorities of the strategic plan.
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