STRATEGIC PLANNING

As with any business activity, the strategic planning process itself needs to be carefully
managed. Responsibilities and resources need to be assigned to the right people and
you need to keep on top of the process.

Who to involve

Try to find people who show the kind of analytical skills that successful strategic
planning depends upon. Try to find a mix of creative thinkers and those with a solid
grasp of operational detail.

A good rule of thumb is that you shouldn't try to do it all yourself. Take on board the
opinions of other staff - key employees, accountants, department heads, board
members - and those of external stakeholders, including customers, clients, advisors
and consultants.

How to structure the process

There is no right or wrong way to plan the process of strategic planning, but be clear in
advance about how you intend to proceed. Everyone involved should know what is
expected of them and when.

For example, you may decide to hold a series of weekly meetings with a strategy team
before delegating the drafting of a strategy document to one of its members. Or you
might decide to block off a day or two for strategy brainstorming sessions - part of which
might involve seeking contributions from a broader range of employees and even key
customers.

Getting the planning document right

The priority with strategic planning is to get the process right. But don't neglect the
outcome - it's also important to make sure you capture the results in a strategic planning
document that communicates clearly to everyone in your business what your top-level
objectives are. Such a document should:

 reflect the consensus of those involved in drafting it

 be supported by key decision-makers, notably owners and investors
 be acceptable to other stakeholders, such as your employees
 [Link] ANALYSIS

Strategic planning is about positioning your business as effectively as possible in the

marketplace. So you need to make sure that you conduct as thorough as possible an
analysis of both your business and your market.

There is a range of strategic models that you can use to help you structure your
analysis here. These models provide a simplified and abstract picture of the business
environment. SWOT (strengths, weaknesses, opportunities and threats) analysis is
probably the best-known model and is used by both smaller and bigger businesses in
the for-profit and not-for-profit sectors alike. STEEPLE (social, technological, economic,
environmental, political, legal, ethical) and Five Forces analysis are two other widely
used models.

SWOT

A SWOT analysis involves identifying an objective of a business or project and then

identifying the internal and external factors that are favourable and unfavourable to
achieving that goal.

These factors are considered using four elements:

 strengths - attributes of the business that can help in achieving the objective
 weaknesses - attributes of the business that could be obstacles to achieving
the objective
 opportunities - external factors that could be helpful to achieving the
objective
 threats - external factors that could be obstacles to achieving the objective
STEEPLE

There are other models you can use to assess your strategic position. STEEPLE
analysis, for example breaks the business environment down into the following
components:

social –e.g. demographic trends or changing lifestyle patterns

technological – e.g. the emergence of competing technologies, or productivity-
improving equipment for your business
economic – e.g. interest rates, inflation and changes in consumer demand
environmental – e.g. changing expectations of customers, regulators and employees on
sustainable development
political – e.g. changes to taxation, trading relationships or grant support for businesses
legal – e.g. changes to employment law, or to the way your sector is regulated
ethical – e.g. ethical and moral standards governing policies and practices
STEEPLE analysis is often used alongside SWOT analysis to help identify opportunities
and threats.
 Five Forces

The Five Forces model aims to help businesses understand the drivers of competition in
their markets. It identifies five key determinants of how operating in a given market is
likely to be for a business:

 customers' bargaining power - the higher it is (perhaps because there is a

small number of major buyers for your product or service) the more
downward pressure on prices and thus revenue they will be able to exert
 suppliers' bargaining power - the ability of suppliers to push prices up (for
instance if you rely on a single firm) can impact significantly on costs and
profitability
 the threat of new competitors entering your market or industry - more
businesses competing makes it more difficult to retain market share and
maintain price levels
 the threat of customers switching to substitute products and services - an
example would be the threat to fax machine manufacturers posed by the
wide availability of email
 the level of competition between businesses in the market - this depends on
a wide range of factors, including the number and relative strength of the
businesses and the cost to customers of switching between them.

[Link] PLAN

There is no set blueprint for how to structure a strategic plan, but it is good practice to
include the following elements:

 Analysis of internal drivers - corresponding, for example, to the strengths

and weaknesses of a SWOT (strengths, weaknesses, opportunities and
threats) analysis.
 Analysis of external drivers - this should cover factors such as market
structure, demand levels and cost pressures, all of which correspond to the
opportunities and threats elements of a SWOT analysis.
 Vision statement - a concise summary of where you see your business in
five to ten years' time.
 Top-level objectives - these are the major goals that need to be achieved
in order for your vision for the business to be realised. These might include
attracting a new type of customer, developing new products and services, or
securing new sources of finance.
 Implementation - this involves setting out the key actions (with desired
outcomes and deadlines) that will need to be completed to attain your top
level objectives.
 Resourcing - a summary of the implications your proposed strategy will
have for the resources your business needs. This will reflect financing
requirements, as well as factors such as staffing levels, premises and
equipment.
You may also want to consider adding an executive summary. This can be useful
for prospective investors and other key external stakeholders.

[Link] TO CONSIDER
Growing a business can pose some considerable personal challenges to the owner or
manager, whose role can change dramatically as the business grows.

Effective strategic planning involves considering options that challenge the way that
business has been done up to this point. It may be that decision-making in some areas
will be handed to others, or that processes which have worked well in the past will no
longer fit with future plans.

It can be tempting for owners or managers to overlook alternatives that are

uncomfortable for them personally, but to disregard your options on these grounds can
seriously compromise your strategic plan and ultimately the growth of your business.

Examples of the kind of issues that tend to get overlooked by growing businesses
include:

 The future role of the owner - for example, it may be in the best interests
of the business for the owner to focus on a smaller number of
responsibilities, or to hand over all day-to-day control to someone with
greater experience.
 The location of the business - most small businesses are located close to
where the owner lives. But as a business grows it may make sense to
relocate the business -for example, to be closer to greater numbers of
customers or employees with certain skills.
 Ownership structure - growing businesses in particular should ensure that
they get this right. The more a business grows, the more sophisticated it
needs to be about meeting its financing needs. In many cases, the best
option is for the owner to give up a share of the business in return for equity
finance - but this can be emotionally difficult to do.
In the final analysis, it is the owner of the business who decides the strategic plan.
Growing a business is not something done "at all costs". However, an honest
assessment of the options allows for any decisions made to be as informed as possible.
[Link] A STRATEGIC PLAN

The plan needs to be implemented and this implementation process requires planning.

The key to implementation of the objectives identified in the strategic plan is to assign
goals and responsibilities with budgets and deadlines to responsible owners - key
employees or department heads, for example.

Monitoring the progress of the implementation plan and reviewing the strategic plan
against implementation will be an ongoing process. The fit between implementation and
strategy may not be perfect from the outset and the implications of implementing the
strategy may make it necessary to tweak the strategic plan.

Monitoring implementation is the key. Using key performance indicators (KPIs) and
setting targets and deadlines is a good way of controlling the process of introducing
strategic change.

Your business plan is another important tool in the implementation process. The
business plan is typically a short-term and more concrete document than the strategic
plan and it tends to focus more closely on operational considerations such as sales and
cash flow trends. If you can ensure that your strategic plan informs your business plan,
you'll go a long way to ensuring its implementation.

Remember that strategic planning can involve making both organisational and cultural
changes to the way your business operates.