Running a business requires focus on the short-term: the daily, weekly and monthly goals. Typically, business owners pay attention to the immediate actions that will help their business, which can prevent them from also focusing on long-term growth and success.
While prioritizing the short term is key for a business' success, having a strategic plan as part of a company's growth architecture means taking a step back and looking at the long-term goals of your business.
What is a strategic plan vs a business plan?
Business owners often mistake a strategic plan for a business plan. Unlike a business plan, which tends to focus on the short-term, a strategic plan provides the direction that will help propel a business to where it hopes to be in the next three to five years. It sets out goals and delineates measurable targets to be accomplished within a set period of time.
Components of a strategic plan
It can be a tough task to visualize and plan three to five years in the future, but with careful consideration and input from your business advisors, it can be done. In addition to standard items like a budget and executive summary, here are some other components that will help you when moving forward with a strategic plan:
- Set key priorities. A strategic plan tasks you with determining what's really important for your business in the next few years. While you might be tempted to do everything on your wish list, prioritizing one area of growth (i.e., expanding your online presence, opening your business in new markets, maximizing your cash flow, etc.) will help you focus and execute on that one goal.
- Conduct a SWOT analysis. This is the time to assess your business, namely evaluating its strengths, weaknesses, opportunities and threats. By assessing your company's strengths, you can take note of any opportunities that could be leveraged. Likewise, recognizing and addressing its weaknesses and threats is half the battle toward eliminating them. Equally important is to evaluate your team and its initiatives. Are those in leadership tactical or more operational? What are their limitations, and do they help or hurt the company? What missing aspects need to be added? Conducting this overall SWOT analysis will give you a roadmap of your company's current position and provide direction as to where it should go in the future.
- Analyze the data. As you're forecasting years into the future, having the right data can help prevent speculation and fear-based decision-making. There are several ways to collect data. You can pull it from your records (sales, products, customer demographics). Or, if you're a relatively new or smaller firm, you can purchase the necessary data from research groups to help you build your plan.
- Set key performance indicators (KPIs) and evaluation methods. Every plan needs a way of measuring success. When you're building your strategic plan, having KPIs will help track your progress, assess if your tactics are working and measure the success of your strategy. It also gives you the option to make changes or pivot from one direction to another during regular meetings with your leadership team.
Remember, your strategic plan is a living document, not one set in stone. Use your KPIs to continuously evolve your plan to meet your goals. These benchmarks also serve to motivate your employees, which is important with a three- to five-year plan.
Executing your strategic plan
The secret to a strategic plan isn't the plan itself, it is the support you get in making sure it's executed.
Ideally, your leadership team will have helped create the strategic plan and will therefore take ownership as you roll it out. In order to get company-wide support, however, you'll need to execute a communications plan as well. This will help your employees, vendors, consumers and the public understand where, what and how you plan to evolve. Once the mission is understood, it's more likely to gain the support of all stakeholders.
As with a business plan, a strategic plan is a necessary document for your company's success. It does take time to create, but once it's in place, you can relax knowing you have set a clear-cut path that can take you to the next level of growth.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.