A business plan is more of an external document to use with third parties like venture capitalists or banks. Building an internal, long-term strategic plan for the business that is going to guide management with its decision-making is different. It is a lot more detailed and can take months to create. Here are the top six key components for building a killer strategic plan for your business.
1. Assess Industry, Competitor & Customer Trends
The first step of any strategic planning starts with studying the overall market in which you are operating. How big is the industry? How quick is it growing? Who are the key competitors? How well-funded are they? What moves are they making? What are pricing trends? What products or services are your customers asking for? Any macro-economic trends at play? Any government regulation issues? You cannot set an effective plan for your business unless you truly understand what you are up against from an industry and competition perspective. Think about this as an “external” evaluation of overall market trends that impact your business.
2. Complete a SWOT Analysis on Your Business
A SWOT analysis critically evaluates your company’s Strengths, Weaknesses, Opportunities and Threats. Strengths in your staff, customer base, market position, financial resources, sales channels, products, profitability, growth, etc. Weaknesses in your staff, market position, margins, financial resources, competitive vulnerability, missing products, customer complaints, missing sales channels, etc. Opportunities to enter complimentary markets, form alliances, raise funds, launch new products, pursue M&A activity, exploit customer weaknesses, etc. And Threats around the economy, losing key staff, lack of financial resources, limited cash flow, disintermediation, falling prices, etc. Think about this as an “internal” evaluation of your business.
3. Define Your Mission and Vision
Once the external and internal evaluation is done, you are in a good position to begin crafting your high-level mission statement and vision statement. Your mission statement speaks to “why do we exist?” Something like, “our mission is to replace expensive offline market research with equal quality insights from social listening.. Your vision statement speaks to “what are we offering and where are we heading.” And all good vision statements should be quantifiable and time-bound. Something like, “We plan on driving $50MM in revenues from our industry-leading social listening platform within 3 years.” These are the “North Star” statements that will guide all detailed decisions from there.
4. Define Your Corporate Business Goals
Once you know where you are heading, at the 30,000-foot view, and what you are up against from an industry and competition perspective, now you are in a position to start drilling down into specific business goals that will enable you to achieve that vision. Your goals are the specific outcomes you are trying to achieve. This could include things like changes to product offering, sales & marketing strategies, financial resources, operational efficiency, employee culture, financial targets and beyond. What high-level things need to happen to make your vision a reality.
5. Drill Down to Department-Level Objectives
As we continue to “peel back the layers of the onion,” now we need to decide what specific objectives and initiatives do we need to implement to help the company achieve each of its business goals. This is typically done department-by-department within the company, setting specific objectives for the product team, sales & marketing, operations, technology, finance and human resources. For example, a business goal might be “improve company morale” and a specific objective of the HR department to support that goal might be “launch new employee benefits.” You should limit all department-level goals to the handful of items that the department can rally around in any one year. And, these objectives needs to be made SMART–Specific, Measurable, Achievable, Results-Focused and Timebound.
6. Determine Staffing, Budget and Financing Needs
Once all the departmental needs have been defined and quantified, now you are able to aggregate them up into one centralized corporate plan, organizational structure and budget. If you don’t have the full financial resources you need to achieve the plan, you have one of two choices: (i) lower your targets to a level you can more easily afford; or (ii) raise the capital required for you to achieve your full plan.
Oftentimes, it is helpful to engage an outside business coach or advisor, to help facilitate these internal discussions between the managers building the plan. They can help keep the process organized and managers focused on the stuff that really matters. They can also help to break any ties or mediate any disputes between managers with different opinions. Because at the end of the day, if all managers are not 100 percent on-board with the resulting strategic plan, it will not be achieved.