There is a misconception that strategy planning is ONLY for large organizations, and that small businesses don’t need it.
Is this statement true?
Moreover, the “classic” approach to strategic planning doesn’t work very well for small businesses. The traditional methods found in textbooks are designed for large organizations.
A strategy defines your plan for moving from where you are today to where you want your business to be in the future. On a more tactical level, having a clearly articulated business strategy is essential to being able to prioritize, make decisions, and assess progress toward your goals.
In a practical sense, strategic planning is about competitive advantage. The purpose of strategic planning is to enable a business gain as efficiently as possible, a sustainable edge over its competitors.
However, given all the evidence, why most SMEs do not engage in strategic planning and execution?
Why SMEs tend to be oriented towards short-term operational issues rather than long-term? And why decision-making tends to be reactive rather than proactive?
Read Also | Who should be involved in strategy development?
That’s due to strategic planning barriers that SMEs need to overcome. It includes:
– Lack of time
– Lack of expertise and inadequate knowledge
– Reluctance to share strategic plans with employees
– Lack of resources
– They can’t justify the investment in time and money (cost-benefit)
– They are crippled by technology
– The strategic planning literature is designed for big corporations
On the other hand, SMEs that engage in strategic planning (compared to those that do not) are more likely to be those that achieve:
– Higher sales growth
– Higher returns on assets
– Higher margins on profit
– Higher employee growth and retention
– Higher innovation
However, without a strategy, a business lacks the direction it needs to be successful. If you want to work smarter rather than harder and grow with purpose, strategic planning is a necessity.
When you find yourself in growth mode, you need to ensure you don’t waste resources pursuing opportunities that are not in alignment with your long-term objectives. A strategic plan can provide the blueprint you need to stay on track to achieve your goals in a changing marketplace.
Strategic planning for a small business doesn’t need to be as time-consuming or detailed as planning for a large company, but your plan does need to identify what you want to accomplish and how you intend to achieve those goals.
Here are a few tips to get you started on the right path:
1. Involve your team members. Your strategic plan will be stronger if it includes multiple points of view, and involving team members early on will result in greater support for the plan.
2. Set the foundation. Your company’s mission, vision and values will set the direction for your strategic plan.
3. Assess you current situation. In order to know how to get where you want to go, you need to understand your starting point. A SWOT (strengths, weaknesses, opportunities, threats) analysis is a good starting point.
4. Focus on what matters. The balanced scorecard approach helps you do that by setting strategic objectives on 4 perspectives: financial, customer, internal processes, and learning and growth.
5. Describe what success looks like. Set measures and targets and create projects and initiatives to help you achieve your targets.
6. Get help. Strategic planning and execution takes some expertise and vision. Work with a specialist who can help throughout the process and make sure you are implementing the strategy effectively.
Strategic planning can be a daunting and time consuming process. But it doesn’t have to be. Keep it simple, stay focused and grow your business by becoming strategy focused.
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