Why Do a Strategic Plan instead of a Business Plan?
by: Dr. Manijeh Motaghy, PsyD. O.C.
Obviously, any business expert would tell you to have a complete and sound Business Plan. They’ll tell you hat success depends on a comprehensive BP and without it you are doomed to failure. I agree with the first part but not necessarily the later. BPs are used both for financing and as a blue print of the ideas, marketing, customer base, resources, etc. that set the stage for a clear understanding of the business and as a map to success. However, BPs are hard to create and follow for startups and small business owners. There was a quote on a Linkedin discussion about business plans: “Action without vision is a nightmare and vision without action is a daydream.” Yes I agree with that, too. It just makes sense to know where you’re going and take the necessary actions to get there. A BP is certainly one effective way to get there.
Statistics show not many small businesses start with a BP or regularly refer to their plans if they had one for several reasons. Most startups and small businesses are made of a small number of people who wear many hats and sometimes have to switch hats very quickly. While running the show and constantly switching hats, a small business owner does not have time to stop and refer to the business plan regularly nor is there enough details and solutions in a business plan to address problems and issues that come up during the day, i.e. lack of ample funds to pay the bills, employee issues, etc. Hence, most small businesses go about their business the best way they can without a BP.
Normally, my suggestion to startups and small businesses is that if they are not concerned about getting an SBA loan, which requires a very detailed layout, then, do a Strategic Plans first to quickly determine focus and direction. A Strategic Plan is user friendly and accessible in accomplishing identified goals and objectives. One of the objectives of the SP could be to develop a comprehensive BP in the first year of of the SP. I just evaluated the last 90 days of my firm’s Strategic Plan and renewed our Objectives for the next 2 years. This helped focus our resources in the right direction and with appropriate tactics. Plus, the ST lent itself to an effective Time Management Table.
Components of a Strategic Plan:
A competent business consultant can help you create a clear and focused Strategic Plan. I highly advise to create a focus group to be involved in developing your Strategic Plan.
- First you need a strategic Mission Statement. This is a statement of purpose that drives from an exercise of answering three questions: What do we provide? Whom do we provide it to? How do we provide it? This statement could be as short as one sentence or as long as several sentences. The rule of thumb, the more concise, the easier to remember and communicate it would be. Having a strategic Mission Statement is very useful in drawing your strategies from and staying focused on achieving the purpose of your organization. Clearly stated and well communicated Mission Statements can promote your services and products better than you can.
- Second, develop a set of Core Values statements that help resolve issues and set the tone for the way you and your organization conduct business. These core values are shared thus should be developed via a focus group. Managing by values is a powerful tool in creating commitment and loyalty. Employees feel grounded and give more of themselves when the company’s core values are actually practiced. By the same token, customers feel confident and loyal to continue their relationship with your company.
- Third, perform a SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis of your products/services, skills / competencies, resources, customer base, the market, the industry, and all else that impact the success of your organization. This includes an Environmental Scanning process.
- From there, identify the necessary Focus Areas where you need to focus your energy, attention and resources to develop.
- Under each Focus Area pick 3-5 Objectives to work on and set goals and actionable tactics to accomplish those goals & objectives. One of these Objectives could be to develop a Business Plan within the first year of the SP. This allows time to gather necessary information for creating a practical and actionable BP using gained experience in conducting their business.
- Goals & Objectives must be SMART, which I like to add the (S) component to it SMARTS (Specific, Measurable, Aggressive & Attainable/ Result oriented, Time-bound and Sustainable).
- Be sure to create a periodic evaluation process, i.e. at least once every 60, 90 or 120 days and once annually.
The Benefits of a Strategic Plan:
- The process of creating it help crystallize your goals and objectives
- Brings attention to areas you need to focus for the short and long term
- Saves time and resources on random wasteful tactics
- Helps your time management and prioritization process
- Helps keep the more creative minds focused and productive
- Empowers linear thinkers by giving them a plan with clear results
- Assists the company, even individuals, to actually achieve their desired outcomes
End of the year is approaching and I recommend to evaluate your progress, and develop or renew your SP for the next 2 and 5 years. By mentioning this article, the first 5 people will receive 50% discount off the regular price of developing a Strategic Plan including a Time Management Table. This offer is valid till November 30, 2010.
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