When I work with business start-ups, one of my first questions is do they have a strategic plan? The reply I often hear is “We have a business plan, so why do we need a strategic plan?”
So let’s start by discussing the clear distinctions between a business plan and a strategic plan…
Business Plan vs. Strategic Plan
A business plan is typically used to get a business off the ground, obtain funding, or set up operations. Additionally, the timeframe or scope of a business plan is typically no more than one year.
A strategic plan is much more detailed with specific objectives coupled with clear action plans designed to achieve those objectives over the course of one to three years.
Think of the difference like this…a business plan presents the entrepreneur’s business concept to potential investors, while a strategic plan communicates direction to the organization.
Why Every Start-up Needs a Strategic Plan
Simply put, strategic planning provides focus and direction. Without a clear plan, any business, and especially start-ups, can easily find themselves wasting valuable resources and capital on activities that will not contribute their ultimate mission.
Developing Your Own Strategic Plan
Below is a framework for developing your strategic plan. Your strategic plan should address each of these key questions:
Phase 1: Where are we now?
Every strategic plan requires a significant information gathering effort. As a start-up you may not yet even have an executive team in place, but your business plan established your business concept and that’s enough for you to get started compiling important information about the marketplace you are about to enter.
- Who will be your competitors? How will you differentiate yourself from them?
- Who are your customers? How large is your target group? How will you reach them?
- How will you develop, produce and deliver your products/services?
- What will our organization look like in six months? One year? Three years?
- What opportunities and threats exist in the marketplace?
If your start-up is further along, then you need to assemble your strategic planning team and assign the research tasks to various members. You should also gather input from everyone regarding the company’s strengths and weaknesses. Even if you have yet to launch, after looking at your competition and your future marketplace, you should be able to identify some of your strengths and weaknesses.
It can’t be emphasized enough that the power of your strategic plan to properly guide your business activities is dependent on good input. You should not move forward until you feel you have a solid knowledge base from which to build your plan.
Phase 2: Where do we want to be?
I call this the desired results phase. This is when you and/or your team establish the vision statement for the business and the two to four objectives the plan will focus on.
Phase 3: How will we get there?
This phase represents the real meat of your strategic plan. I like to wait until this point to create the mission statement, then move on to creating and prioritizing the strategies and programs designed to achieve the objectives of the plan.
Phase 4: Who must do what?
During the implementation phase agreed upon action plans are established for the prioritized strategies and programs. Action plans include specifics about what is going to be done and who is responsible for getting it done and when.
Phase 5: How are we doing?
During the review phase the person responsible for the overall adherence to the strategic plan monitors the progress of all action plans. Failure to meet due dates requires adjustments or revisions to the action plan(s).
This raises a very important point…as a business in its infancy; your strategic plan is a working document that you should be open to revising and updating when things change. Once you start actually selling and serving your customers, you’ll be gathering real data about what works and what doesn’t. This may require revisions to your action plans and even some of your primary objectives.
Make these revisions with the consensus of your strategic planning team to be sure everyone has input and is ‘on-board’ with new directives. Having the ability to adapt to changes based on real market experience is key to surviving those first critical years when most new businesses fail. While most established companies can go a full year between strategic planning efforts, as a new business, your strategic planning team may want to meet every month or two.
I promise if you follow these tried-and-true steps in creating and implementing your strategic plan, it will become your blueprint to success. Commit to your plan and follow it!
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Jim Gribble is a Senior Consultant for PI Midlantic, a behavioral and cognitive assessment consulting firm based in Annapolis, Maryland. PI Midlantic’s consultants aid businesses in strategic planning using the Predictive Index System. The PI Worldwide member firm is celebrating 30 years in business this year.