Strategic planning is a comprehensive process for determining what a business should become and how it can best achieve those objectives or goals.
Strategic planning appraises the full potential of a business and explicitly links the business’s objectives to the actions and resources required to achieve them. It offers a systematic process to ask and answer the most critical questions confronting a management team – especially large, irrevocable resource commitment questions.
Steps in strategic planning
The pathway to successful strategic planning lies in the following steps:
1. The creation of a mission statement for the business
The Mission Statement of a Business is a Statement of the purpose of the business which is intended to unify the business to focus towards one common page. A well worded Mission Statement will put all stakeholders (from management to employees to shareholders) “on the same page” and will get all stakeholders thinking along the same lines.
2. Creating a vision for the business
A Vision is a realistic dream for the business for the future. With the Mission Statement in mind, a Vision needs to be created and all stakeholders need to “buy into” the Vision. A Vision is normally focussed on the long term and paints the picture of where a business should be heading to or what should a business look like in the long term in a near perfect environment.
3. Translating the vision for the business into short-term and long-tem objectives
The next step is to set short-term and long-term measurable and obtainable targets that would ultimately lead the business to its Vision as set out for the business. By linking the objectives to the Vision, the business will focus on achieving the “future realistic dream” it set out for itself.
For strategic objectives to be measurable and obtainable, it should be set out in a structured way, such as measuring each objective against the SMART objectives framework.
S – Specific (What exactly are we going to do, with or for whom?)
M – Measurable (Is it measurable and are we able to measure it?)
A – Attainable (Can we get it done in the timeframe, in the climate, with the amount of money?)
R – Relevant (Will this objective lead to the desired result?)
T – Time-bound (When will we accomplish, achieve the result?)
Once objectives have been set in this way, these will be evaluated and re-evaluated on a continuous basis to establish if the business is realising the objectives on its way to its Vision.
4. Putting strategies into place to achieve the objectives
At this stage various possible practical actions plans will be analysed and decided upon to achieve the strategic objectives. Core to the decision on which action plans to be implemented are the following:
- What are the different possible plans available to achieve the objectives?
- Who will implement the plans?
- With what will the plan be implemented (what resources are needed and are the resources readily available)?
- By when will the plan be implemented?
These plans will be business and industry specific and a detailed analysis of each environment will have to be done before a decision on the course of action is taken. Once the course of action is decided upon, a budget can be drawn up. Theoretically a budget is an expression, in financial terms, of the strategic and operation plans of an organisation, for a forthcoming period of time.
Planning the process
Various items should be taken into account during the process as mentioned above, especially after the mission and vision have been created, preferable on a yearly basis. An analysis of these items will help in setting the measurable and obtainable objectives, as well as deciding on the correct action plans to achieve the objectives.
Listed below are some items to take into account:
- The current economic cycle
The economic cycle refers to the fluctuations of economic activity (business fluctuations) around its long-tem growth trend. The cycle involves shifts over time between periods of relatively rapid growth of output (recovery and prosperity) and periods of relative stagnation of decline (contraction or recession).
- The stage in the life cycle of the business’s products
All firms and products have a life cycle. The length of the cycle can vary enormously from business to business. The stages in the life cycle are: Introduction in the market, Growth, Maturity, Saturation and decline. A business needs to analyse where in the life cycle it is to be able to establish its way forward.
- SWOT analysis of the business
Each business should be aware of its Strengths, Weaknesses (Internal Environment) and its Opportunities and Threats (External Environment) to be able to plan for its future.
- PESTEL environment analysis
For Strategic Planning purposes a business needs to know the environment in which it is operating as it will directly influence the course of action. Factors to take into account are Political, Economical, Social, Technological, Environmental and Legal environmental analysis.
- Industry analysis
Understanding the industry will help in setting the correct plans. The following factors should be analysed:
- How big is the industry?
- Market Characteristics
- Industry Conditions
- Key Competitors
- Industry Performance
- Industry Outlook
- Competitive analysis
A continuous process of comparing a business’s strategies, products or processes with those of ‘best-in-the-class’ organisations. Such benchmarking will help a business in closing any gaps that might be existing relative to the industry leaders.
Strategic planning is a comprehensive process for determining what a business should become and how it can best achieve those objectives or goals. It should be done in a logical way with a process approach to enable a business to reach its full potential.
The financial objective of a business, to create wealth by adding value to providers of capital, lies at the core of the whole strategic planning process. All planning activities should ultimately also be weighed against this objective.
Taking Care Of Business
Do you want to grow your business in 2019? Bear these tips in mind.
SMEs are the lifeblood of the South African economy, accounting for approximately 29% of employment in the country and forming a critical pillar of the government’s 2030 National Development Plan. With funding scarce and the economy volatile, small businesses remain increasingly vulnerable to economic pressures, with many failing to last beyond the five-year mark.
Thanks to the abundance of new and affordable technology, bringing with it the potential for new industries and market gaps, there has never been a better time to conduct business without crippling costs. It is not all doom and gloom in the small business sector, despite findings in the 2018 SME Landscape Report that suggest that a meagre 6% of all start-ups have received government funding.
Do not be afraid to delegate
Many entrepreneurs are so passionate about their own undertakings that they are unable to simply let things go. Rather than empowering and enabling others to take responsibility, many Type A business leaders instead opt to do it all themselves – usually with disastrous consequences.
Learning to delegate is key to alleviating bottlenecking and freeing up capacity in your business, so make sure to utilise all your available resources if you want your enterprise to expand.
While billboards and TV ads are expensive, marketing a business can now be done quite cheaply, thanks to the abundance of relatively affordable digital channels. So while you might not be able to have your brand staring out at you from the pages of a glossy magazine just yet, digital channels like Facebook and Google now allow you to achieve the same audience reach for a fraction of the cost.
Offering the best service in town is one thing, but it is worth nothing if nobody knows about it. So make sure to pay close attention to your website and its search engine optimisation (SEO). By using the correct keywords and even putting a small investment into Google Adwords, you will ensure that people who are looking for what you offer are able to find you easily.
With over 50% of all web traffic in South Africa coming from mobile devices, businesses simply can’t afford not to take a mobile-first approach to business. If you are offering an online service, make sure it is optimised for a mobile experience and ensure that any communication touch-points – be they blogs, social media posts or online check-out pages – are designed with mobile in mind.
One of the key advantages SMEs have over their larger counterparts is their ability to be flexible. Without outdated systems and reams of red tape to wade through, small businesses are far better able to adapt to market conditions and revise their offerings based on consumer needs. So make sure to listen to your customers and be willing to accept that some of your great ideas simply are not feasible.
Your willingness to accept failures and move on, will ultimately be what gives you the edge over your competitors.
Plan your finances
Cashflow is king when it comes to entrepreneurship and many a micro enterprise has come undone thanks to their inability to manage it. As such, financial planning is a critical tool for any business, especially for those operating without significant investment capital. Understanding potential pitfalls and keeping tabs on your profit margins will help to ensure you keep your pricing realistic and enable you to avoid finding yourself in the red.
Operating in isolation can only get you so far, so it is important that you put yourself out there and make proactive attempts to connect with other like-minded businesses. By joining a business network or attending industry events, you will be able to arm yourself with useful contacts, handy insights and perhaps a few new clients in the process.
Remember that owning a business is like raising a child – it requires constant supervision, nurturing and care if it is to succeed to its utmost potential. So make sure to look after your business and one day it will end up looking after you.
MiWay is a licensed Short-term Insurer and Financial Services Provider (FSP. 33970).
How Taking Risks – And Failing – Can Lead To Business Success
Don’t let fear of failure stop you from taking the risks you need to, to carry your business forward. But as your business grows, you’ll have to re-evaluate what risks you can take.
Innovate, innovate, innovate. The war cry is so often repeated that it has become something of a bore. Yet, true innovation remains a rarity – and to our huge detriment. As South Africans, we seem to carry a deep shame associated with failure. Yet, facing the very real possibility of failure is the only arena in which a culture of innovation can take root.
The biggest business failure of my life was an investment into a software company that wrote a piece of software that was set to revolutionise the mobile landscape. It was going to be huge. It was going to take the world by storm. But unfortunately, we backed the wrong horse.
We developed the software for the Symbian platform because Nokia was way ahead of the pack. Nobody else even came close. But, given the fact that there’s a good chance you currently have an iPhone or Android device in your pocket right now, you know how that story ended. Nokia seemed untouchable, then almost collapsed. We lost a lot of money.
Get back up
But, we learnt valuable lessons from that. Of course, there’s the general lesson that everyone should take away from failure – to get up and try again. As General George Custer said, “It’s not how many times you get knocked down that count, it’s how many times you get back up.”
The other lesson was more specific to our business. In developing the software, we learnt a lot about different technology platforms and those lessons were invaluable as we took the next steps in Fedgroup. The same people who built that software helped in the initial stages of developing Azurite, which today is the backbone of our company’s entire operation.
Because we’d been involved so heavily in developing for mobility and the future, our minds were opened to what technology could do. It gave us the mindset to get where we are today.
Investing in education
It sounds like a terrible cliché, but there’s value in failure. Take the lessons you learn in failure – the genuine lessons – because even if you lose money, consider it school fees, and cheap at the price. Arguably, our failure was the “fees payable” that bought us our competitive edge.
In the United States, they are less afraid of failure. They wear their failures like a badge of honour. Elon Musk, for example, misses his targets, but he’s always pushing the boundaries. Recent (questionable) antics aside, Musk’s risk-taking drives innovation.
If people in an organisation are terrified of failure, they don’t try new things, they don’t innovate, they don’t move forward and they certainly don’t disrupt. Even though now, as the CEO of a large financial services company, I can’t afford to bet the whole business on a risky proposition, I still encourage risk-taking and a spirit of adventure – within reason.
Reckless vs reason
This is not to say that we can – or should – be reckless. There should be accountability, and the reasons for making the mistake should make sense. And, you shouldn’t make the same mistake twice. But if you take risks within those parameters, you’ve got a better chance of making a real difference in your organisation.
We have recently launched an app that is fairly disruptive, and as far as we can tell, the first of its kind in the world. Before we launched, we put our personal money behind the idea to test it. We had done our homework, but it was still a risk. If it hadn’t worked, we would have lost our personal money, but because we took that risk and proved it worked, we were able to launch it safely to the public one year later.
Parameters, limitations, and the ethics of risk
When you’re an entrepreneur, when you’re just starting out, you can bet the farm. You can take risks on new ventures and potentially build something out of nothing.
Once you’re an established organisation with staff and clients – and in our case, clients who have invested their pension with us – the scope of risk takes on a new set of parameters. When you are dealing with a client’s security, it is simply not acceptable to expose them to additional avoidable risk.
However, because risk taking is where the magic of innovation happens, encouraging a framework where creativity, experimentation, and risk is possible within your organisation, is critical. One of the ways to encourage this is to examine your attitude towards failure. Build an environment where failure is not taboo, but presents a strong learning opportunity, and ring fence those areas within the organisation which absolutely cannot be jeopardised. This is risk in a helmet – you might get a roasty, but you could win the race.
Proven Strategies To Grow Your Start-up On A Scale Following These Guidelines
The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.
Scalability and flexibility are important properties of any business. Let’s say you’ve managed to build a successful start-up. It’s profitable and promising, but you want it to become better. The scalability of a business involves its ability to adapt for bigger workloads without losing revenue.
Even if your business is currently small and doesn’t generate huge profits, scalability can help it turn into a large enterprise. The wrong approach to developing a start-up can deprive it of an opportunity to become better.
The following strategies can help you make the start-up scalable and grow it to accommodate a larger demand.
Scaling Vs Growth
Many companies make a mistake of thinking that scaling and growing a company is the same thing. In fact, growth involves increasing revenue or the size of the company (the number of employees, offices, clients).
Constant growth requires numerous resources and may not always lead to a proportional revenue increase. In many cases, the growing number of services or products needed to boost revenue involves high costs related to the growing number of employees and equipment.
On the other hand, scaling allows you to increase the revenue without the costs involved in growth. You can handle the extra load and boost your profits while keeping the costs to a minimum.
At some point, a successful start-up needs to make a choice between growing at a constant rate and switching to the scaling business model.
Even though a single clear method for scaling your business doesn’t exist, there are some guidelines you can follow.
1. Get Ready To Be Patient
Scaling is not a quick process so you have to be patient. The overnight success story is not about you. In fact, scaling too fast usually results in unfortunate failure.
Allow yourself to spend the time to understand who your ideal customers are and how you can solve their problems in a better manner. Make sure you understand how to be confident about the new volume of your work.
Do research to find out how you can find the right resources to achieve scaling rather than growth.
2. Choose The Right Software
The lack of time and team members is a common problem for a startup looking for scaling methods. That’s why they need to try and automate as many processes as possible. This can be done with the assistance of the right software.
- Trello – to simplify in-office and remote teamwork
- MailChimp – to improve marketing campaigns
- Brand24 – to get insights about your business
- Survicate – to collect customers’ feedback
- Voiptime – to increase connectivity.
3. Take Advantage of Outsourcing
Since you are hoping to limit the expenses while growing the revenue, you have to find ways to spend the revenue in the right manner. The biggest mistake made by business owners who think they are choosing scaling is hiring a big team. By doing so, they turn scaling into growing.
Your best bet to avoid hiring a large team and paying large salaries while achieving your plans is to outsource. Using your resources wisely involves finding freelancers and remote employees who are willing to work for a lower pay on a one-time (or several) contract bases.
For example, you don’t need a lawyer or a computer specialist sitting in the office all day long. Why should you pay them a monthly salary?
4. Don’t Do It Alone
Even though certain team minimisation is necessary to improve your scaling efforts, don’t try to handle everything on your own. It’s important to have at least one person you can rely on to manage the business-related problems.
Scaling your start-up is possible as soon as you understand what scaling is in detail. You need to be careful not to start growing your business instead of scaling it in the process. Once you have all the fundamentals figured, resources managed, and the right people in place, you are ready to start.
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