No business ever became great without a great business plan. In order to succeed, businesses need to clearly outline their objectives, communicate those objectives throughout their organization, and plot actionable steps to achieving them. This requires strategic planning. According to the Harvard Business School, strategic planning is the ongoing organizational process of using available knowledge to document a business’s intended direction. It is used to more effectively allocate resources, efforts and personnel in the pursuit of a company’s goals, to align shareholders and employees on those goals, and to ensure that those goals are reasonable given available data.1
Why is strategic planning important?
Strategic planning can positively impact businesses in numerous ways. For one, it creates a single vision of a business’s path forward that all employees and stakeholders can get behind. When everyone is unified in their understanding of the company’s objectives, they can most effectively perform the individual functions that move the company towards achieving its goals.
Strategic planning also helps business leaders straighten out their thinking by examining the rationale behind every decision. Various cognitive biases may impact leaders’ decision-making ability, so a process that places emphasis on data-driven, fact-based decisions is immensely beneficial.
Lastly, strategic planning aids in the tracking of progress towards the goals the business has outlined. With objectives that are clear to every level of the business, the outputs of individuals and teams can be distilled into key performance indicators (KPI’s). These KPI’s allow companies to measure progress as it occurs.1
Strategic planning process
The strategic planning process begins with starting early. Leadership teams need time to brainstorm and construct a data-driven plan.2 Once the process has begun, the first step is assessing the climate this strategy will operate in. Market trends and the company’s industry and competitors will all have a heavy influence moving forward, so the plan must account for them. Within these external factors, opportunities and threats must be identified. Companies can conduct a SWOT analysis (strengths, weaknesses, opportunities, and threats) to do this. The plan should be able to capitalize on any advantages while simultaneously defending against disadvantages.
With the landscape analyzed, the mission and vision of the organization should be reviewed and revised if necessary. Then, business goals should be set that will help the company realize the mission and vision. Next, specific initiatives should be developed that align to each business goal, along with an estimate of resources required to pursue each initiative. Once staffing and budget needs are determined for each of these objectives and initiatives, the plan can proceed.
It’s important to track success metrics as the plan unfolds. Regular progress reports foster accountability within an organization and ensure that leadership is made aware when changes are necessary. The best laid plans frequently need to pivot to better fit a changing landscape with new challenges, so remaining vigilant for these changes is critical.3
How often should a company revisit its strategic plan?
An essential part of strategic planning is being able and willing to change course. At a bare minimum, companies should revisit their plans on an annual basis, generally in the final four months of the fiscal year. This allows for an analysis of changes in the market, external factors, and the company itself. Even still, checking in one or two additional times throughout the year can be very helpful in ensuring the strategy is still working as intended. Strategies should also be reevaluated any time there is a major development such as economic upheaval or the loss of a major client.4
Get started on your strategic business plan
If you haven’t already crafted a strategic plan for your business, there’s no time like the present to get started! The sooner you plan for the future, the better. To learn more and gain access to resources that can help you craft a solid plan for your business, check out the Nationwide Business Solutions Center.