One of the significant areas most business owners tend to neglect is the strategic planning of their business. Not because they don’t necessarily want to do Strategy sessions, but rather that the immediate tasks or customer requirements mean that Strategy is reprioritised and pushed out – sometimes indefinitely.
What makes Strategy so important then?
Consider this; there are roughly 250 working days a year. If you take 5 days out of the year to do strategy, 1 day to define your 3 – 5 year plan and then 4 days throughout the year to follow through on your strategy, you’ll only spend 2% of your year focusing on strategy. It’s probably a little lame, but I think strategy planning is like a road trip. For the vast majority of us, when going on a road trip, it means setting a destination to get to and then planning the route.
The road-trip then starts taking form:
- we know where we want to go,
- we know when we want to get there,
- we know the route and potential pitstops/checkpoints we’ll need to make,
- and we can put a budget together to afford it.
By doing this, we can share this plan with either the convoy with us and/or those interested in our road trip. By putting this plan together, we can also tackle any potential detours or breakdowns should they happen. Considering this, think about your business in this way. Have you planned where you want your business to be in the next one, two or five years? What are the checkpoints to get you there, and have you defined a budget needed to get there?
I can almost hear you asking, “There’s no guarantee this strategy will happen; what’s the point when I can’t predict the future?”That’s a great question, and the answer is we can’t guarantee anything. A pandemic can hit us and shut our business down or boost sales if you’re in the right industry. However, a strategy is a plan and not the outcome. We do many strategy development workshops and use a 5-step process over 1 day to help businesses define their strategy.
From my perspective, there are two primary outcomes from a strategy session, and those are:
- Does this strategy achieve the goals of the shareholders?
- What is the business going to do to fulfil this strategy?
Considering the first point – there are several debates around the purpose of a business and the impact on social-beneficial obligations versus profit-driven. Regardless of our views on this, a business needs to be profitable, and a business model needs to work. The way that profit is used to achieve the objectives of the shareholder’s purpose can be discussed away from this.
However, the business has investors and shareholders whose needs need to be satisfied. As a business owner, you need to be satisfied the business can achieve the reasons you started the business.
The second point looks at how the business is going to achieve this strategy. There are multiple areas in this, but I want to focus on two:
- It all starts with your financial forecast and particularly your sales plan. We need to try and predict how much revenue we are going to make and set these targets for our sales teams. From this base, we can predict the COS (cost of sales) and then the expenses needed to achieve and deliver these sales amounts. As we prepare these forecasts, we’ll start to develop the potential checkpoints and areas of concern that need to be prevented from achieving a profitable business model that satisfies the shareholders.
- As part of developing and finalising a strategy, we need to include and allow our teams to influence the strategy. These are the staff you will rely on to help you when delivering your strategy, and they need to define their own departmental or team plans to achieve the business strategy. Lastly, we need to share the results of the strategy session with the wider team, which is to ensure that the broad details and “route” are clear. Your plan should have clear and measurable checkpoints that you can periodically assess and measure your progress. This helps you keep to your plan and ensure your team follows through on their individual plans and targets.
Hopefully, this has indicated why it’s important not to avoid or put off doing a strategy at least once a year because we have a chance to take a step back, realign our teams to plan our business journey for the next few years.
If you don’t know where to start or just want to have a chat about your strategy to people who have built, implemented and delivered on strategic plans, contact to us today.