The 7 Critical Steps to Formulating Your Annual Strategic Business Plan
Businesses tend to avoid doing their annual business plan thinking that it is an arduous task that does not accomplish much. Formulating your annual plan is, however, critical to your business success and if done correctly should be quick, easy and generate bottom line results.
Rather than creating a business plan that achieves no results, other than to gather dust, you should be writing a strategic and operational plan. The words 'strategic' and 'operational' are important as they give purpose and results to the plan. Your annual plan needs to be strategic so that you know where you are going and what you would like to achieve from your business or division. The plan needs to be operational so that it will tell you how to get there. It will determine the strategies and goals that need to be achieved to reach your end point.
Strategic business planning is about deciding on the future you want for your business or division and then deciding how you intend to obtain that future. If you have been in business for a number of years and your results each year are much the same as the year before then obviously something will have to change if you would like to see an improvement. It comes down to the saying: If you keep on doing what you have always done you will get what you have always got.
The steps we outline below are perhaps unconventional to people familiar with business planning, but then most business plans don't deliver results. All too often business plans are created out of a corporate requirement rather than a focused result. This system of business planning has been proved to deliver results for over 20 years. Try something new and you may be surprised by the outcome.
To achieve results it is important that each step is well thought out and no step is omitted. Equally important is that the steps are completed in an open and collaborative environment that encourages learning and new ideas.
Step 1 - Vision and Mission Statements
A vision statement should paint a picture of the business you would like. It should get you thinking about your business and dreaming about what is possible. You can't exaggerate your vision so go wild and have large dreams. You won't know where it will take you unless you give free reign to those ideas and get excited.
A vision statement can contain what you would like to see in revenue in a number of years. You could want to become a "world leader" in something, or become a "specialist" in something else. What would you like out of your company? Let it be more specific than flowery language that sits in your entrance foyer.
A mission statement should answer the question as to why your business or division exists. Why would someone buy your product or service? What makes you different from your competition? Who are you selling too? What problem are you solving? Keep your mission statement short but answer why you are in business. Nike is a good example - 'Do it" Who needs more?
Ensure that your mission statement supports your vision. Ensure that it is concise and unique to your business. Try and capture your competitive edge and unique selling proposition in a statement that motivates.
Step 2 - Celebrate Successes
Take some time to think about what you achieved in the last year. Whether it was reaching a goal you had set or handling a crisis that arose. A thank you from a client indicates a success as does appreciation from your staff. Make a list of all the successes you achieved and find ways that you can expand on those achievements.
Step 3 - Learn from Failures
Make a list of your failures and mistakes and for each examine why it failed and how you can prevent the failure in the future. What needs to be changed? What needs to be put in place? What is missing?
By examining both what worked and what didn't work, you can find the lessons that you need to learn. You can then identify opportunities and the way forward.
Step 4 - A New Paradigm
Complete the following sentence ? "I'd love to ____, but I can't because I'm/we're _____. What are the words in the second blank? This is an example of a limiting assumption. The second blank need not be about you but could be about your market, your clients, your competitors etc. To move forward and achieve your vision these limiting assumptions need to be changed, you need to take responsibility for where you are.
Change your limiting assumptions to empowering perceptions. Find a way around the external factors you feel are limiting your business or division. There are no "cant's", only new alternatives and new possibilities. Create a new paradigm.
If you really are not able to get around a "can't" then you need to examine how important this factor is to your business and therefore whether you are in the right business.
Step 5 - Values
If your business supports your values, such as honesty and integrity, it has a greater chance of success than one that requires you be dishonest on a daily basis.
Step 6 - Strategies to Success
Create your strategies based on opportunities and threats that your business faces. Think about what is critical to growing and operating your business and achieving your vision.
Remember that you can't be all things to all people and you should therefore specialize in what you do. Strategies can include topics such as technical knowledge, reputation, visibility, quality, employees and service.
Select up to 5 topics that are critical to building your business and achieving your vision. Formulate a strategy statement for each topic and ensure that it is easy to understand and results in growth and profitability.
Step 7 - Specific Goals
Goals differ to strategies in that goals should always be SMART goals:
Strategies are big picture items that work towards your vision. Goals should have number and dates in them to serve their purpose. If goals are not SMART goals they are not specific enough and will not provide focus on the tasks to be achieved.
Goals can be formulated for each area of your business such as financial, marketing and sales, human resources, operations etc. Ensure that meeting these goals will achieve your vision and mission.
As goals are measurable they can be graphed and also broken down in to weekly or monthly goals. If you are trying to increase sales over a one year period take the amount that you trying to increase it by and make smaller goals to achieve on a weekly or monthly basis. The good thing about graphing them is watching them go up!
? Did you achieve them?
? If not, what was the problem? Can you recover and move forward?
? If yes, congratulations are in order
? Do you need to change any goals? Have you shifted your focus since your plan?
Living by your plan will keep you focused. It also ensures accountability in a team setting and therefore improves performance and productivity.
One word of caution however, using these 7 steps in a team environment requires open communication and contribution from all members. If you are unable to generate open communication in your team, then facilitation by an outside person can be invaluable.
There are a number of excellent systems on the market that can facilitate this business planning process. They have been proved to be affective in delivering results to companies of all sizes and in all industries. They differ in certain aspects of the 7 steps listed above but they achieve the same purpose.
GRAEME NICHOL, President, Arcturus Advisors.
Graeme Nichol has worked on 4 continents and in 117 unique businesses gaining experience in manufacturing, transportation, agriculture, communications, banking, direct marketing, consumer goods and retail amongst others. He has significant management experience and consulting experience, including Business strategy, project management, change management, big six consulting, team productivity, business productivity and quality improvement, ERP implementations.
Arcturus Advisors works with businesses and teams that are struggling to formulate a strategic plan that delivers bottom line results. Using tried and tested planning systems that have achieved results internationally for 20 years we ensure that you transform your business through focus, alignment and accountability.
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