The beginning of each year is always full of promise and high hopes but promise and high hopes alone will not effectively drive a company to profitability. Savvy business owners understand the important distinction between promise and planning. Setting a clear 2022 vision for the new year begins with effective strategic planning and these four steps will help business owners accomplish their 2022 vision for the new year.
Whenever possible, perform the strategic planning process as a team, with all the business departments or areas represented, because many heads think better than just one. On this week’s episode of The Playbook, host Mark Collier, business consultant for the UGA Small Business Development Center, shares his nine essential steps to formulate high-efficiency strategic planning in any company.
1. Determine the mission, vision, and core values of the company
This is a key fundamental step. The company’s definition of mission, vision, and values must be fully known. This is crucial for the plan to have long-term alignment as well as respect the organization’s beliefs.
The mission defines what an organization is, why it exists, and its reason for being. At a minimum, the mission statement should define who the primary customers are, identify the products and services the company produces and describe the geographical location in which the business operates.
The vision statement is a company’s road map, indicating what the company wants to achieve by setting a defined direction for the company’s growth. Core values are the fundamental beliefs on which the business and its behavior are based.
2. Establish the desired goals and objectives
Establishing reasonable goals and objectives is critical. To do so, one must understand that there is a difference between goals and objectives. Goals are statements that represent the future of the business, aligned with the company’s mission and vision.
Objectives are the detailed planned steps that the company undertakes during the execution phase to achieve the desired goals.
3. Analyze the organization’s internal environment
It is necessary to have an in-depth knowledge of the company’s resources. Factors such as motivated people, clear processes, quality products, control systems, company culture, and suitable facilities are of great value.
Make a list of the key features that will be needed to achieve goals and objectives by performing a SWOT analysis which is an acronym for strengths, weaknesses, opportunities, and threats.
4. Monitor the company’s external environment
The external environment (such as market, regulations, and competitors) must be taken into consideration. Issues such as financial crises, the emergence of new laws, and changes in consumption habits should be thought of in advance.
For example, one suggestion is to divide the external environment into two main blocks: the macro environment and the task environment. The macro-environment is everything that is more abstract and distant from the company, such as legal considerations, general economic or market trends. The task environment is represented by what is near, such as customers, competitors, suppliers, and regulatory bodies.
5. Understand the customers
In most cases, the planning targets are the end-user customer or client, aiming to engage them in new purchasing decisions and retain them. Because of this, we need to give special attention to customer trends and understanding their static and shifting purchasing habits.
The planning process can segment customers into four different categories: geographic, demographic, psychographic, and behavior. By understanding the company’s target audience, a business can deliver a more effective engagement strategy and a more effective marketing campaign.
6. Define the overall strategy that will be used
The overall strategy refers to how the results will be achieved. Good strategies contribute to creating a competitive advantage and differentiating the company from its competitors.
The company should use a strategy that best fits its target audience and is aligned with the business’s mission, vision, and core values. The strategy needs to be constantly revisited because the market conditions are dynamic, with new entrants, new regulations, substitute products, and changes in demographics. A company needs to have the ability to quickly assess the external business environment and its impact on the business to adjust the strategy as needed.
7. Develop an action plan
The action plan symbolizes the tasks that must be done to achieve the goals and objectives initially defined. Generally, this plan is developed based on a tool called 5W-2H, which represents these seven words:
- Five W: What (what will be done?), why (why will it be done?), where (where will it be done?), when (when will it be done?) and who (who will do it?)
- Two H: How much (how much will it cost?) and how (how is it going to be done?)
A table with the answers to these key issues should be assembled so that the company will have an auxiliary document for the implementation of each stage of the plan. In the end, the chances of success in execution will be even greater
8. Monitor the results
Monitoring results is a way of observing whether everything is going according to plan or if the execution needs fine-tuning or adjustments. Therefore, it is important to establish the tools that will be used for this monitoring as well as to train the professionals accordingly.
Timelines and key performance indicators (KPIs) are good options for evaluating the progress of the plans being put into practice. The choice of the ideal indicators will vary according to the final goal of each plan.
9. Evaluate the final results
With the correct choice and use of KPIs, the results of the implementation of the strategy can be evaluated, and then the action plan can be modified or maintained based on the results. Thus, it is possible to enter a learning process, creating a feedback loop that will guarantee better results in the future by making constant adjustments to the strategy and action plans.
It is important to record and archive the results obtained, ensuring that they can be seen in the future and that they can be incorporated into new corporate strategies.
In conclusion, strategic planning doesn’t have to be and shouldn’t be a cumbersome and bothersome process. Small business owners should view strategic planning as a necessary precursor for success.
The upside to strategic planning is that those companies who choose to engage in a consistent and persistent strategic planning exercise on an annual basis at a minimum will begin to distance themselves from their competitors and drive market share gains.
Benjamin Franklin’s famous quote rings true: “If you fail to plan, you are planning to fail!”
Have a phenomenal 2022 and we’ll see you next time here on the Playbook!
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