Why Strategic Planning Matters

Posted by Jeanne Zeske on Jan 19, 2017 17:00:00 PM

Topic: ALL

Lender meeting with a man looking at a report

It’s all about protecting your most important asset – your business – for the future.

If you fail to plan, you are planning to fail,” – Benjamin Franklin

Ask any business banker, when customers call with last minute loan requests because a unique opportunity or a sudden financial need arises, the thought always occurs: "Was there a strategic plan in place?"

As a business owner, your business is your greatest asset. You do what you can to protect it – from hiring honest, hardworking and loyal employees to ensuring your physical assets are well maintained and your supplies or inventories appropriately managed and insured.

But if you haven’t taken the time to do serious strategic planning, then you haven’t done everything you should to protect your greatest asset.

As Ben Franklin famously pointed out, by not having a strategic plan, you may just be planning to fail.

Why strategize business goals in phases
From a high-level perspective, a strategic plan focuses on where to spend time, human capital, and money for your core business products or competencies. It can help you keep your business on track, keep you pointed towards the future and help you realize the growth and success you envision.

There are hundreds of books devoted to strategic planning. But most experts recommend planning within a framework of short-term, medium-term and long-term goals and action steps.

Goal outlook: generally look towards the next one to three years, medium-term goals are usually three to five years, and long-term goals tend to look about 10 years out.

In many cases, the best approach to strategic planning is to identify the long-term goals first, then determine the short- and medium-term actions necessary to achieve them. For instance, merging with another company several years from now may become achievable once revenues increase, which occurs after a new product line or new markets are first identified, possibly followed by additional sales staff hired and trained. This would be an example of a long-term goal with short- to mid-term goals that need to be met.

Regardless of which direction you approach your strategic planning from, here are the questions I advise business customers to address after they identify their strategic planning team:

  1. Who are you? What is your value proposition? Analyze your marketplace, the competitive environment and your real—not perceived—competencies.

  2. Where are you going? Does your mission align with your optimal markets and most lucrative customers? What is your vision for your organization’s future?

  3. What do you need to do first, second, and after that? What are the steps needed to move you in the direction of your long-term goals and objectives? If the ultimate goal is to expand your product line, what needs to be done – from hiring the necessary competencies to budgeting for necessary equipment or additional buildings – to achieve those goals?

  4. Who is accountable? Goals need action plans and action plans need owners who ensure the necessary steps and actions actually occur.

  5. When will you review? The planning process is just the beginning. Periodic reviews of actions and progress are the only way to really succeed at achieving your long-term goals, Periodic scheduled plan reviews – at least quarterly − help hold everyone accountable for the processes and actions they own and also enable timely adjustments to the plan.


Tapping into expert advice
Unlike a board of directors, which has formal legal authority over a company and a fiduciary duty to either family or public shareholders, an advisory board has no obligation to owners or fiduciary liability for business actions. 

Creating an advisory board may be one of the most important steps business owners can take to ensure success − especially for a family business. By identifying key success factors through your strategic planning, you’ll be able to seek outside advisors who have already traveled the journey you’re about to undertake and understand the goals you’ve identified.

Additionally, advisory board members should be at the level you want to reach, not where you are currently. In other words, look for advisors who have grown their businesses (or counseled others in doing so) with similar resources and similar financial goals.


Find a template or hire a facilitator
If there is not an individual on your advisory board who can facilitate your strategic planning exercise, you’ll find both software and planning templates online to guide you through the process. 

Whatever process you chose or however you end up conducting your strategic planning, the most important thing is to do it. A strategic plan creates focus and provides targets for growth. It can actually make running your daily operations easier because you now have your end-goal in mind.

Last but not least, don’t forget to keep your business partners − your banker, CPA, lenders, attorney – informed of your strategic planning activities. You may ask them to join your strategic planning team, or where appropriate, serve as a member of your advisory board.

At a minimum, it’s to your benefit to share your plan and ongoing results with them. As providers of services essential to your operations, they can’t do their best for your business when you surprise them with last-minute requests.

With a strategic plan in place, there should be fewer surprises for everyone – including you!