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We have come to perhaps the most important part of helping a business grow, actually implementing or communicating the results of all our efforts. As an advisor who helps with business growth I am amazed at how often the best ideas are left on the shelf. The best strategic plan or business plan always remains pristine on the shelf because one lacks the confidence to put it into practice. Take that leap of faith and use your growth plan. If it goes wrong at least you have tried and you can learn from your mistakes. Remember that if you keep on doing what you have always done you will probably achieve what you always have.
We are aiming to drive businesses forward. If you have followed the blog you will realise that you are investing time on your business. By not implementing your plans, you have just lost big time on your investment. If you are uncertain whether the business or strategic plan is right, then get some experts in to help you.
I am genuinely thrilled when a company implements a strategy, and even more so when that strategy pays off. It is not just a paper exercise – have confidence and faith in your hard work, or call us and we can very quickly advise you.
This section of the blog is short because it carries such an important message – namely that to succeed, you do need to implement your ideas in the structured way that has been planned.
You have invested time and effort as well as money (even if only time) into defining and planning your future strategy. It has been written and the only thing left to do is implement it. This process starts with communicating the plan to the stakeholders.
You should ensure that the right level of detail is presented to each group of stakeholders.
- The board and/or senior management team should receive a copy of the complete plan.
- Each person in the company needs to be aware of the major direction of the strategy – after all the culture of the organisation resides with every employee. By getting everyone on board, there is sign-on from a majority of the company and the process is much easier to implement.
- Ensure your miscellaneous items – mission, vision and values statements are seen by all. These are deemed “not our sort of thing” by many people, but for the strategy to deliver the vision, everyone needs to be working together to achieve the results you want.
- You should try and educate people through your marketing material – including the internet and for many companies, the intranet.
- Have senior managers provide input on the new strategy at internal meetings.
- You may wish to provide key external stakeholders with portions of your strategy.
We hope you have enjoyed this look at strategic planning. Next time we look at preparing the business plan that inspires growth for your business.
- Do have the first draft of the plan written by as few people as possible.
- Do not have the plan written by an external consultant – it should be owned by the company. Obviously the external consultant can prepare a report with relevant points that can then be transcribed to the draft plan.
- Do not include full detail into the draft discussion document.
- Do present the draft to the board and/or senior managers so they can review it and/or approve it.
- Do use senior managers to input to the main document.
- Do use other employees to provide the input to the detail (mainly objectives, time lines etc)
- Do distribute the plan to major stakeholders (this should not include the sensitive information)
- Do format the report where things that are less sensitive and/or are likely to change are included in the appendices.
Your growth plan is probably well defined by now and the only thing left to do is to write the strategic plan that allows you to communicate your plans for growth. Writing the strategic plan is as important as going through all the component parts of the exercise as it brings focus to the issues that are relevant to your business. After all, we are all trying to change and whether this is through growth or sustaining our position, we want to know when we start going off track so we can correct this and be successful.
The following sections are often included within the main body of the plan, in roughly this order:
- Executive summary – usually the overall goals and the key strategies for reaching these.
- Approval – often a simple note to say that the board or senior managers support the plan and implementation for the company.
- Background – this usually refers to the company, and defines where it has been historically and where it is at the moment. Any major achievements are usually noted as it validates the company as being adaptable and flexible to change and realising success.
- Miscellaneous – these include the “thinking” of the company and will include the mission, vision and values statements previously discussed.
- Strategic goals – detailing the main goals and strategies that have been identified throughout the planning process.
The following sections are often included in the appendices as they are often confidential, very detailed and/or subject to change:
- Financial reports – usually last year’s accounts, this year’s budget, a balance sheet or statement of financial position, income statement or statement of financial activities and ideally an estimate of next year’s budget
- Budget review – defines the resources and finance needed to achieve the strategic goals.
- Senior management intervention – what is expected of the senior management team, how they are assessed in terms of performance management for this task in relation to their overall role.
- The process used – describes how the plan was developed, who was involved and provides a document that can be reviewed to improve the process in the future for other plans/projects.
- The data collated – the SWOT and PESTLE, the FIVE FORCES data and strategic issues highlighted throughout the process.
- Action plan – provides SMART objectives along with assigning tasks to people with milestones for review and completion.
- Operational plan – definition of the main goals and tasks that have to be achieved over the nexy year.
- Monitoring and review processes – how is the process to be monitored and reviewed and who is responsible for ensuring that the plan is being implemented as agreed.
You have now prepared a strategic plan that reflects the values of your business and its vision. Now all that is left to do is to implement the plan – it is worth little to your business if a well-considered and SMART strategic plan remains on file. The implementation now needs to follow certain steps – again a function of careful planning.
You will need to implement the objectives and major actions identified. To do this you will need to assign tasks and responsibilities to the relevant heads of department. Along with these, you will need to assign budgets and deadlines. This is a project and as such needs to have a core timeline – it is no use having worked through the plan and defined the financials at certain points if one set of tasks are not completed on time because the owner of that task did not recognise the value to the overall project.
You will need to therefore assign someone to monitor all aspects of the status of the implementation plan and provide control against the strategic plan.
What we do know from experience is that the implementation often throws out some issues in the early stages that cause the overall plan to need adjustments. Hopefully these are minor.
Use key performance indicators (KPIs) to monitor the implementation. Setting targets and milestones or deadlines is a great way of controlling the process of strategic growth.
You will need to work closely with the business plan. We have stated that a business plan is a document that provides clarity over the short to medium term and is therefore often more detailed than a strategic plan. There will be cashflow forecasts. Monitoring the implementation of the strategic plan against these KPIs is ideal as any variance can be seen quickly.
If you have a monthly forecast then you may wish to review an indicator such as sales against a daily target. You may know that there are trends, but the daily review does provide a way of looking ahead and changing priorities as needed to close any gaps (or variance) observed.
Whether you like the idea of change or not, or whether you like the risks involved, you have chosen a route that will deliver growth – this implicitly provides change.
Every company has its own culture. Whilst some cultures are responsive to dramatic and frequent change, many companies that have been around for a while have their own more instilled culture and this often takes time to change. This is a factor that should come out in the planning, but if it is not highlighted as an issue until the plan is being implemented, action should be taken to assess the impact of this culture. Analysis needs to be undertaken to ensure that the positive impact from the implementation of your strategic growth plan is realised.
Examples of the kind of issues that tend to get overlooked by growing businesses include:
- The owner staying put – the goal of many business owners is to grow their business and they retire when they are ready. However, it may be in the best interests of the business for the owner to focus on a smaller number of responsibilities, or to hand over all day-to-day control to someone with greater experience. This takes great foresight and confidence in your strategy – but if you have defined the strategy, it is down to you to implement it to create the added value in the company.
- Business relocation – most small businesses are located close to “home”. However, as a business expands it might be the best business decision to relocate – either for access to clients, obtaining a skill set in the staff resource or to reduce costs of manufacture. Remember to consider what is in the best interests of the company. If those link with retaining a business close to home, then this is an added bonus. Growing a business usually means employing more people, directly or indirectly. As your desired aim is to pay these less than you, the potential employees who could add greatest value or benefit to the business may not be geographically located close enough to make it worthwhile them joining your company. What impact does that have on your potential for growth? We need to remember that many businesses are now based from home because they are run via the internet. Here a different set of dynamics start to come to the fore.
- Ownership structure – if a business grows, it may need financing from an external source. The more it grows and the faster it grows, the more likely the business will have to be more responsive to delivering this finance. This may mean that you give up a share of the business in return for equity finance or investment from business angels.
The first time you do this will be quite emotional. Remember to keep in mind why you are doing this. You have chosen a growth strategy and the best plan for success means you need to share your business. They do say that 10% of something is better than 100% of nothing!
It is the owner of the business who decides the strategic plan when all is said and done. If you want to grow the business, you assess the risk and make your choices accordingly. It may be that after the analysis and the in-depth review of all the factors that influence your strategic plan, you decide not to grow the business. That is down to your choice. By ensuring that you are open and honest throughout the whole process – for you and anyone else working in the business, the options will have all been assessed and any decisions will have been made on the basis of reliable information.
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If you have run the strategic planning project as effectively as you can, you will have found that the process involves considering options that challenge how business has been done so far. If you are the sole decision maker, the change that you have identified probably ends up making you feel a little uncomfortable. This change may be a result of seeing your decisions having been made hastily or not fully thought through in the past. You are where you are as a result of the decisions made. Recognising that you cannot change the past, but you can have a positive change on the future if you stick to delivery of your strategic plan for growth will inspire you to succeed. Please be reassured that this feeling is perfectly natural and is a desired outcome in many respects. You will need to feel uncomfortable with where you are before you really want to get to where you “see” yourself.
If you blindly ignore the facts and overlook options that are uncomfortable, you may be missing out of a great opportunity for future strategic growth – and that element of pride could cost you dear by not making the decisions based on the best way forward.
As the business owner (or manager) your own role will probably be the one that changes most dramatically through any growth that you plan. If you are a sole trader or sole director of a company, taking on a partner will “halve” your impact with the business as you have to consider another perspective. Your decision making powers are now diluted – but remember that as you look at your business, you will be driving it forward with the same or similar effort and you will have gained someone who can be additive. They should be at least as effective as yourself, so you are in a win-win scenario. In effect you are doubling the effort being invested into the business.
Simply look at where you want to be and be objective about where you are and what needs to be done to get you there.
We will see an example below where there is a change in the ownership as a result of wanting to gain more in the longer term. Many family businesses suffer through feelings of loyalty or contentious decision making. It is great to start a business and have your child(ren) take it over, but is this in the best interests of the company? Often the first generation will have similar values – but then partners and their families can get involved so they have a job. The allocation of resources is a critical success factor. A niece or cousin may be a super person, but in an open market would you have employed them for the role they have?
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A strategic plan is a dynamic document and reflects your business. As such you will be pleased to know there is no set format that is absolutely required for your business growth plan. Writing your strategic plan is never the easiest thing to do in isolation – so ensure you share your thoughts with someone slightly removed from your business. However, there are some features that should be included to help you:
- High level objectives – the headline goals that you aim to achieve for your vision to be reality.
- Vision statement – a summary of where you “see” your business in five or ten years time.
- Analysis of any internal drivers – these relate closely to the strengths and weaknesses (the internal factors) from the SWOT analysis you carry out for the business or project.
- Analysis of the external drivers – these relate closely to the opportunities and threats (the external factors) from the SWOT analysis you carry out for the business or project.
- Implementation – these are the key actions that have to be completed to achieve your high level objectives. Remember to include outcomes and timelines to each of the actions (remember to think SMART).
- Resourcing – look at what the business needs to deliver your strategy. This will include various factors that have already been highlighted – finance, staffing, premises and any equipment.
- Executive summary – this is of benefit to key external stakeholders but also is of interest to any investors that you may need based on the finance requirements (above).
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I am a firm believer that Porter was a genius who could actually communicate his ideas in very simple ways. The five forces model is presented here in a “snapshot” fashion, and does not do it true justice. However, if you take the time to understand the points below and reflect on how they impact on your own business, you will be well on the way to understanding what makes your company so special.
The Five Forces model helps businesses understand the drivers of competition in their markets. There are five key forces according to Porter that seek to identify the significance of how operating within a type of market impacts on your business:
- your customers’ bargaining power – the higher it is, the more downward pressure on prices and thus income they will be able to exert
- your suppliers’ bargaining power – the ability of suppliers to push prices up can impact significantly on your operating costs and hence profitability
- the threat of new competitors entering your market or industry – more businesses competing makes it more difficult to retain market share and maintain price levels
- the threat of customers switching to substitute products and services
- the level of competition between businesses in the market – this depends on a wide range of factors, including the number and relative strength of the businesses and the cost to customers of switching between them. We all know the pressures for consumer energy prices and the need for customers to review suppliers on a periodic basis to obtain a better overall deal.
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A SWOT analysis looks at an objective of a business or project and then identifies the internal and external factors that either help you reach your goal (Strengths and Opportunities) or that you determine might prevent you from achieving your goal (Weaknesses and Threats).
These four factors used are:
- Strengths – attributes of the business that help in achieving the objective
- Weaknesses – attributes of the business that could be obstacles to achieving the objective
- Opportunities – external factors that could be helpful to achieving the objective
- Threats – external factors that could be obstacles to achieving the objective
The analysis of the results should not look at simply the strengths and weaknesses as a pair that counters each other. Weaknesses can be turned round to be strengths and threats to opportunities.
We like to think of this in terms of TOWS rather than SWOT. The reason being that it is often harder to think of the threats and opportunities than the strengths.
The analysis should be considered in context. If you are looking at part of the business, there may be perceived weaknesses for that part to grow. If you are looking at the overall business then that feature may be an overall strength. Retain the feature in the area of the page that reflects the part of the business that you are looking at for this particular strategic growth plan. Obviously if a series of TOWS analyses are undertaken, you will gain a considerable insight into your overall business and this will enable you to observe a balance or imbalance on how the overall business may react to any change.
PESTLE brings other factors into the equation. It is often harder to reflect on each of these factors and bring them round to the impact on your own business plan:
- Political – such as: changes to taxation, trading relationships or funding for businesses
- Economic – such as, interest rates, inflation and changes in consumer demand
- Social – for instance, demographic trends such as the current trend to larger percentages of people being in the over 60 age bracket or changing lifestyle patterns – where people have been retiring at a younger age until the end of the 2000’s
- Technological – including the emergence of competing technologies, or productivity-improving equipment for your business
- Legal – such as, changes to employment law, or to the way your sector is regulated
- Environmental – e.g. changing expectations of customers, regulators and employees on sustainable development
Reviewing your business position and future growth plan against a combination of SWOT and PESTLE does deliver a more holistic approach and should improve the chances of success for your new strategy for growth.
You will probably be thinking that strategic planning is dependant on getting the process “just right”? It is certainly very important, but the whole reason you are undertaking this task is to ensure you deliver a strategy that provides growth – that is your outcome. The plan is simply a tool that allows you to implement the necessary actions to deliver your growth.
It is important to write things down – not only do we tend to forget what has been decided but if we write things down we do not drift from the plan. Consider our shopping habits. If we do not have a list, we simply put into the basket what we think we will need and add those things that we desire. When we get to the checkout we find that the total is more than we had budgeted for. By writing down in clear terms what is needed, anyone else can do the shopping and the budget will only vary if the exact items are not added.
By clearly communicating through a written plan, we make sure that everyone is aware of our high level objectives. This planning document therefore:
- Reflects the combined, agreed thoughts of all involved
- Provides a basis for key decision makers to support the process
- Enables all stakeholders to have clarity of vision and therefore support the process.
Why strategic analysis is essential
Strategic planning is about positioning your business as effectively as possible in the marketplace. You therefore need to conduct as comprehensive an analysis as possible for both your business and your market. The two are never separate – this is your real world and external pressures are always there. You might find that at the start of the process you have a certain set of competitors and as you progress, another company comes into the market. Simply add them to your review. The fact that they have entered into the arena you are trying to move into is confirmation that someone else has decided it is worthwhile.
There are some simple tools or models that you might want to use. These provide a picture of the business environment – but they do rely on you actually having a full and open analysis of all the factors. We will look at well known models: SWOT (strengths, weaknesses, opportunities and threats) analysis is probably the best-known model and is used by both smaller and bigger businesses in the for-profit and not-for-profit sectors alike, whilst PESTLE (political, economic, social, technological, legal and environmental) and Five Forces analysis are two other models. We will not provide detail on the Five Forces model – there are plenty of references to it within MBA texts. Michael Porter was the guru behind the model. It is an elegant model and one that is well worth investigating within this process.
Any business owner is aware of the need to carefully manage any activity. Strategic planning is no different and will involve a number of people to obtain the best-suited strategy for the business. Each person within the team will need to understand their role and responsibilities – you need to treat this as a project. This means having the right people and resources correctly allocated, tasked to deliver and undertake frequent reviews throughout the process.
Who to involve
Strategic planning is most successful when the information has been analysed to be of value. Therefore the ideal team will include a person or people who have analytical skills. There needs to be someone with an operational perspective who looks at the detail and allows the analyst to obtain the most from this process. You would ideally want someone who is creative and thinks outside the box. The strategy has to be realistic, not constrained. Having only analytical thinkers and doers means that your strategy may not be radical enough to deliver enough change to obtain competitive advantage.
Basically, try not to do everything yourself. In a large company you can call upon the board, heads of departments or other key staff. If you are the business, then speak with your accountant, your clients and consultants who can assist. The benefit of having an external consultant is delivery of a viable strategy that does not pander to the whim of internal opinion. You are challenged as to why certain “facts” are being reacted to rather than be proactive.
The structure of the process
You will be pleased to know there is no absolute right or wrong way to plan the process. However, you need to be very clear at the start about how the process will work and everyone involved must understand what is expected of them, when it has to be done and why they are being involved.
In a large company the process will probably start with a series of edicts from the board, followed by delegation to a small team. They will hold weekly meetings after an initial brainstorming session. Each person within the team will understand what they have to deliver before a certain date. This is then reviewed and the next phase moves ahead.
If you doing this alone, expand the “team” so that the inputs are more reasoned. Do an initial brainstorm so that you have ideas to explore with key clients and your accountant or someone from a consultancy such as ours. By asking for help, you are not committing to a long-term relationship and that ½ or 1 day of advice might give you enough clarity on direction that the rest of the process just takes time that you can invest into your business.
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