Your Business Foundation – Part 4 – Annual Strategic Planning

April 22, 2009

The business plan becomes the basis for your strategic planning process. On an annual basis, you should:

  1. Review your business plan
    1. Revisit your mission and vision. Are you fulfilling your business purpose?
    2. Review your company performance. Are you meeting your objectives?
  2. Analyze your business. I recommend a SWOT analysis of each of the following areas.
    1. Markets – who are you serving? How well are you serving them?
    2. Assets – what are the most valuable assets? Are they being captured? Grown?
    3. Organization – are you structured to execute the business plans?
  3. Make plans accordingly.
    1. Set (or continue) directions and objectives.
    2. Just as important to determine what you aren’t going to do

 Note that you don’t have to work out every detail and step, just create a clear picture by which management can lead the company.

Get Away from the Office

When conducting your strategic planning, it is worth the formality of an annual meeting. It is your business, so it is important enough to take some time once a year to plan for its future. There is a huge difference between the daily management of your business and strategic planning. By getting away from the office, you can avoid the interruptions and distractions of your daily management responsibilities. It also creates a more open environment to have frank discussions about the business.

Another benefit of an annual meeting is that it provides the opportunity to make adjustments to the company’s plans and operations. It gives you the opportunity to say, ‘we met with the board, and have decided that ….’

Get an Outside Perspective

Speaking of ‘the board’, it also raises the issue of who should be involved in your annual strategic planning process. If the ownership resides completely within the current management of the company, than it is an excellent idea to involve external people. Note that it doesn’t necessarily involve ownership, just an outside perspective — someone who is not involved in the daily company operations to test your ideas. For one thing, it will keep you honest and force you to create and justify your business plans. You’ll have someone to challenge your assumptions and offer fresh perspective.

If you don’t have external ownership with a vested interest, here are some potential advisors:

  1. Vendor or customer – need to be careful about potential conflict of interest
  2. Perhaps, a business person in your community that you respect and admire. Don’t know one. Ask you banker.
  3. SCORE – Service Corps of Retired Executives
  4. Exotek – very knowledgeable about business, but more likely as a facilitator

Next, we’ll talk about putting your strategic plan into action.


Your Business Foundation – Part 3 – Creating a Business Plan

April 20, 2009

Creating a business plan requires an understanding of the owner’s purpose for the business as well as the guiding principles for the business. A business plan typically describes the 2-5 year direction and objectives for the organization. That is, where the organization is going and how it is going to get there.

Basic Elements of a Business Plan

Check out the Small Business Association Planner for some good tools and advice. Typical business plans include:

  1. The purpose of the business – essentially a statement of the owner’s purpose, the company’s mission and vision
  2. Objectives – where will the company be 2-5 years from now (size, profitability, efficiency, ….)
  3. The organization – a description of how the company is organized to meet it’s purpose and objectives
  4. Strategies – Overall strategies for obtaining objectives
  5. Action plans including metrics for implementing strategies

Porter’s Five Forces

porters-five-forcesThere are a number of methods for determining a business plan. One of the common is to review ‘Porter’s Five Forces’. That is to look at the most common factors that affect your business. 

  1. Your buyers – the current and potential customers of your products and services
  2. Your suppliers – the basis for your products and services on. How is that changing and affecting your business?
  3. Your competitors – those competing with you for your business. What are your relative strengths and weaknesses?
  4. Substitutes – really another form of competition. What outside forces can affect your business?
  5. Barriers – kind of the opposite of substitutes. What can is protecting your business? How can you take advantage of that?

Obviously, you could spend a lot of time working on this and I’m not advocate wasting time. Still, if your business is important, then you need some sort of business plan to get you where you want to go. This business plan will fuel you annual strategic planning process – Part 4 of this Business Foundation series.

Question: Did you evaluate Porter’s Five Forces to create your business plan? If not, what other analysis did you find useful?