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Benefits and Basics of Strategic Planning for Small Business Owners
Posted by Lagerquist Accounting & Advisory
There’s a common misconception that strategic planning is a task primarily suited to large-scale enterprises and industry giants—and while larger companies should certainly make regular use of this vital tool, small business owners can reap tremendous benefits from the process of strategic planning as they scale their business and grow their profits.
To that end, we’ve put together a three-part guide to strategic planning for small business owners. We’ll start here with an exploration of the benefits and the basics of strategic planning particularly as it relates to small business owners; in future installments, we’ll cover the essential elements of a small business strategic plan, as well as some pitfalls to avoid to ensure your strategic planning is as smooth a process and valuable a tool as possible.
What is strategic planning?
Strategic planning is a process in which a business analyzes its present situation and plots out a roadmap to get from its current state to its desired state, identifying milestones along the way and a method for assessing progress. Some strategic plans are created to guide the business to achieve goals envisioned for five or even ten years in the future, keeping in mind that the plan will be regularly updated to ensure continuing relevance and to adjust course as needed. If your business is in a quickly evolving sector like technology, however, it may make sense for you to create a three-year plan.
The process of strategic planning and the elements that comprise a plan will vary from business to business, and we’ll discuss plan components in more detail in a future article, but the following four questions are essential to every strategic plan:
- What is our current state? Where are we now in terms of our profits, products, and market position?
- What is our desired state? Where do we want to be several years from now?
- What is our plan for getting from our current state to our desired state? What action steps can we establish to progress us towards our long-term goals?
- How will we monitor our progress? What are the milestones along the way to our desired state? What are the key performance indicators that will let us know whether we are on track to achieve our goals within our established time frame?
What are the main benefits of strategic planning for small business owners?
The advantages of strategic planning for small business owners are many, and span both long-term ROI as well as more immediately realized benefits. Here are just a few of them:
- Increased employee and stakeholder buy-in: When employees and stakeholders see a clear vision of a path forward as well as their role in advancing the business in the desired direction, they understand their value and are better able to connect it to the overall mission and objectives of the business. That sense of ownership grows exponentially when employees and stakeholders are invited to be part of the strategic planning process and can pay off in increased morale and productivity.
- Clear direction—and a defined roadmap to get there: Strategic planning doesn’t stop at spelling out where you want to be a few years from now—it gives business owners the opportunity to develop action steps to achieve that vision. With an actionable plan in place, forward and purposeful progress is not left up to chance but accomplished by strategy.
- Milestones to measure progress: One of the greatest benefits of having a roadmap is seeing the milestones that mark your progress towards your destination. Milestones like achieving a KPI serve as a way to monitor, evaluate, and celebrate forward momentum as well as motivate continued work towards your long-term goals.
- A focus for all of your business initiatives and decisions: A thoughtfully crafted strategic plan can act as a guidepost to ensure that all organizational efforts, from new product development to employee training—are rooted in a sound understanding of your current resources and capabilities, and geared towards the achievement of your overarching objectives.
How often should small business owners do strategic planning?
Strategic planning is not a one and done prospect, but rather a process meant to be revisited and re-evaluated regularly. All small business owners, but particularly those in quickly evolving industries, should view their strategic plan as a living document which is reassessed for accuracy and adjusted as needed. Twice a year is a good rule of thumb for revisiting your plan, though some small business owners find that a quarterly review keeps them both nimble enough to take advantage of opportunities that arise and focused enough to stay on course towards their long-term goals.
Who should be involved in your strategic planning process?
As a small business owner, your strategic planning process should involve not only your managers or senior staff, but a cross-section of staff and employees, as well as any other stakeholders. Each of these parties has a unique perspective and insight into the company’s operation and can provide valuable input to help shape a realistic and effective plan.
Investing the time and effort into creating a strategic plan is critical for small business owners eager to gain the benefit of focused direction, an actionable roadmap, and organization-wide support for long-term goals. Your team of trusted business advisors, including your CPA or small business accountant, can help you lead your team in a strategic planning process that will guide your business from your current to your desired state with the greatest possible success.
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