How Strategic Planning Leads to Business Growth | Number ...

Every business, at one time or another, is burdened by those unanswered questions. Where are we going? What must this company do to grow? What is our purpose, and how can we turn plans into actions? It?s not uncommon for companies to ignore the importance of a strategic plan, and decide to play it day by day, continually wondering how and when things will improve, or if they will improve at all. Some companies grow when their industry grows, but the best grow through their own strategic initiatives, and it?s these companies that align their goals, objectives and resources, into one cohesive strategic plan. Looking to adopt a strategic plan and unsure of what it entails or why it?s so important? Well, there are some simple and straightforward approaches that all companies must endorse to chart their own path.

What Must a Strategic Plan Include?

For many businesses, strategic planning, operational planning, goals and objectives, are often lumped into one another, and ultimately, become one and the same. However, they simply aren?t, and while each of these plays a specific role, they are all meant to be intertwined into one ultimate goal, to grow the business. So, when it comes to a strategic plan, what must it involve? The strategic plan must provide a roadmap to create separate individual plans. It must provide incentives and empower management and employees to think strategically. It must also include quantifiable and measurable results, and must in the end, bring together the company?s resources to fulfill the overall strategic plan. Granted, there?s a lot to consider. To clarify, we?ll review them and show how each, combined with the other, will provide that much needed roadmap to growth.

Use Either a Vision or Mission Statement to Start the Plan

While some companies use both a vision, and a mission statement, they are quite similar, and ultimately accomplish the same result. A vision statement might include stating where the company, as a whole, wants to go, while a mission statement will declare that the company will be the best at what it does. Since both are similar, either will suffice when it comes to starting the strategic plan. However, one or the other must be present. Therefore, keep the vision, or mission statement, a simple and straightforward declaration of what the ultimate objective of the company is. For instance, a company may declare that its mission statement is to ?be the market leader in consumer electronics?, or be ?the preeminent designer of automotive brake systems?. Whatever the case may be, the statement is a declaration of purpose and intent to the customers and market a company services.

Include a Best Business Practices or Code of Conduct Declaration

Some companies call this step their core values. In essence, this is the basis for determining the company?s most important value propositions. It is a declaration to its employees, customers, and the market it services, that the company will conduct itself in a professional manner. It may involve stating that the company?s core values are its employees, the importance of their customers, and their respect for the environment. Core values are an essential set of criteria that can help define a company?s image, and foster an appreciation and confidence in how it conducts business. It?s essentially a promise from the company, which includes the employees, to establish a code of conduct with respect to how it operates its business.

Start With Company Wide Objectives

This is when the planning starts. Objectives can be broken down into yearly, semi-annual, quarterly and monthly objectives, but are always in tune with the overall goal of business growth. For instance, a company may want to grow its business to $4 million in sales within 5 years. As such, it determines that to accomplish this 5 year objective, it must grow sales by 15% to 20%, year over year. This 5 year objectives would then be broken down into yearly and quarterly objectives. These yearly and quarterly objectives would essentially be considered benchmarks, where progress is assessed and changes are made, if needed. In the case of this 5 year objective, the company will asses its progress quarter by quarter, year by year, and make changes accordingly in order to accomplish its ultimate 5 year goal of $4 million in sales. ?Here are some examples of some objectives a company might determine are essential to its 5 year goal.

• Increase market share by 5% year over year.
• Increase gross profit by 5% by year?s end on core products.
• Reduce inventory costs by 2% quarter over quarter.
• Introduce two new products a year.

Use Separate Strategies to Achieve Objectives

Now that the objectives have been determined, the company now must determine their specific strategies to accomplish these objectives. What strategies could the company come up with to accomplish some of the objectives listed above? In order to accomplish the goal of increasing market share on new products by 5% yearly, the company might decide to increase its sales efforts or increase the effectiveness of its marketing plans. In the case of growing gross

profit, it could involve negotiating better pricing and strong contractual agreements with suppliers in order to lower the pricing on parts and materials. This would lower the company?s overall cost structure. In addition, those supplier price reductions could also be used to lower the quarterly costs of inventory objective. Strategies must be tied into objectives, and must provide a path to successful completion of those objectives.

Tie Strategies With Objectives Through the Company?s Resources

This is when the company breaks down its objectives and strategies into implementation. To do so, it will determine what company resources are needed. What resources does the company have to accomplish these objectives, and successfully implement the above strategies? In the case of increasing sales efforts to accomplish the 5% growth year over year objective, is there a company resource that can help accomplish this? Sure there is. Perhaps there is a sales person who has had fantastic results using a specific approach. The company could use this person as a resource to help other sales people grow their territories. In terms of improving new product introduction, what engineering and design resources does the company have that could be put to use to accomplish the objective of introducing two new products a year? Using company wide resources to successfully tie in the company?s strategies to its objectives, is not only cost effective, but an essential aspect of strategic planning.

Many companies make singular declarations on growth, without providing their employees and management with any way to disseminate how, why, or who will help accomplish these goals. It?s often these companies, with no clear plan or path, that wonder what went wrong and why their people weren?t able to get the job done. Strategic planning isn?t simply a one line statement. It involves a coordinated effort of the company?s entire workforce and resources to chart a path, and approach to growth.

Source: http://paperworknightmare.com/2012/10/how-strategic-planning-leads-to-business-growth/

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