Eight out of ten entrepreneurs who start businesses fail within the first 18 months – a mind-boggling 80% crash and burn according to Bloomberg. The number one reason why businesses fail is because the business owner did not take the time to conduct a business plan.
But it’s not just startup businesses that fail, 96% of all businesses fail within 10 years according to Inc. magazine and time tested businesses are not immune either. Fewer than 1/3 of all second generation business survive and less than 12% of businesses manage the third generation transition. Whether you’re just starting out, or your business has passed the five-year mark and beyond, strategic planning is essential to keep your organization on track and ensure growth.
Strategic planning is like planning for a long trip… a journey that will guide you towards achieving your goals. But in order to get there, you have to know the final destination (long-term vision) the purpose for traveling (your mission) and the road map of how to get there (a tactical plan).
So why should you invest in developing a strategic plan for your business?
It facilitates team building: In our technology-driven culture, we tend to communicate more via email or smartphone instead of engaging in real conversations. As a result, employees are not communicating enough with each other and the team suffers. Planning gives management and employees an opportunity to sit face to face, envision, dream and think big. When employees come together and develop a common vision, it instills a deep sense of purpose and commitment to the organization. They become empowered to achieve critical goals, think outside the box and reach for success.
Helps to Avoid Pitfalls: It’s easy for an organization to become insular and not take into account looming competitive threats or shifts in the marketplace until it’s too late. Jack Welch was known for asking his division leaders to dig deep to understand how things might change before they really happened. It’s essential to take time to fully understand both the competition and the environment which is an important component of strategic planning.
This process pushes a company to look beyond its own walls and be more proactive in the marketplace versus being caught unaware when it’s too late. One must wonder if Blockbuster was really looking ahead when Netflix offered to sell them the company and they passed because they didn’t glimpse what was just around the corner.
Sets your company on a unified path: My favorite part of the strategic planning process is to develop the strategy for reaching goals and then define a list of tactical action steps to on how to get there. This can often feel like a leap of faith, reminding me of the saying in the movie Field of Dreams, “If you build it, they will come.” But the reality is that this process of planning and building sets things into motion and the time and effort it takes to achieve goals is reduced because the company’s employees are more aligned, organized and efficient. However, it’s important to acknowledge that every dream does not become reality, hence the purpose of a comprehensive strategic plan and not just a dream on a wing and a prayer.
Creates a culture of performance: Strategic planning can be used to manage performance by developing targets that are measurable and tracked. This includes holding regular meetings to check in with staff to see how they are performing against the plan and determine a
ny external or internal forces that inhibit growth. And most importantly, employees should be recognized and rewarded for achieving goals to foster continued enthusiasm and empowerment.
According to Richard Verity and Simon Mills on Strategy + Business, “Done well, performance management contributes to a performance culture. A performance culture is one in which all employees’ empowerment is facilitated, there is widespread management by fact and by process, plans reflect the organization’s capability, capability improvement is aligned with the strategy, and continuous improvement is achieved.”
Serves as a communications vehicle: Once the plan is complete, the next step is to communicate the details throughout your organization and instill a timeline for direction-setting and monitoring, as well as a clear action plan and responsibilities. The plan itself provides a great vehicle to communicate your vision, mission and priorities to all stakeholders within your organization.
From this planning process, you also have the opportunity to stake your claim and position your company in the marketplace. The plan provides the foundation to develop and communicate key messages to your customers and the trade. This includes but is not limited to sales presentations, website, press releases, social media and more.
The key to strategic planning is making the investment of time and committing to the process. It’s going to take more than just a two-hour meeting and will encompass all aspects of your organization for months and years to come, but speaking from my own personal experience, it’s worth the effort. It is also a living breathing reflection of your business that needs regular updates and attention. But you’ll find that it builds a stronger, more purpose focused company that is prepared to weather the storms, continue to break through the clutter and speed ahead of the competition.
At Full Tilt Marketing, we have facilitated the strategic planning process for many of our clients, and helped them define their leadership position in the marketplace. Are you interested in finding out more about the process or pushing ahead of the day to day to focus on the future? Do you want a culture driven by performance and innovation that attracts the best and brightest? If you can answer yes to any of the above, now is the time to contact me and learn more. You can reach me via email at Heidi@fulltiltmarketing.net.
