When you think of strategic planning, you probably envision executives sitting around a table discussing how to increase profits or break into a new market, and you wouldn’t be wrong. Multi-billion dollar corporations certainly do rely on strategic planning to improve operations or change the direction of the organization. However, every organization can benefit from having a researched, documented statement on how to create a clear, measurable path to success, and this is especially true for small businesses. To help you get started, we are sharing four reasons your small business needs a strategic plan.
Understanding Strategic Planning for Small Businesses
Strategic planning is an organizational management process in which you look at your business objectively, including your mission statement, company values, and strengths and weaknesses. Using this information, you can set the direction you want your business to go, including setting goals and priorities. Most importantly, strategic planning allows you to map out the actions you will take to meet your goals as well as set measurable benchmarks to track your process (Vo, 2021).
One study found that the majority of small businesses focus on three key areas in their strategic planning:
- 46 percent focus on improving sales,
- 41 percent focus on directing resources and strategy toward advertising, and
- 36 percent focus on improving customer service (Jordan, 2020).
It’s important to be aware that strategic planning is an ongoing process rather than a single planning session that results in a document that is set in stone. In a study of Harvard Business School graduates who started businesses, Professor Clayton Christens found that over 90 percent of them evolved and changed directions from their original strategic plans (Cote, 2021), often caused by unforeseen circumstances like COVID-19, staffing issues, or economic shifts.
4 Benefits of Strategic Planning for Small Businesses
Now that you have a better understanding of what strategic planning is, let’s look at how it can benefit your small business.
Improved Clarity of Your Business
When you run a small business, you start with a clear mission statement, have a vision of where and what you want your business to be, and values that guide you. Over time, many business owners lose sight of the foundation of their business, instead shifting their focus on keeping up or overtaking competitors, maximizing profits, and minimizing costs. While these are all important, if your actions and goals aren’t in keeping with your business’s original foundation, you may find yourself at odds with your business, feeling inauthentic or struggling to convey what your business really is.
Strategic planning allows you to look objectively at your mission statement, vision, and values and see if these still serve you and align with what you want your business to be. You may find you want to get back to your foundation and set goals and priorities that are more closely aligned with what you originally envisioned. On the other hand, you may find that you are ready to make a more dramatic shift in what you want from your business.
Having clarity in your mission, values, and vision gives you the opportunity to move forward with confidence and effectively communicate your business to your target audience as well as to your staff.
Clearly Defined Goals and Objectives
As a small business owner, you may find yourself getting caught up “shiny object syndrome,” meaning you want to try the latest accounting software, offer the latest trend in your industry, or expand your digital presence. However, trying to cast as wide a net as possible or go after every “next best thing” will cause you to spread yourself and your resources too thin, confuse your messaging, and pull you away from your mission.
Strategic planning provides you with a clear outline of your highest priorities and your goals. This will act as your compass to help you make decisions that support your goals. When faced with a decision or an opportunity that requires you to redirect resources, invest money, or train your staff on something new, you can objectively determine if it will truly help you move forward or if it’s a distraction.
Identify Strengths and Weaknesses
One of the steps of creating a strategic plan is to identify your strengths and weaknesses. This allows you to objectively look at what your business does well, such as providing more innovative solutions than your competitors. It also means you need to be honest about your business’s weaknesses, such as having an inexperienced staff or a low profit margin.
By identifying these factors, you’re able to see where you need to focus your energy to overcome your weaknesses and how to maintain your strengths. For example, if your weakness is related to staffing, you can focus your priorities on training or hiring, and set goals on what you want to see in this area.
Clear Ways to Measure Success
Strategic planning for small businesses requires having key performance indicators (KPIs) to determine if you are moving closer to your goals. These may include:
- Customer satisfaction as rated by surveys or reviews;
- Return on your investment for advertising campaigns;
- Profit margins
- Turnover percentage
- Customer retention rate
Because you can measure success or the lack there of, you have evidence of whether or not your strategic plan is working. This ensures you’re not spending too much time or resources on something that doesn’t work and allows you to quickly pivot to a new action that will help you meet your goals.
Schedule a Consultation with Our Strategic Planning Agency Today
If you would like to learn more about strategic planning and how it can benefit your small business, reach out to Woodland Strategies, Inc., today. Our strategic planning agency work with businesses and organizations around Minneapolis to help them create a clear path to meeting their goals and achieving success. Fill out the easy-to-use contact form to get started today.