BY LAURA MOWER
Recruiting, compliance, marketing, finance—there are so many issues to address in your business, especially as demand increases and as situations change on a seemingly weekly basis. It’s understandable that most operators are addressing the immediate needs of their businesses right now. However, it’s important to also consider the future even as you focus on today’s critical needs. When was the last time you updated your business plan? Your strategic plan? Your contingency plan?
I’m going to assume that you developed plans before starting (or purchasing) your business. Whether you did or didn’t create formal plans years ago isn’t our focus today.
Business plans and all they encompass should be living, fluid documents that are reviewed at least annually and even more often, as circumstances dictate. We’re going to guess that your original plan did not consider the impacts of a global pandemic that has lasted for 18 months and counting.
What came first ... the business plan or the strategic plan?
Opinions differ as to whether you need a business plan or a strategic plan first. Many define a business plan as a “one and done” document for when you start a company. More contemporary thinking is that your business plan is a living document that reflects new goals as your industry and trajectory changes. You’ve certainly made pivots in your operation that were never part of your original plans.
For our purposes today, let’s define the business plan as the playbook that encompasses the essence of the operation: who we are, who our competitors are, SWOT analysis, and general objectives and purpose with financial projections. The strategic plan, on the other hand, will address the approaches for meeting those objectives.
For example, if our business plan objective is world domination as the preferred official transportation provider for every luxury resort and their guests, our strategic plan (SP) will address how we will obtain our first, second, and millionth resort contract; the timeline; the tactics we will take to get our foot in the door; and how we will close the deal.
Creating the SP
First, we need to explain the essential components of the SP.
Introduction and Background: In a few paragraphs, describe your business. Not sure where to start?
1. Who are you?
2. What do you do?
3. Where do you serve?
4. Who do you serve?
5. How long have you been in business?
6. Have there been any significant transactions in your business, such as purchases or sales of divisions?
Mission and Objectives: While it is likely included in your business plan, it is important to incorporate your mission and vision statements in your SP. This is valuable for at least three reasons:
- Provides you the opportunity to determine if the mission and vision are still relevant for today’s business environment or should be revised,
- Ensures anyone reading the SP is aware of your mission and vision, and
- Serves as a reminder of your baseline philosophy as you develop your SP. [If you are not tying strategy, objectives, and goals back to your mission statement, your SP or mission statement likely needs to be revised.]
Strategy Itself: By now, we’ve defined our business and disclosed our mission and objectives. Now what? This is the meat of the SP, including how you are going to get from who you are today to who you want to be. In this section, describe specific ways you will reach your objectives.
For example, if your goal is to grow your operation by 20 percent in the next 24 months, how will you do it? This may include a plan for acquiring another business, organic growth by targeting a specific market, or a combination of strategies.
Before developing your stratagems within the SP, have a greenlighting session that includes yourself, business partners, and/or staff members. In this type of discussion, no ideas should be off the table. Write down every thought that comes up during the process, and then determine which ones would be feasible and the effective steps to achieving your goals.
Don’t be afraid to include someone outside of the industry in your greenlighting process. Some of the best solutions may come from someone who isn’t limited by the inherent phantom thought obstacles that exist in every field. Some good people to include would be someone who will respond to “we can’t...” with “why not?” A trusted advisor or a business consultant can play this role for you.
Monitoring: We wrote everything down ... We’re done, right? Of course not. Goals not tracked are often goals not met. Within your SP, identify how you will monitor the effectiveness of the plan, including metrics; frequency; and how to respond to ineffective strategies, changing market conditions, and other unanticipated factors.
Realizing the Value of Your SP: As written, your SP is worth the paper it’s written on—in other words, nothing! Your SP gains its true value through execution and implementation. Regardless of how carefully it was crafted, if you don’t have a way to benchmark your progress, then it’s just a well-written exercise.
Consider your SP as a living document that is relied upon and revised as needed and monitored routinely, which will increase its value not only to you as a business owner but to your stakeholders. If you had an SP prior to 2019, you certainly didn’t plan for 2020 and the ensuing slowdown, so any objectives you had before our current economy will need to be updated—and it will happen again in the future, no doubt.
It’s easy to get bogged down on the most pressing challenges right now, especially as we emerge from the pandemic, but it shouldn’t permanently disrupt your future strategizing. Things are changing rapidly, and you’ll need to pivot with it. What are you waiting for? It’s time to identify your goals and strategies and make things happen. [CD1021]
Laura Mower, MBA, is Senior Financial Consultant for LMC CFO. She can be reached at laura@lmccfo.com.