Why Strategic Planning Is So Important

Warren Buffet is quoted as saying, “Someone’s sitting in the shade today because someone planted a tree a long time ago.” These wise words apply to our approach to strategic planning for our businesses (and most likely in our personal lives).

The stats are stacked up against small businesses. It’s reported that:

  • 20% of small businesses fail in their first year
  • 30% of small business fail in their second year
  • 50% of small businesses fail after five years
  • 70% of small business owners fail in their tenth year

With numbers like that, it’s clear that making it work as a small business is no easy feat. A strategic planning initiative can literally be the foundation our success is built on and the ultimate decider of whether we survive.

4 Benefits of Strategic Planning

  1. It facilitates a common understanding of goals. Your organization, even if it’s extremely small, needs to have clear insight into the goals. Creating this alignment of goals will improve productivity, empower employees and avoid the negative impact that confusion can cause. The end result is an organization moving in sync toward a clearly defined set of goals with a plan to make success happen.
  2. It creates a benchmark to measure against. Your strategic planning effort will (and should) include benchmark KPIs to measure your performance against goals. These KPIs or metrics are the measurements by which you’ll measure your progress toward a target or goal. For example, if one of your strategic objectives is to increase sales, one of your KPIs would be related to sales volume. That goal should be broken into measurable (and achievable) milestones, such as monthly, quarterly and annually. KPIs should be revisited frequently and adjusted when needed as market or external factors or internal challenges come into play.
  3. It accelerates execution. Most business owners can relate to the chaos that ensues when execution is needed, and no plan is in place. Even the most basic of strategic planning effort will accelerate and improve execution. It all starts with a solid plan that acts as your team’s roadmap to getting things done!
  4. It fosters efficiency. Strategic planning provides a roadmap that guides management in all aspects of the operations. Through deep insights and continued measurement, the organization is able to optimize its output. In fact, your strategic plan creates the foundation from which an organization grows, evaluates its success and establishes boundaries for efficient operations.

Strategy, unlike tactics, helps businesses answer high-level questions like:

  • Where is my business going?
  • What do I want to accomplish?

Strategic planning looks to the future and focuses on the long term. Many business owners focus on executing tactics and on meeting revenue targets, but without aligning the execution with an overarching, long-term strategy.

When you’re ready to audit your current strategy or create a strategic plan from scratch, I can help!