Strategic planning is a complex management process that offers a wealth of benefits to businesses when correctly executed. Strategic planning is a strategy map that allows business employees to achieve goals and sustain a unified direction. Strategic planning influences a wide range of business functions from business model updates to decision making initiatives. Ultimately, the strategic planning process influences both short term and long term business profitability and success.
Businesses generally craft a strategic plan that addresses two or three years into the future. Alternatively, some businesses' strategic planning process only looks one year into the future. In fact, 63% of small business owners report they only plan one year or less into the future. Organizations decide how many years their strategic plan covers depending on objectives and desires.
Different businesses also choose to involve different representatives in the strategic planning process. A large company may include only high level board members and strategic management professionals in their strategic planning process. Alternatively, a small business may choose to involve many different team members. Experts generally agree a strategic planning process should include a variety of staff members, not high level board members exclusively.
The Importance of Strategic Planning
The strategic planning process is important for a wide variety of reasons. To understand the benefits strategic planning offers small business owners consider top business concerns reported. 24% of small business owners struggle with effective time management and 28% with marketing or advertisement success. 67% of small business owners are challenged by a lack of cash flow or capital. Thankfully, an excellent strategic plan can address all these small business owner concerns and more!
A significant reason that the strategic planning process is important is for strategic goals establishment. A strategic plan sets short, medium, and long term goals that may be either high level or lower level. Strategic goals are compatible with the vision statement and mission statement of a specific organization. In fact, both a mission statement and a vision statement are commonly reviewed before planning strategic goals. Established short term and long term goals are crucial to properly achieve goals for both small businesses and large corporations.
While planning strategic goals business professionals detail action plans that will make sure the company can achieve set objectives. Action plans describe the business strategy meant to bypass strategic issues and make sure the plan runs smoothly. In fact, 37% of organizations report strategic implementation success is partly due to business strategy and strategic plan compatibility.
An action plan is made up of numerous delegated action steps for different parties to undertake. Timelines assigned during action plans help make sure that action plan steps are completed in a timely matter. Recalling that 24% of small business owners are concerned with time management effectiveness, established timelines are obviously crucial.
Benefits strategic planning offer for bottom line profitability and market share portion are noteworthy. Securing and maintaining a larger market share portion helps businesses obtain a competitive advantage in their industry. Both small business and large corporation owners benefit significantly as a result of increased market share acquisition.
Strategic plans supply invaluable insights on market trends and consumer segments. Insights are helpful for planning strategic marketing and advertising campaigns. The strategic analysis allows marketing department professionals to better understand the target audience in addition to the existing customer base. Planning strategic communications with consumers decrease money wasted on unsuccessful marketing initiatives.
The durability that strategic planning grants is invaluable for long term business success. Studies show that one out of three industry leaders may be out of business in just five years. Although the statistic may feel bleak, it ultimately expresses the importance of short term adaptability for long term durability. A proper strategic plan greatly increases the chances of maintaining businesses in both the short term and long term future.
Foreseeing strategic issues supplies strategic management professionals with ample time to prepare or prevent them. If not properly planned for strategic issues can severely damage a business. As such, strategic issues should be identified and avoided whenever possible. Instead of an organization merely reacting, proactivity is a hallmark of successful strategic planning. The proactivity that strategic planning produces increases decision making effectiveness and the ability to achieve goals set.
The SWOT analysis is an important strategic planning process staple. SWOT analysis contains an acronym that stands for strengths, weaknesses, opportunities, and threats. Too often, a small business may find themselves focusing on their strengths without evaluating weaknesses. Similarly, a large corporation can be so concentrated on opportunities that they overlook threats. A SWOT analysis allows strategic management professionals to make sure a comprehensive understanding of the business is formed.
The extensive benefits strategic planning offers small business and large corporation owners are leading to an increase in its popularity. A small business does not need to start strategic planning as soon as a business plan is drafted. However, it is a good idea for a new small business owner to preemptively research strategic planning processes. When the small business owner is ready to create a strategic plan prior research will likely come in handy. Alternatively, a well established small business or larger corporation may be overdue to begin its strategic planning process.
What is Strategic Planning? - Key Takeaways
Sucessful strategy implementation and the ability to properly execute strategic plans depend heavily on the overall planning process.
Goals strategic management professionals set are often based on vision statements or mission statements available.