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Develop a Business Strategy

What is a Strategic Plan?

Entrepeneurs and business managers are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. That's why a strategic business review or the preparation of a strategic plan is a virtual necessity. This may not be a recipe for success, but without it a business is much more likely to fail. A sound plan should:

• Serve as a framework for decisions or for securing support/approval.
• Provide a basis for more detailed planning.
• Explain the business to others in order to inform, motivate & involve.
• Assist benchmarking & performance monitoring.
• Stimulate change and become building block for next plan.

A strategic plan should not be confused with a business plan. The former is likely to be a (very) short document whereas a business plan is usually a much more substantial and detailed document. A strategic plan can provide the foundation and frame work for a business plan. For more information about business plans, refer to Writing a Business Plan, Insights into Business Planning and Free-Plan: Business Plan Guide & Template.

A strategic plan is not the same thing as an operational plan. The former should be visionary, conceptual and directional in contrast to an operational plan which is likely to be shorter term, tactical, focused, implementable and measurable. As an example, compare the process of planning a vacation (where, when, duration, budget, who goes, how travel are all strategic issues) with the final preparations (tasks, deadlines, funding, weather, packing, transport and so on are all operational matters).

A satisfactory strategic plan must be realistic and attainable so as to allow managers and entrepreneurs to think strategically and act operationally - see Devising Venture Strategies for further insights.

See a sample strategic plan.

A strategic plan looks beyond normal budgetary horizons and requires a certain attitude of mind and predisposition. Some essential points to be observed during the process include the following:

• Relate to the medium term i.e. 2/4 years
• Be undertaken by owners/directors
• Focus on matters of strategic importance
• Be separated from day-to-day work
• Be realistic, detached and critical
• Distinguish between cause and effect
• Be reviewed periodically
• Be written down.

Basic Approach

As the precursor to developing a strategic plan, it is desirable to clearly identify the current status, objectives and strategies of an existing business or the latest thinking in respect of a new venture. Correctly defined, these can be used as the basis for a critical examination to probe existing or perceived Strengths, Weaknesses, Threats and Opportunities. This then leads to strategy development covering the following issues discussed in more detail below:

• Vision
• Mission
• Objectives
• Values
• Strategies
• Goals
• Programs

Notwithstanding that "battles are often lost for want of nails", a company rarely succeeds or fails for minor or trivial reasons. The causes are usually substantial and are often self-evident, at least to an outsider. For example, the business was completely over-borrowed; management was weak; a major new product opportunity was identified; legislation changed; a major competitor went bust or expanded; the company never reinvested.

It should be possible in the course of a few pages to set down the main elements of a business's vision, mission, values, objectives, goals, strategies, SWOTs etc.- see Key Steps for an explanation of this terminology. The compilation of a short report along these lines is likely to prove much more difficult than a lengthy dissertation which mixes up details and principles, and confuses the broad picture. The Strategic Planning Worksheet will help this process. Also, have a look at the sample strategic plan.

Additional Help

For further information on business planning issues, refer to business ideas, venture strategies, financial planning, cashflow forecasting and business planning.

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