A Step by Step Guide to Strategic Planning
To many people, strategic planning is something meant only for big businesses, but it is equally applicable to small and medium businesses. Strategic planning is matching the strengths of your business to available opportunities. This guide will walk you step by step through all the essential phases of developing a results driven strategic plan. The book is packed with guides, worksheets and checklists that make it easy to apply all that knowledge to your business.
Here's what’s in the book:
* The Need For a Strategic Plan
* How to Create a Mission Statement
* How to Define Your Business
* How to Set Your Firm's Goals
* How to analyze your business environment
* How to Implement The Strategy
* A System For Applying The Strategic Plan in Your Business
* How to Create a Business Environment that Supports Growth
* How to Ensure That Your Business is On The Right Path
* All these and much much more.
Strategic planning focuses largely on managing interaction with environmental forces, which include competitors, government, suppliers, customers, various interest groups and other factors that affect your business and its prospects. Your ability as a small business owner-manager to deal with these groups will vary widely depending on the group and on the timing. Also, you may be able to get more of what you want from a supplier than from a competitor (although size, distance, the percentage of the supplier's business you represent and your record of dependability as a customer can affect this relationship). How you manage these and other relationships is one of the decisions you will make during the strategic planning process.
Because of major changes in the business environment, your familiarity with strategic planning and your ability to implement it is critical. At one time, business owner-managers assessed the environment on a continuum that ran between very stable and very unstable. Businesses, such as the producers of automobiles, furniture and other consumer goods, operated in a relatively stable and predictable world. This also was true of many service firms, such as banks and savings and loans. Typically, the environment included competition that was limited to a stable group of competitors, loyal customers and a relatively slow transfer of information. Many small businesses could thrive in this environment. Other small investors entered fields such as xerography, computers and computer component production, software design and chemical research. Some of these grew rapidly, becoming names with which we all are familiar: Xerox, IBM, Apple and Microsoft. But many more failed.
Today, experts agree that more businesses face an unstable business environment. Improvements in information processing and telecommunications have made major changes in most industries. Along with this, improvements in transportation and the growth of foreign economies (specifically in Europe and Asia) have created a global marketplace and redefined certain industries. In addition, as consumers are exposed to more choices, loyalty has become less important than it once was; a slightly better deal or a temporary shortage of stock can easily result in the loss of customers. Competitors also can change rapidly, with new ones appearing from out of nowhere (often this means the other side of the globe). With the instability of the global market, it is important that you make strategic planning part of your overall business strategy.
Proactive Versus Reactive Management
A few years ago, you could establish and maintain a business by reacting to and meeting changes in tastes, costs and prices. This reactive style of management was often enough to keep the business going. However, today changes happen fast and come from many directions. By the time a reactive manager can make the necessary adjustments, he or she may lose many customers -- possibly for good.
Proactive planning is the anticipation of future events. Decisions are based on predictions of future states of the environment as opposed to reactions to various crises as they occur. Proactive planning in an unstable, technology-driven business environment is critical to continuing success in almost any endeavor. Rather than reacting to the situation as it changes, proactive planning requires that you analyze environmental forces and make resource-allocation decisions. By doing this you will take your business where it needs to be in the next month, year and decade. Barry Worth, a consultant specializing in small business management, puts it this way: Today's entrepreneur must be a business architect. Anything built in today's business environment must have a step-by-step blueprint or plan on how to achieve success.
The blueprint for today's business owner is a business plan.
The Need For a Strategic Plan
Planning plays an important role in any business venture. It can make the difference between the success or failure of your business. You should plan carefully before investing your time and, especially, your money in any business venture. The need for a plan is best illustrated by the following scenario - "A Tale of Two Businesses."
Two franchises (A and B) were started by individuals who had worked in management in much larger companies. While Franchise A provided a product and Franchise B a service, the output of both franchise systems had been sold exclusively in the United States before the current owners became involved. The output of both was readily available in other developed countries as well. The franchises opened about the same time and neither franchisee had a strong market presence, nor do they at present. Today Franchise B is bankrupt. By contrast, Franchise A is selling products in the Midwestern United States and in Europe.
What was the deciding difference in the two franchises' success? You probably expect it to be that one had developed a strategic plan and the other hadn't; however, it isn't this simple. Many factors can influence the outcome of a business venture. There were many similarities between the franchises, but there also were many differences.
Most notably, Franchise A sold a product and Franchise B a service (although this does not clearly limit options). Another difference was that Franchise A had a carefully thought-out plan. The investors knew as they looked for a franchise partner that they wanted to find a product that could satisfy international markets and a franchiser who would support that kind of sales effort. These investors were based in the Midwest, but negotiated for exclusive rights to export the franchiser's product. Once they had obtained the franchise, and as they began to establish their business domestically, they also began to contact government experts in the U.S. Department of Commerce as well as educators and local managers with international experience.
Clear plans were developed outlining how they would position, market and distribute the product and which foreign markets would be targeted first. Even as they were building sales in one European market, they were attending trade shows and planning entry strategies in others.
By contrast, the second investor (Franchise B) started his business strictly because he wanted to leave a former employer. Of course many small businesses get started this way; however, in this case no investigation of franchising alternatives was done. The business was located in an area that, as it turned out, contained virtually no consumers for the kind of service being offered. When this mistake was realized, it was too late to move--the investor simply did not have the money or the desire to risk starting again.
Other examples further show the need for strategic planning and for developing a clear business plan. The owner of a business that seemed to be doing quite well in two locations was about to open in a third. The authors were called in to develop a benefits policy and discovered cash flow problems that could be found only after operations had begun in the new location. After analyzing the situation, an expansion and financial plan was developed for the sound locations only. In another case, the authors determined that a business had purchased more equipment than was necessary to accomplish the current workload.
After careful analysis, plans to make further purchases were put on hold, and the equipment available was used effectively to meet immediate needs.
A business enterprise is to complex to assume that failure to develop a sound business plan will be the cause for problems Nevertheless, this failure often counts among the factors contributing to business difficulties. As Worth has said, "Being a business entrepreneur today takes constant vigilance in order to be able to take advantage of new opportunities and the availability of new information and technology as they come into being." The first step in doing this is to have a plan.
Other books in this category that may interest you:
A Step by Step Guide to Strategic Planning
A Step by Step Guide to New Product Development
A Step by Step Guide to Implementing MBO
A Step by Step Guide to Business Productivity Improvement
The 70 Best Business Ideas for Small Business Managers
A Step by Step Guide To Managing a Family Run Business
A Step by Step Guide to Negotiating the Buying or Selling of a Business
A Step by Step Guide
Essential Ingredients for Success
A Step by Step Guide to Managing Your Business Inventory
A Step by Step Guide to Merchandising in a Retail Store
BA Step by Step Guide to Purchasing and Supply Chain Management
A Step by Step Guide to Managing Risk In Your Business
Guide to Self Audit the Planning Activities in a Small Business
Guide to Self Audit the Production Management in a Small Business
A Step by Step Guide to Purchasing Management in a Retail Business
A Step by Step Guide to Buying and Selling a Business
A Step by Step Guide
A Step by Step Guide
A Step by Step Guide to Quality Control Management System
Perform This Self-Audit to Increase the Effectiveness of Your Business
Oportunidades de Negocio (Nuevos Negocios)
Guía para Elaborar un Buen Plan de Mercadotecnia para su Negocio
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