How to Develop a Strategic Plan for Your Business

To many people, strategic planning is something meant only for big businesses, but it is equally applicable to small businesses. Strategic planning is matching the strengths of your business to available opportunities. To do this effectively, you need to collect, screen and analyze information about the business environment. You also need to have a clear understanding of your business - its strengths and weaknesses - and develop a clear mission, goals and objectives. Acquiring this understanding often involves more work than expected. You must realistically assess the business you are convinced you know well. Familiarity can breed contempt for thorough analysis; you cannot properly evaluate your firm's strengths or shortcomings.

The Business Environment

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.

As the owner of Your company you deal with problems on a nearly daily basis. Getting comfortable with powerful Problem Solving
Techniques can dramatically alter the development of your small business.

Even though you Find answers to your problems, many people are not really proficient in the ways of problem solving, and if
solutions fail, they fault themselves for misjudgment. The problem is typically not misjudgment but instead a lack of skill.

This manual Instructs you in some problem solving processes. Critical to the success of a business faced with problems is the
understanding of what the problems are, setting them, finding solutions, and picking the best solutions for the scenarios.

What's a problem. A problem is a situation that poses trouble or perplexity. Problems are available in many shapes and sizes. By
Way of Example, it may be:

Something did Not work as it should and you also do not know how or why. Something you will need is unavailable, and something
must be found to take its place. Workers are undermining a new program. The marketplace is not purchasing. What do you do to
survive? Customers are complaining. How can you manage their complaints?

Where do Issues come from? Issues arise from every facet of human and mechanical functions in addition to from nature. Some issues
we cause ourselves (e.g., a hasty choice has been made and the wrong individual was chosen for the job); additional issues are
caused by forces beyond our control (e.g., a warehouse is struck by lightning and burns ).

Problems are a Natural, everyday occurrence of life, and in order to suffer less from the anxieties and frustrations they cause,
we must learn how to deal with them in a reasonable, logical manner.

If we accept The simple fact that issues will arise on a regular basis, for a variety of motives, and by a variety of sources, we
could: learn to approach problems from an objective point of view; learn how to expect some of these; and prevent a number of them
from getting bigger problems.

To accomplish This, you have to learn the process of problem solving. Here, we'll instruct you in the basic methods of
problem-solving. It is a step by step manual that you may easily follow and exercise. As you follow this guide, you will
eventually develop some strategies of your own that work in concert with all the problem-solving process described in this guide.

Remember, However, as you see this is not a comprehensive evaluation of the artwork of problem-solving but instead a sensible,
orderly, and simplified, yet effective, method to approach issues contemplating the limited time and advice most business owners
and managers possess. In addition, some issues are so complex that they need the additional aid of experts in the area, so be
ready to accept the fact that some problems are beyond just one person's ability, skill, and desire to succeed.

To be able to Appropriately recognize the problem and its triggers, you must do some research. To do this, just list each of the
previous queries in checklist form, and maintaining the checklist handy, go about collecting as much information as you possibly
can. Keep in mind the relative importance and urgency of the issue, as well as your own time limitations. Then interview the
people involved with the problem, asking them the questions on your own checklist.

When You've Gathered the data and reviewed it, you will have a fairly clear comprehension of the problem and what the major causes
of the issue are. Now, you can research the causes farther through monitoring and additional interviewing. At this time you should
summarize the problem as briefly as possible, list all the causes you've identified, and record all of the areas the issue appears
to be affecting.

Now, You are ready to assess your understanding of the problem. You have already identified the problem, broken down it to each of
its facets, narrowed down it, done research on it, and you are avoiding typical roadblocks. On a large pad, write down the issue,
including each of the factors, the areas it affects, and what the effects are. For a better visual comprehension, you might also
wish to diagram the issue showing cause and effect.

Study what you Have written down or diagrammed. Call on your workers and talk about your analysis together. Based on their
opinions, you may choose to revise. As soon as you believe you fully understand the causes and consequences of the problem,
outline the issue as succinctly and as easily as possible.

Proceed through your Long list of solutions and cross-out those that clearly won't work. Those ideas aren't wasted for they impact
on these thoughts that stay. In other words, the best ideas you select may be revised depending on the thoughts that would not
work. With the rest of the solutions, use what's called the"Force Field Analysis Technique." This is basically an analysis
technique that breaks the solution down into its positive results and negative effects. To do so write each solution you're
considering on a separate piece of paper. Beneath the solution, draw a line vertically down the center of the paper. Label one
column advantages and one column disadvantages.

Now, some more Analytical thinking comes in to play. Analyzing each facet of the solution and its effect on the issue, listing
every one of the advantages and disadvantages you may think of.

1 way to help You think of the benefits and disadvantages would be to role-play each solution. Call in a couple of your employees
and play out each solution. Ask them for their reactions. Depending on what you observe and on their opinions, you'll have a
better idea of the advantages and disadvantages of each alternative you are thinking about.

Once you Complete this procedure for every solution, select those solutions that have the Many advantages. At this point, you
should be considering only three or two.

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