What exactly is Strategic Planning and Why is it So Important?
A strategic plan acts as a guiding document on the vision and strategies for the organisation. This helps ensure all divisions, teams and leaders are aligned in their focus on a common vision and the strategies / actions required to be implemented to achieve it.
According to Harvard Business School (HBS):
” Strategic Planning is the ongoing organisational process of using available knowledge to document a business’s intended direction”
Creating your Strategic Plan is key to planning for growth, and helps you to create a realistic vision for your business’s future.
We recommend that you start the planning process by completing a one-page plan.
The one-page plan is a simple yet effective tool to capture the NOW, WHERE, HOW strategies, actions, timings and who is responsible for each action.
It is also a powerful way to summarise all your strategic-planning work onto one-page and use it to hold teams and leaders accountable to implement each action.
While a one-page plan in this context is used for the overall business strategy you can also have a unique one-page plan for a sub-strategy, another division or even for a specific leader.
There is still a place for comprehensive medium to long-term strategic plans. Your medium or long-term strategic-plan is focused on mid to long-term goals. It explains the basic strategies your business will follow in the coming years, I recommend 3 to 5 years no more.
The days of 10 year plans are gone. The level of uncertainty in our world in 2025 makes planning for even 3 to 5 years difficult.
But for any business owner, senior executive or family business shareholder, chances are your business or equity in the business you manage, your shares in the business will be your major asset, and will underpin your retirement savings and income.
So, for example, if you plan to exit the business in 5 years, and your target is to receive a payout of $5 million, you need a clear strategy and step-by-step plan demonstrating how you will grow the business year-by-year to realise that payout.
And once completed, you will need to update it whenever circumstances that impact your business change, and at the very least annually, so you know whether or not you are on track.
N.b. having an exit plan does not necessarily mean that it will happen on that date. But it does give you a clear target valuation on which to base your business plan, and you know that if you follow that plan, you will be in a position to exit at that date, with your retirement funding in place, or later if you so choose.
Your strategic plan is also about how people throughout the organisation should make decisions and allocate resources in order accomplish key objectives in your Strategic Plan.
The Strategic Planning Process
Creating your Strategic plan is necessary to determine the direction of your organisation. It focuses your teams thinking and ensures that everyone in the business is working towards common goals.
Every business’s strategic plan is unique. There is no one-fits all template, although the nature and structure of the content from company to company will be similar.
A good strategic plan provides a clear roadmap, consisting of a set of guiding principles or rules, that defines the actions people in the business should take and not take, and the things they should prioritise, and not prioritise to achieve your desired goals.
Strategic planning is a systematic process that helps you set an ambition for your business’s future and how best to achieve it. Its primary purpose is to connect three key areas:
- your mission – defining your business’ purpose
- your vision – describing what you want to achieve
- your strategic plan – outlining how you intend to achieve your ultimate goals
It requires stepping back from your day-to-day operations and articulating where your business is heading, by setting goals, objectives, and priorities for the medium to long-term.
Growing a business is inherently risky. Strategic planning will also help you identify, manage, and reduce business risks.
The strategic planning process allows you to ask and answer four fundamental questions about your business. The answers to these questions will make up the bulk of your Strategic Plan document:
Where are you now? This is your starting point. Learn as much as you can about your business. Find out how it operates internally, what drives its profitability, and how it compares with competitors. Be realistic, detached, and critical.
Where do you want to take your business? What is your target destination? Outline where you see your business in twelve months, three years & 5 years (depending on the time horizon you choose), what you want to focus on, and what will your competitive advantage be.
How will you get there? Map out the journey, the milestones, and the changes you will need to make to achieve your strategic objectives.
How will you know if you’re succeeding? Determine the checkpoints and decide how you will measure success.
So, how much time do you currently dedicate to reviewing, & updating your business strategy?
If your answer is on the low side, you’re not alone. According to research outlined in the Harvard Business Review, 85 percent of executive leadership teams spend less than one hour per month discussing strategy, and 50 percent spend no time at all”.
The research also revealed that, on average, 95 percent of a company’s employees didn’t understand their company’s strategy.
Given the proper priority and attention, your strategic planning process can set your business on the right track, and give you a competitive advantage over your competitors.
The strategic planning process requires attention to detail and should be led by someone who can follow through on the next steps and make regular updates.
Many businesses hire an external independent expert to help facilitate the strategic planning process. But your expert should have extensive high-level experience and skills and have experience in leading and facilitating teams.
External facilitators tend to be more effective than internal facilitators, simply because they are not emotionally invested in the outcome of the process.
Your Strategic Plan Content & Format
Your Executive Summary should be the first section of your plan. But wait until you have completed your draft plan to write the Executive Summary so that you have the complete “strategic plan document” available to refer to for guidance.
Before beginning the strategic planning process, it’s important to make sure you have buy-in from your management team, board of directors, or other relevant leaders. Without their support, the process is unlikely to succeed.
What is a Strategic Plan Document?
Your “Strategic Plan” is the formal document that describes your mid-to-long-term business goals, and the actions needed to achieve them.
What you decide to include depends on your organisation’s industry, size, structure, culture and location.
Conclusion
If you would like to learn more about how to create your Strategic Plan for your business, what your plan should include, how the plan document should be structured, you can request a Free 20-30 minute discovery call with me by clicking on the link below.
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