Entrepreneurs and business managers in small companies are often so preoccupied with immediate issues that they lose sight of their ultimate objectives. For them, that’s why preparation of a strategic plan is a virtual necessity. This may not be a recipe for success but without it a small business is much more likely to fail. A sound plan should serve as a framework for decisions or for securing support/approval and also to explain the business to others in order to inform, motivate and involve.
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).
How can you obtain optimum results for your Business Plan? To help you answer that question, we have prepared a process chart. As you examine this flowchart, you may notice that the top row of boxes represents the strategic portion of the plan and covers three to five years’ time frame. The second row of boxes displays the tactical one-year plan. It is merging of the strategic plan and tactical plan into one unified Business Plan. This makes it a complete format and an operational management tool to strength your company’s potential.
Section 1: Strategic direction
So you have a new vision statement and are so proud of it. It sounds nice, inspiring even. But the vision is useless unless it can direct action.
Creating a compelling vision, developing the strategies to achieve it and managing the leadership to direct it, presents a great challenge for many small companies, yet it is also an opportunity. Without a clear strategic direction leaders will be unable to make the best decisions. And without the necessary leadership skills, leaders will be ineffective and unable to create the culture and systems necessary for organisational growth and innovation.
The following six questions will provide an organised approach for you to develop a strategic direction.
(1) What are your company’s distinctive areas of expertise? This question refers to your company’s special competencies. Let us give you some points to stimulate your thinking. (1) Product or service strengths based on customer satisfaction, (2) Your relationships with the supply chain or with end-use customers, (3) existing marketing/production capabilities, (4) technology advantages, (5) efficiency of your sales force, (6) financial strength, (7) unique skills of personnel, (8) corporate culture, etc.
(2) What businesses should your company be in over the next three to five years? How do you see it being different from what your company looks today?
(3) What new segments of customers will you serve?
(4) What additional functions, products or services will you likely offer customers as you see the market evolve?
(5) What new technologies and resources will you require to satisfy future customer and market needs?
(6) What changes will likely take place in any of the following areas that will impact your company? (1) evolving markets, (2) consumer behaviour and buying patterns, (3) availability of resources, (4) domestic competition, (5) environmental issues, (6) trade practices, (7) changing economy? Add any other changes unique to your company that will likely affect your business.
Now compress your answers into one statement with just a few sentences that will represent a realistic strategic direction for your company. As you develop your strategic direction, recognise that your corporate culture is the operating system and nerve centre of your company. Therefore, be sure that your company’s culture can support your vision.
Here is an example of a well-written strategic direction.
Our strategic direction is to meet needs of consumers and corporate customers for high-quality bathroom solutions by offering a full line of bathroom fittings, bath ware, bathroom accessories and other related products. Our leadership position will be maintained through total end-user satisfaction extending throughout pre-and-after sale.
The company’s previous statement was a narrow and restrictive. “Our position is to be the leader in our country in the supply of sanitary fittings and sanitary ware.”
As part of the planning process, you need to look at where you want your business to be in the future. This allows you to work backwards by selecting future targets, developing strategies to achieve those targets and then communicating the direction the business is taking to your team. Future planning will also help you to set timeframes within which you need to achieve goals.
Setting some specific targets for your business will also help you direct the efforts of your team. For example, you could ask your team to develop at least one new product before the end of the year or ask them to come up with a new and more efficient way of doing a certain task within the business.
You may want to direct the focus of your innovations to a certain area of the business from which you have identified potential for improvement. Try not to limit your team to only working towards a single target but rather encourage and direct them towards what you are looking for. You don’t want to miss out on an opportunity or great idea simply because it falls outside of your main focus.
The plans you put in place may not be definitive and they are likely to change as time goes by but they should give you a general direction for the business that is strategically aimed at achieving certain outcomes. Any strategic direction or targets that are in place should be adaptable and changes should be made to reflect changes in the market.
Although today’s successful organisations depend on the active involvement of all employees, managers are still ultimately responsible for establishing organisational direction through vision and strategy. When they fail to fulfil these responsibilities, their companies struggle. When managers succeed in fulfilling these responsibilities, they can make a big impact on their company’s future.
Managers decide the direction for their organisations based on facts, rational analysis, intuition, personal experience and imagination. Consequently, a manager’s contribution and impact can be measured by the extent to which they are able to: (1) formulate the vision, mission and strategies (2) allocate the resources required for their implementation (3) inspire those who must embrace and achieve the organisational goals (4) provide rewards appropriate to those who contribute to achieving the vision.
Finally, strategic leadership is about gaining control over the direction a company is heading. It’s also about change — transforming the company from its present state to a more meaningful future state.
(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at