Having a clear, well-articulated strategy for your business is widely acknowledged to be one of the most important things you can do in making sure your company is successful. It can be a tricky thing to get right, especially when a firm is in a relatively small state in a fast-moving industry.
What timeframe should you be looking at? How do you set goals, and break them down into achievable targets? How do you stay on course – or adjust as necessary?
1 Know your value proposition
Next, you need to have a clear idea of what makes your business different – what your overall value proposition is. Antoine Hermens, head of the Management Discipline Group, says that too many small businesses don’t have a clear idea of what their offering is.
“The biggest challenge for small and medium-sized companies is really understanding what value you add to your customers,” says Hermens. “My research indicates that successful SMEs have really thought long and hard about their unique value proposition and the economic value they’re adding for their stakeholders: customers, employees and suppliers.”
He also recommends that you look at your business and ask what’s unique about it.
“If you stopped doing business tomorrow, would anyone really miss you?” he asks. “If the answer’s no, then you’ve really got to go back to square one. You can talk about vision, mission and objectives – but if you don’t know what kind of business you want to be, what your competitive advantage is, it’s meaningless.”
The general consensus is that value propositions are best kept short – distilling your core competitive advantages into a few lines or paragraphs.
2 Set your overall vision
The next stage is to set your ultimate goal or vision for the business – where you want your business to be, and when.
What this means varies from person to person as does the timeframe in which you’re planning to achieve it. Some people operate on a calendar year basis; others work to five- or 10-year plans.
Fiona Mackenzie, head of Macquarie Practice Consulting, recommends a three-year horizon as a good compromise. “We encourage our clients to step back and look at a three-year goal,” she says. “One year can be too ‘operational’: if you want to make any changes to the business it feels too tight. Five years, meanwhile, is a little far out for some people to feel that it’s practical.”
The overall goal or vision should be based on where your business is at present.
“We take a look at the business today. Key facts down on the table: key clients, revenues, profit, size and shape,” adds Mackenzie. “Then, we look at what you want it to look like in three years – once we know that, we can look at the ‘gap’ and what you need to do to achieve that.”
That overall goal shouldn’t just focus on business metrics, however: Mackenzie says you should also factor in your personal goals. While the overall vision should be relatively realistic, it can be somewhat aspirational, too – crunching it down to numbers and targets can come later. Whether you call this a vision, a big hairy audacious goal or a stretch target doesn’t matter – the key is to concentrate on where you want to be at the end of your timeframe.
Doug Mathlin of consultancy Frontrunner Group adds that it can be useful to think of this in terms of financial metrics.
“In a commission-driven business, you need something you can focus on: for example, saying you want to write $100m worth of business in a year.”
3 Breaking it down
Once you’ve got your overall goal and your timeframe, you need to figure how to get there – and this is the nitty gritty of strategic planning.
You need to work backwards from your large, aspirational goal into measurable, timed targets, ideally monthly or even weekly. The tried-and tested SMART rules for target-setting are invaluable here. Any targets you set should include the following criteria:
From these targets, you can track how you’re going and extrapolate other aspects of strategy such as:
• Marketing: how many campaigns do you need to mount to fulfil your targets?
• Product/service offerings (should you diversify?)
• Operational issues, such as staffing: do you need administrators or more loan writers, or expand into more offices
• Process (can you put in place better systems to improve efficiency and therefore write more business for the same resource requirements?).
Understanding the financial implications of your strategy is a fundamental part of success. Budgeting should be based on realistic sales estimates, based on your current position and long-term goals; you should also take into account every cost. It is useful to break down costs into discrete areas, such as people, supplies, facilities, equipment, marketing and other. While these numbers don’t need to be accurate, they should be a realistic estimate.
5 Monitor, review, and adapt
It’s all very well building a grand plan, but if it ends up in the filing cabinet until next year, then it’s no use. Therefore, it’s important to keep monitoring your progress on a regular basis.
“If nothing else, my strongest suggestion would be to set a recurring appointment with yourself called ‘Business Review’ that runs 12 times a year at the very least,” says Mathlin.
You shouldn’t be hobbled by your strategy either.
“The vision should be where you want to get to: the route you get there might change. Some things you implement will not work; some will work better than you expect. There are some things you haven’t thought about that you will be able to do, so you shouldn’t necessarily wait until the end of the month to decide to do something differently.”
This is a slightly amended version of an article written by Kevin Eddy. It has been shortened to make it suitable for web publishing.