If you run a company and you’re thinking about where you want that company to go, developing a strategic plan can help you crystalize your goal(s) and, even more importantly, how you’re going to achieve them. In short, it’s about setting a goal and a plan to make it a reality.
You may ask “why bother to create a strategic plan?” when you already know your goal and just need to keep doing the same thing you’ve been doing. If you have no doubts about your goal or that doing what you’re doing is working, then you probably don’t need to do strategic planning at that point. However, a year from now you may look back and realize the plan isn’t working or that you’ve achieved your goal and now you want to set a new one for which just doing the same thing may not be enough.
If you’ve thought about developing a strategic plan or if this article is getting those thoughts started, then please read on as I pose and answer a few key questions:
How will a strategic plan help my company?
Upon the completion of a strategic plan, you will not only have a well-thought-out goal that’s been discussed and agreed to by your leadership team and other key employees, you will have a plan to make it a reality. If your goal is doubling revenue, the strategic plan will address the number, type and quality of salespeople, the types and amount of marketing you need to do, the products you are going to offer and develop, your pricing strategy and customer retention.
Further, all these ideas should be put into a financial model to tell you whether your assumptions, fully executed, will get you to your revenue goal. If not, your team needs to keep working on the plan so that it does—without just changing the assumptions to make the numbers work in a spreadsheet but coming up short in reality.
That same financial model should also show you how much cash you will burn executing the plan before the revenue and gross profits start bringing in more cash than is going out. This is really important to know before you start executing the plan. If the plan will put you in a negative cash position, you’ve either got to get access to additional cash or slow down your plan so that you don’t go into a negative cash position.
Who should participate in the creation of a strategic plan?
I always include the leadership team of the company. You can also include certain key employees who you think are a) interested in the growth of the company, b) will have ideas to help you get there and c) whose buy in will be helpful in executing the plan. It’s often a really good idea to have someone from the outside help your team develop the plan with a key role being challenging assumptions (particularly of the owner/CEO) whom others may be hesitant to challenge. It’s also important to have a leader who keeps the discussions on track. Bringing up issues that will be obstacles to success is important; complaining without solutions is not helpful or a good use of time.
What do we do after we’ve completed a strategic plan?
Typically, you want to let your entire organization know where the company is going and how you plan to get there. Everybody that took place in the creation of the plan should be 100% behind it and help champion it amongst the rest of the company.
Set quarterly and annual goals for each manager, department and in many cases individuals. This will help in two ways. First, achievement of each sub-goal will get you closer to achievement of the larger goal. Second, you will have measuring points each quarter and year to stay on track.
Meet at least annually with the same people that created the goal to review progress to date, new and/or unanticipated obstacles that have come up and make adjustments to the plan, even if just tactics, to keep you on the path to full success.
If you’re interested in exploring the development of a strategic plan and the accompanying financial model I mentioned, please reach out to me at llevy@CFOoptionsinc.com.