What’s the value of the strategic planning process?

 Email Article |  Twitter |  Facebook |  digg it |   delicious |   StumbleUpon |   LinkedIn |  reddit 

Maybe that question should be addressed to individualcompanies as “what’s the value of your strategic plan?

We’ve all read that the majority of small to mid-sizedcompanies don’t have a strategic plan. Of those that do have a documented planonly 10% execute them.

There must be a reason why strategic planning is such a lowpriority with the majority of businesses.

Since becoming a business coach I’ve had the opportunity to review numerous documents and work with many companies in developing their plans. The one common thread that came through from most of them was, they simply don’t know how to plan.

In many cases if they documented one it was poorly conceived and soon became lost in the day-to-day realities of business. Many are nothing more than a series of spreadsheets built to show increasing sales and profit year over year. Some financial forecasting is warranted in a plan but they area measurement of plan attainment, not the plan itself.

 A good strategy starts with a clear vision. This is the first step and one that is frequently overlooked. If you don’t start yourplanning process on a solid foundation, how can it ever be successful?

Most management teams have great difficulty committing wherethey want to go and what they want the business to look like in five years. Iusually get a response I want to grow X% or I want my sales to be X dollars bythat timeframe. That isn’t a vision statement, that’s an off the wall forecast.A clear vision is one you can articulate to all stakeholders and use as adecision tool by asking does this investment take me closer to or further frommy strategic goal?

A vision statement must include specifics, what will we looklike in 5 years? How many locations? What markets will we be in? What productswill we sell? What will we be known as within our chosen industry?

After you can answer questions like this and articulate thevision clearly then you are ready to begin the planning process.

Lack of a better sales process to blame for most business failures?

 Email Article |  Twitter |  Facebook |  digg it |   delicious |   StumbleUpon |   LinkedIn |  reddit 

We read about businesses failing every day in the newspaper. In the articles documenting the latest list there are always reasons given for the failure, the economy is usually the number one cause.

I’d like to offer a different and less popular opinion. In most cases I’ve seen the reason your business fails is you!

Sound harsh? My experience as a business coach has proven this to be correct.

A great example of this appeared recently in the Tupelo newspaper. An article appeared with a list of restaurants that failed in 2009. The reasons given by the owners were “poor timing and the economy”. Tupelo being a smaller city my wife and I had visited all three of the establishments named over the course of the year so I was in an excellent position to review the article. All three restaurants had three things in common, high prices, poor service and mediocre food.

One in particular, a sandwich shop, that stands out in my mind had an ordering process that involved standing in line to order, and then moving to another station and standing in line to repeat your order and pay for it. Total wait for an expensive and really poor take out sandwich was over 45 minutes. Now this particular shop was located in a strip mall that was exactly four doors down from a Mexican restaurant that is not only surviving it’s thriving. Apparently the economy issues haven’t moved that far down yet.

The point is it’s easy to assign blame but it the long run it really doesn’t matter who’s to blame, your business has failed and you are left with the consequences.

Small and mid-sized businesses are critical to the national economy. A newsletter from the Small Business Administration dated September 2008 provides the following interesting figures about U. S. small businesses. It says the firms with fewer than 500 employees –

• Represent 99.7% of all firms with employees.
• Employ about half of private sector employees.
• Create between 60% and 80% of all new jobs during the last decade.
• Generate more than half of non-farm gross domestic product.
• Employ 40% of our nation’s scientists, engineers, and computer workers.

As important as these firms are to the overall economy all too often they are launched and operated without the resources needed to succeed.

I tell my clients to “find a need and sell the outcome”. Another way of saying it is find a customer base, determine their wants and needs and supply a cost effective solution. Many businesses start with the opposite strategy, develop a product and look for customers. Regardless of the movie line “if you build it, they won’t necessarily come”.

Most business failures occur for several reasons:

• Lack of a clear plan / vision/ direction.
• Lack of execution by management.
• Insufficient capital, or due to lack of a plan wasting the capital they do have.
• They don’t ask for help until it’s too late.
• They don’t understand their markets, their customers, or their competition.

There are other reasons of course, but strong well-run companies are able to survive downturns, the economic swings weed out the weak and poorly conceived.