Today we return to the theme of Business Strategy, beginning at the beginning – the formulation of a company’s strategy. Without proper preparation, evaluation, and planning, even the best plans and strategies will fall flat.
To devise a strategy that will work for your particular business, you must approach the process with as much information as you can gather, and perhaps most importantly, with honesty. An honest evaluation and look to the future are vital in the formulation of a business plan.
There are three general steps involved in putting together a quality Business Plan: analysis, setting objectives, and finally the detailed plan.
Whether you are beginning with a new business or formulating strategy for an already existing company or new product line, the first phase of the process is in analysis. You need to look at as many variables as possible during this initial phase. Break down your company in detail – internally, externally, situation, location, finances, past performances, etc. Break down your competition, as well as you can, in this same detail.
Study your market; study your industry; study the larger markets and trends. The ultimate goal here – to be able to see your company as it really is. If you have an inaccurate estimation of your company at the end of step one, then none of the other phases will matter. This is where the above mentioned honesty comes into play – an honest evaluation and analysis is crucial. We cannot stress this enough; take the time and use the resources needed to do this step properly.
II. Setting Objectives
Once you finish the analysis phase, you then have the chance to set goals and objectives for your business. Many companies try to set goals first, but then you have no idea how realistic or achievable your goals might be. Goal setting comes after analysis – you see where you are, and then you can make plans for where you want to go. Often, in analysis, companies find out things about themselves which are surprising!
Objectives will be formed in multiple ways: long-term goals, short-term goals, overall objectives (internally and externally), financial goals, etc. Often these will be framed as mission statements, vision statements, or company statements. So objectives will span several planes, including horizontal (over time) and vertical (building on one another).
III. The Strategic Plan
The objectives which you set in step 2, after a careful consideration of the information you gather in the analysis stage, should in themselves suggest a strategic plan. The plan itself merely provides the specific ways that you will go about achieving your objectives. What projects or programs will you implement to achieve your ultimate goals? If your company wants to increase sales, for instance, then your strategic plan will need to lay out exactly what steps you intend to take to increase your sales.
The strategic plan will be based on the analysis, which will have considered such questions as – what is your competition doing that is successful? what are you doing that you know is not working? what is no one doing? what has worked in the past? what are the markets showing for the future? You can then take the answers to these questions and decide what your specific company, in your particular situation, can do to achieve your objectives.
As you are in the final phases of fine-tuning your plan, there are three final questions to consider.
- – does my plan make sense?
- – is my plan feasible?
- – will this plan be acceptable to all parties involved (employees, consumers, investors, etc.)?
Finally, keep in mind during this phase that your plan is not set in stone! As we will see in Steps 2 and 3, the plan will be constantly revisited and modified as needed. You want to put together the best plan possible, this is no excuse to cut corners early (which will inevitably derail your efforts from the beginning), but do not get caught up by the “myth of perfection” – the chances you will get every possible piece of your plan exactly right is somewhere near 0%, even with the best teams and analysis in the world. Formulate the plan with all proper preparation and caution, and then move forward.
Our next article will look at the second step in Business Strategy – Implementation.