Annual Strategic Plan for Small Business:

• Why do you need a strategic plan for our small business?
  Creating an annual strategic plan is essential for small business owners for several reasons, including:
  1. Direction and Focus: It provides a clear direction and focus for your business, helping you align resources and efforts towards specific goals. With limited resources, focus is critical.
  2. Resource Allocation: It helps you with the efficient allocation of resources, ensuring that time, money, and effort are invested in areas that will yield the most benefit. Where should you spend your money to grow your business? How much should you budget for marketing? Does it make sense to hire additional staff? Will you invest in additional vehicles or equipment?
  3. Performance Measurement: A strategic plan sets benchmarks and goals, allowing for the measurement of progress and performance over the year. “What gets measured gets managed.” – Peter Drucker.
  4. Adaptability: An effective strategic plan enables small businesses to anticipate and prepare for changes in the market, staying adaptable and responsive.
  5. Long-term Success: A strategic plan lays the groundwork for long-term success and growth, helping your small business navigate challenges and seize opportunities.

The renowned management consultant Peter Drucker said: “The best way to predict the future is to create it.” This emphasizes the proactive role that strategic planning plays in shaping the future success of a small business.

• A Plan is Not a Strategy
  • More than just a plan, you need a strategy.
  • With simple planning: You control the costs (allocation of resources). You are the customer (and your internal departments with their budgets). It’s comfortable because we have lots of control.
  • But you also need a “Strategy”:
    • An integrative set of choices that positions your small business on a playing field (market) of your choice in a way that you can win.
    • Strategy has a “theory” – “…here is why we should be on this playing field, not another one. And here is how on that chosen playing field we are going to be better than anybody else at serving the customers on that playing field.”
    • This theory must be coherent and doable. It must translate into actions.
    • What is the Plan going to collectively help the business accomplish?
    • A Strategy specifies a competitive outcome that you wish to achieve, which involves customers wanting your product or service, enough that they will buy enough of it to help you make the profit you want to make. The tricky thing is you don’t control the customer.
    • The challenge with Strategy: The “customer” is the actual customer (compared to internal with just planning). You don’t control them. You control revenues.
    • If you are only “planning”, then a better competitor is strategizing to beat you.
  • Reference Source: Roger Martin – former dean of the Rotman School of Management at the University of Toronto and one of the world’s leading thinkers on strategy. Harvard Business Review Interview of Roger Martin.

• 10 Steps to Create Your Strategic Plan:
  Creating an annual strategic plan for your small business involves several high-level steps. Your annual strategic plan is a crucial tool for guiding the direction, priorities, and actions of your business over the course of this coming year. When we break it down to this level of detail for the purposes of learning, it can seem overwhelming and excessive. Take this as just a template or guide of what you may include in a Strategic Plan, but then be realistic and practical about what you include in yours. It does not need to be complicated or lengthy to be effective. Download the full version of the Annual Strategic Plan Outline.

1. 1. Review of Previous Year.
   2. Vision and Mission.
   3. Complete a SWOT Analysis.
   4. Plan for Risks and Contingencies.
   5. Determine Your Strategy.
   6. Set Goals, KPIs and Objectives.
   7. Action Plans.
   8. Budget Planning.
   9. Share and Get Buy-In.
   10. Review and Adapt.

Remember, the strategic plan should be a living document, adaptable to changes in your business environment. It’s also important to involve key team members in the planning process to gain diverse insights and foster commitment and buy in to the plan’s execution.

• Key Takeaways:
  • “Begin with the end in mind” – Stephen Covey.
  • This quote from Stephen Covey highlights the importance of setting clear goals and objectives in the planning process.
  • Download: Annual Strategic Plan Outline – 10 Steps to creating your Annual Strategic Plan.
  • You need a plan to succeed.
  • You need a strategic plan to focus on the right things – to allocate your limited resources carefully to realize the best returns.
  • Your Annual Strategic Plan should be guided by a “Strategy”.
  • And your strategic plan is a living document that you refer to regularly, and adjust as needed, through the year.

Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of this episode of The How of Business podcast show – dedicated to helping you start, run and grow your small business.

Resources:

Free Downloads:

• Annual Strategic Plan Outline – 10 Steps to creating your Annual Strategic Plan

Books mentioned in this episode:
[We receive commissions for purchases made through these links (more info)].

• Playing to Win: How Strategy Really Works by A.G. Lafley and Roger L. Martin
• Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine by Mike Michalowicz.

Related Podcast Episodes:

Episode 223: Goal Setting

Episode 506: Budgeting Fundamentals for Small Business

You can find other episodes of The How of Business podcast, the best small business podcast, on our Archives page.