Businesses that plan strategically have given thought to how they will operate and compete in their market. Those that don’t plan strategically leave success to chance and are more likely to come up against challenges that are difficult to tackle because they are not prepared.
Why start with strategy?
Strategic alignment is critical for success
All businesses are project or activity based and research* shows that projects that are aligned with strategy are more successful:
- 57% more likely to achieve their business goal
- 50% more likely to finish on time
- 45% more likely to finish on budget
To understand why and how to succeed, you need to appreciate the difference between a business plan, a strategic plan and other types of plans (tactical, operational and contingency plans) and why they are all important.
How a business plan helps you to start with strategy
The process of business planning is more important than having a business plan you never refer to
When people talk about a business plan, they typically mean a written document which provides an overview of your business, the market in which it operates and how it will achieve its goals.
Many businesses need to provide a business plan when they open a bank account, seek investors or apply for funding. When people review your business plan, they are looking for evidence that you have developed a business model and strategy based on research and insights, and that you have the capability to execute your plan. You need to demonstrate how you will succeed when perhaps others have failed or how you will compete or lead in your market. Your business plan will evolve as your business evolves; it’s the process of business planning that is important if you want to increase your chance of success.
The 4 key stages of the business planning cycle
Business planning is not a one-off exercise
Business planning is not a one-off exercise. It’s a systematic and iterative approach to developing, executing, evaluating and refining your business plan based on actionable insights.
As with all planning cycles, the iterative process helps you to identify what’s working and what’s not working and make informed decisions about what to do (or not do) next. From a strategic perspective this helps you to maximise opportunities and minimise risks, and this is what will help you to achieve a competitive edge and be successful.
Business strategy is about planning but not all plans are strategic
There are different levels of business planning and they all stem from an understanding of the bigger picture i.e. what business you are in, where you are going and why.
Strategy is about HOW goals will be achieved over the long-term
Planning is then the process of developing a road map to achieve your long-term goals and the easiest way to do that is to break the process into more manageable steps i.e. a series of plans that are all aligned with the big picture and as well as together.
1. Strategic plans focus on the HOW over the long-term
Once you have clearly defined your vision, it is important to set goals and measure progress towards those long-term goals (outcomes) using Key Performance Indicators (KPIs). Your strategic plan is then about HOW you will reach those goals (outcomes) within the context of the market you are operating.
Tactics are about specific actions and short-term outcomes
2. Tactical plans focus on HOW to achieve short-term outcomes
Once you have a developed your strategic plan, the next step is to develop a tactical plan by setting milestones in the short to medium-term which will contribute towards achieving your longer-term goals. When you follow an iterative review process, you will test what is working and not working from a tactical perspective and be in a good position to change tactics to optimise short-term outcomes whilst still keeping an eye on the bigger picture.
A good way to remember the difference between strategy and tactics is, “Think strategically, act tactically.”
3. Operational plans focus on day-to-day activities and who will do what and when
At the next level, operational plans focus on who will do what and when in the short-term to achieve specific objectives (outputs) that are aligned with tactical and strategic plans. In general, operational plans span no more than 12 to 18 months.
Operational plans are about who will do what and when
4. Contingency plans focus on business recovery when disaster strikes
Contingency plans focus on what-if scenarios. They are backup plans which can be activated in the event of a disaster or situation that might disrupt the normal running of your business. Contingency planning is important because it helps you to get back to business-as-usual as quickly as possible with minimal cost and disru
Contingency plans focus on business recovery from what-if scenarios
Top-down versus bottom-up and concurrent planning
Early-stage companies start with a top-down approach i.e. starting with the big picture and planning from a management perspective across the whole business.
Established businesses sometimes take a bottom-up approach. This is where opportunities for growth are identified from within the business at an operational level and goals are established by and for each operating unit.
The above approaches have pros and cons, so in a concurrent approach, as the name implies, both approaches are adopted at the same time.
If this is too confusing, don’t worry. The important take away is that a strategic approach (whether from a top-down, bottom-up or concurrent perspective) will help you to make strategic decisions in terms of how you will operate and compete in your market.
Strategy-led business planning helps you to make tough decisions and achieve goals
Business planning and decision-making is easier when broken into steps aligned to goals; this helps you to compete and be successful
Decision making is difficult when there are a lot of unknowns. However, a strategic approach helps take the guesswork out of decision-making at all levels of planning.
In summary, a strategic approach requires you to take a step back and consider the bigger picture. Reviewing and evaluating current information and performance against industry and best practice knowledge and experience will help you to predict what will happen next and decide the best course of action. Over time this process becomes easier, and you will become more confident and proficient in your ability to make sound business decisions.
When all decision-making – at all levels of planning – is aligned to your business goals you are more likely to be successful. Therefore strategic, tactical and operational plans are all equally important.
Business plans help you to communicate the big picture and get everybody on board
Your business plan helps you to communicate the big picture and how you will operate and compete in your market. It’s important to communicate this to your key stakeholders e.g. shareholders, investors and staff. When you have multiple stakeholders, you may want to emphasise different parts of your business plan, so that you highlight what matters most to each audience. It is much easier to achieve success when everyone has a clear picture of the end goal and the path to achieve it.
How to get started and take a strategic approach to business planning
Strategic business planning only happens when you take time out of the day-to-day running of your business. You need to take a step back – review and reflect and make time for decision-making based on actionable insights.
If you need help with strategic business planning, our strategy-led workshops will give you the time and space to think strategically.
Our facilitators will challenge your thinking whilst allowing you to be creative. Together we will develop strategies based on your sector specific knowledge and our business experience. We will apply best practice and our collective actionable insights.
