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Personal Finance

Every business requires strategic plan to succeed

Drafting a business strategy
Drafting a business strategy. FILE PHOTO | NMG 

When forming a business, it is important to also draw up a strategy that includes the vision, mission and values.

Some businesses overlook this very important step. A strategic plan provides your business direction and it is important for all stakeholders such as employees, suppliers and clients because it outlines your goals.

When drawing up a strategic plan have a clear sense of the business goals and objectives. Experts advise businesses to have realistic goals and go beyond “making profits”.

Setting out goals in writing helps all stakeholders adhere to them. A strategic plan gives your business a sort of identity and keeps the staff motivated.

The mission sets out why you exist — the purpose of the business. A purpose-driven business is more likely to succeed than one without a strategic plan.

Values are the third part of the strategic plan and in it, the founder states the type of values one wants the business to adopt. While the values are mostly standard, there is nothing wrong with having unique values as these shape the identity of your business and office culture.

Businesses with strong values perform well. Some values include providing quality services, being customer conscious and going green. If the business adheres to these values then they will reflect in the performance.

Other things that go into strategic planning are the SWOT test (analysis of strengths, weaknesses, opportunities and threats) and also a competition analysis where the business owner carries out a study on rivals with a view to establishing an edge over them.

A competitive advantage is a core strength that a business has over its rivals.

Once that is identified, then a business will be able to remain relevant.

Strategic planning is the main duty of the founder and the board of directors whose role is to steer the business growth and development.

The staff and in some cases, stakeholders have a role in the development of a strategic plan as they have to own it for it to be successful.

A strategic plan must be well understood and communicated to all staff for it to succeed. It is important to have constant monitoring of its progress.

A good plan should have timelines and goals to be achieved within a specified period. It is, therefore, important to have a monitoring and evaluation tool for the performance of the strategic plan.

Some businesses have a strategic department whose main mandate is to oversee the performance of the plan.

Strategic plans fail due to a number of reasons.

A lack of clarity and ambiguity can cause a strategic plan to fail. Poor communication of the plan to key persons involved can cause it to fail.

Setting unrealistic goals causes many startups to fail and is a source of demotivation when those goals are not achieved.

A lack of proper resource allocation may also be a cause of failure. For example, where the goals are good but the budgetary or staff allocation is not sufficient.

It may be important to hire an expert to help in drafting the strategic plan.

It may not be enforceable as a legal document, but aspects of them can be domesticated into other policies and documents. For example, an employment contract. Strategic goals can be a term of the contract and staff failing to observe them would be in breach of contract.

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