Warning signs that your business needs a strategic plan
Warning signs that you need a strategic plan
You may think that you have been doing just great without a formal strategic plan. But you could be achieving more – and time might just be running out. The business environment is dynamic and very competitive with conditions changing rapidly. How can you be sure that what seemed to have worked in the past will still work in the future? You may need to heed the warning signs that you need a strategic plan.
“Of course, I have a strategic plan.” Really?
“Of course, I have a strategic plan” is a claim made by many CEOs/MD. But when I ask some pointed questions I find that many SMEs and larger firms up and down the country are working blind. For sure a lot of them are making money but a viable future for the business is not being planned. If ever there was a time to have a sustainable business strategy it’s now as the UK prepares to leave the EU. The uncertainty of Brexit is no excuse for your own lack of direction – precisely the opposite.
As a business leader you have a responsibility to do the best you can for everyone’s sake – employees’, suppliers’, your own. That’s what leadership means. Planning a future and hitting the right targets along the way. But without a well thought-out strategic plan how is this possible? You may be a successful business owner but to be frank, oblivion awaits you if you’re winging it.
If you really have a strategic plan for your business then the following 5 questions won’t embarrass you at all. Instead they’ll give you clear warning signals that you are in need of a strategic plan.
1. What’s your vision for the business?
It’s a basic business principle to know what you want your business to look like in 3-5 years. Do you know? Do you know where you’ll be trading – 20-mile radius, nationally, internationally? If you are dreaming of going global how are you going to get there? Who are your customers, what kind of products and services will secure them and what kind of workforce will you need to achieve this vision?
If your vision involves a buyer or investor how are you going to get them to part with their money without offering them a well-thought out strategic plan that reassures them the investment is sound?
No doubt you have a revenue target in place but if all that does is help you cover your costs, you’re simply missing the point. You should be setting sales targets based on solid data and a defined future.
If you don’t have a vision for your business with a clearly laid out plan how to achieve it, you don’t have a strategy for the business.
2. What do you know about your market?
Do you worry that your company has run out of ideas? That you’re being led around by customer whims and distracted by competitor wins? These are reasonable concerns yet when I ask MDs about key trends and why their customers buy from them I get a blank look in response. This makes absolutely no sense – if you aren’t on top of your data no wonder you’ve run out of ideas.
The more relevant your market intelligence (economic climate, technological advancement, customers, competition, etc.) the more informed your decision-making. I regularly take my clients back to basics and help them understand their market place because ideas and inspiration need to be driven by relevant data otherwise their effect will be short-lived.
Market research reinforces your vision, your strategic plan, and this leads to an indisputable role and purpose for every part of the business. Do you in fact miss key trends or find you lack the agility to change tack and react? Do you even recognise threats in time let alone protect the business effectively?
Be honest: do you really know enough about your market to be able to plan a month ahead, let alone 3-5 years?
3. Customers in your sights or the scatter gun approach?
Can you visualise your ideal customer – the size of company, the challenges facing them, their priorities? Do you know how to get on their radar? Whilst, you’re not alone if you answer “no” to these questions remaining ignorant of who you should be targeting is going to harm the business in the long run.
Why would you not be working from valuable data about your target market? A doctor cannot hope to make a diagnosis and prescribe effective treatment without a precise understanding of a patient’s symptoms. It’s the same for you. How can you hope to provide a solution through your products and services if you know so little about the intended buyer?
The data is available and, more importantly, the customer expects you to access it. Strategically, this means identifying which market segments are the best fit for the long-term growth of your business – and which you should abandon.
At a closer, more individual level it requires you to understand the subtleties of building a good relationship. Lowest price is rarely the driver-to-buy so where is the value to them? Do you know? If not, how can you expect to create leads let alone qualify them?
If you don’t have a process for identifying and evaluating opportunities and making rational, data-driven decisions, how can you hope to apportion resources and judge success? How can you distinguish between an opportunity and a waste of time?
The whole purpose of your vision is to find the ‘good-fit customer’ and concentrate on delivering highly regarded value. How’s that going to be achieved – without a strategic plan?
4. Does your company have a position to defend, a place in the world?
So far, the discussion has focused on the market and the customer. What about your organisation?
Brand reputation is very important particularly in a crowded market place. Do you have a brand – as in can you explain coherently why your company matters, what it stands for and why it’s better than the competition? Would your employees know what you stand for?
Think about the company you most admire – whatever sector they’re in. You can probably describe what they do and how in some detail. Their marketing activity will support the overall reputation – from logo to website. In essence, they hold a recognisably good position in their industry. Can you claim the same for your company?
Such companies don’t achieve this by luck – they work hard at understanding what matters and then acting it out in everything they do and say right throughout the organisation. That’s the point of having a brand.
Be honest – have you given enough thought to the role of brand as a means of establishing your reputation in the industry? No? If you don’t know why you matter how can you expect others to know – or care? Not knowing this type of information is a key indicator that you are in need of a strategic plan.
5. Are your people just a name on the payroll?
Are employees at every level behind the business or are they working in a parallel universe? Have you shared a strategy with them so they have a common goal to channel their energies towards? Or does their indifference to the company mean they are effectively undermining its future?
The business with the most meaningful mission statement is the one where the entire workforce is involved in creating the vision in the first place. Expecting accountability from your people is only reasonable at any level if there’s a sense of ownership and that comes from involvement.
At general employee level, you’re missing a trick if you think a newsletter or dress down Friday is enough to get buy-in. You need to harness ‘intrapreneurship’ in the way that very famous brands do. Facebook’s ‘Like’ button, 3M’s Post-It Note and Google’s Gmail all came from employees. When was the last time the company encouraged employees to come up with money saving ideas or customer-pleasing initiatives?
Then, the question is whether you are consulting at the right level? I heard a rumor that IT/technology is only a recent addition to BA’s board of directors following its recent technology meltdown. If your board of directors is similarly unrepresentative of your business, you need to re-visit your strategy.
How did you score?
Even a minor wobble on any of one these 5 areas tells me that you are in need of developing or updating a strategic plan – a carefully-thought out plan that documents your goals, the rationale and how these goals will be achieved. “No, we didn’t hit our revenue target but we’re making money…” is a sign that you’re flying by the seat of your pants. You do not have a set of tools that explain your targets and how to reach them.
I’m always wary of inspirational quoting but Peter Drucker’s “the best way to predict the future is to create it” really makes sense to me because I help businesses develop their future. And it starts with a strategic plan, as a way taking charge of your company’s future