A strategic plan is one of the most important things any organization can (and most definitely should) undertake. Having a well thought out strategy establishes the foundation against which a business can both create and monitor its success.
Here are three reasons why your business needs a strategy:
1. Vision for the future
Too often business create an annual plan as they look through the rear view mirror. How did we do last year and how can we beat that this year? Although this type of thinking is rooted in good intentions, having a backward looking mentality can be bad for business. If your business does not have a clear vision for what the future should look like, your response to the changing business environment will always be more reactive than proactive.
2. What is my competitor doing better than me?
Do you know what your competitors are up to? What are they doing better than you? What is changing in the external business environment?
As part of the strategy formulating process, businesses sometimes (successful businesses do this EVERY time) conduct an environmental scan. This allows a business to truly know the external environment and tweak its strategy accordingly. An external analysis can help a business get more in tune with its customers and become even more aware of its competition. Being aware and ready for potential shifts in the external environment can give your business an edge in taking appropriate action before your competitor does.
3. Find efficiencies aka more money in your pocket (CHA-CHING $$)
If you own a business you know that your resources are finite. Let me repeat that one more time. Your resources are FINITE. This includes staff, capital, assets, inventory, and most importantly time.
You may read fluff about strategy on the internet but just know this - when all is said and done, strategy is all about making choices. What product will my business release? What market will I serve? Which product will I discontinue? Which market will I not enter?
Strategy is ultimately about trade-offs; choosing to allocate resources to a certain market while taking resources away from another. Taking the time to think through a strategy for your business allows you to find efficiencies as you deploy your limited resources. Take away resources from markets that are not aligned with (or part of) your strategy and assign them to markets outlined in your strategic plan. Having a strategy ensures you allocate your resources consistently and efficiently. Without a strategy, you could be throwing your resources away by putting time and efforts randomly into markets/products. Take the time to formulate your strategy so that your business can allocate resources efficiently.
If you own a business, take charge of where it goes by having a strategic plan. If you are thinking about starting your own business, get to work on your strategic plan. If you are successfully running your business and already have a strategic plan in place, check-in periodically and beef up your efforts in environmental scanning.
Someone, somewhere is coming after you. Your market. Your customers. Staying abreast of the external environment and your competition can prolong your life as a business(wo)man.
