At its simplest, strategic planning is the disciplined and methodical process of defining the purpose, mission and goals of a particular business, along with a desired timeline for achieving them.
Good strategic planning for the family business charts the course for most effectively using the resources at your company’s disposal in order to achieve a strategic advantage. Strong strategic planning also positions your business for success well into the future.
Why is Strategic Planning Important?
As the Cheshire Cat famously said in Alice in Wonderland, “If you don’t know where you are going, any road will take you there.”
It was true for Alice, and it’s true when it comes to strategic planning for family businesses.
The process of strategic planning ensures that you have an identified direction and end point for your business – so just any road won’t do.
In general, strategic planning takes a longer view than typical business planning, which may center on one fiscal year at a time.
This longer view allows your leadership team to consider changes in the legal, regulatory, competitive and industry landscapes that need to be met effectively for continued business success. The process further allows your team to prioritize its efforts, appropriately deploy resources, align stakeholders, and ensure that the company’s actions are backed both by data and sound reasoning.
5 Steps to Strategy Development
In our time and experience as strategic planning consultants, we’ve developed a clear, five-step approach to strategic planning for the family business. Defining each of these key areas can help ensure that your business stays on a defined strategic path for growth and development.
Why do you do what you do – why does your business exist? Stating your purpose allows you to articulate the most foundational of business characteristics. If your business went away tomorrow, what would the world be missing? Ideally, your purpose guides every decision you make and every action you take as a company.
What does it look and feel like when you get there? If just any destination won’t do, what does your ideal destination look like? Defining a vision allows you to articulate your aspiration for your business’ ideal future, along with creating a unifying force that gets everyone pulling in the same direction and working as a team. Your vision outlines your big dreams for the business – the results and goals you want to reach in the future. And your vision should be so big that others also can dream inside of it. This is what drives alignment and buy-in with your team and culture.
Your mission outlines how you’ll reach the vision for your business. Company missions can be broad enough to evolve with the organization, while also being actionable. Your mission defines what your business does and why it matters. A good mission statement clearly articulates what will be a priority – and, maybe more importantly, what will NOT be a priority. Our experience with strategic planning for Houston businesses has shown us that a strong mission brings focus to your organization and can be helpful in eliminating distractions.
Once you’ve moved beyond the big picture of purpose, vision and mission, you can clearly define your strategic intents – what will you have to do to live into your aspirations? Two key components of strategic intent are your business definition, which outlines the day-to-day basics of how revenue and profits are made, and your business model, which delineates how your business operates on a daily basis.
And finally, you must outline specific goals, each one of which moves you closer to your stated vision and purpose. To be most effective, your strategic business goals must be SMART: specific, measurable, attainable, relative and time-bound. Putting these parameters in place provides a solid North Star for your leadership team – at any moment, they know how they and their respective teams are performing against goals and can course-correct where necessary. Think of it like an ongoing score card – if your team knows the score, they know when they’re winning. It’s important to have both long-term, ambitious goals, plus shorter-term leading indicator goals that help push your business in the right direction. Achieving the short-term goals lets your team know it’s on the right path to realizing its larger strategic objectives.
5 Benefits of Strategic Business Planning
Putting this kind of rigor and accountability into your company culture and business expectations carries many benefits for your business. In our years of offering family business consulting services, we’ve found these to be the most crucial:
An actionable way to reach your company’s goals
Good strategic planning empowers people – it gives your team a clear road map for defining and achieving success for your business. Without this kind of planning, your team will founder – working hard without knowing where they’re going or if they’re successful.
Progress can be tracked based on strategic goals
Knowing whether you’re succeeding at any given moment helps your team understand how the business is performing overall. Having a plan in place to measure against ensures that your business always has a benchmark by which to define its success. And when individual business units understand your overall strategic goals, they can align their own goals in support of the company’s success.
It allows organizations to be proactive
A solid strategic business plan provides insight into a company’s strengths, weaknesses, opportunities and threats – which then allows your team to proactively capitalize on strengths and opportunities while proactively addressing weaknesses and threats. This helps protect your business against external market forces beyond your control and positions it to weather volatile times. Strategic planning for small businesses requires risk assessment, which helps your business articulate and prepare for challenges.
Sets up a sense of direction
In business, there’s nothing more powerful than a smart, hardworking group of people united behind a common cause. We’ve seen it time and again throughout our years of strategic planning in Houston. With clarity around mission, vision and strategic goals, your team can unite its efforts to push toward success. Good strategy touches every stakeholder in your organization, making your purpose and path distinct and explicit. This also helps avoid silos and internal leaders or business units with competing agendas.
Makes a business more durable
If you and your leadership team regularly take the time to discuss strategic direction and priorities, it’s unlikely that anything within your market or industry will take you too much by surprise. After all, you’re engaged in methodically scanning your landscape to identify risk, opportunities and threats on a routine basis. Being prepared in this way can help future-proof your organization against the inevitable shifts and disruptions it will face.
Smart and regular strategic planning helps your business reach a healthy mix of structure and flexibility, while supporting high levels of transparency, communication, trust and accountability across your team.
If you’d like some outside perspective on beginning the process for your business, please book a free consultation call with one of our family business advisors. We’d love to help.