By David Castlegrant
All businesses need to establish a strategy to address its future viability. To just survive is never a good business strategy. And, the lack of strategic planning (and planning in general) will create nothing but a sense of being perpetually lost and unsure of what to do next.
Companies set themselves up for failure if they do not create first, a strategic vision and then, strategic goals crafted to get there. Many times when companies do establish goals, they are unrealistic and created without the adequate financial, human, and technological resources to support achievement.
The term “strategy” should be interpreted broadly. The strategy can build around or lead to any of the following: new products and service initiatives; redefinition of target market segments; revenue growth via different approaches; new partnerships and alliances; or redefining employee relations. The strategy can be developed toward becoming a preferred product and service provider, a market innovator, a value exchange leader, or a provider of customized product or service.
What is a strategic vision? It is best described as where the company’s leadership would like to see itself in the future (in some respects, the ideal future.) Once the vision is clearly defined, it will provide direction to the development of strategic goals that will get there.
Strategic goals must be realistic and based on the essential truths of the company in its current state. These goals must then be logically integrated into the organizational structure. As the “current state” of the business can sometimes seem a stretch to the strategic vision, or the “desired state”, leadership must come to terms with this reality and perform a gap analysis to determine the necessary steps (strategic goals) to achieve the vision.
This gap analysis can be accomplished by taking the time to do a SWAT (strengths, weaknesses, opportunities, threats) for the business. A good way to start the strategic planning process is to do a self-assessment for your business. The questions that require some careful thought include:
1. Provide a detailed description of your business.
What is its history? Foundational roots? What does the company represent? How is it viewed by its customers, employees, suppliers, the community in which it serves? Is the company a brand by its very presence?
2. Currently, what are the strengths of the business?
The strengths of the business are within the span of control of the owner. Strengths are often the competitive advantage that the business has within its marketplace. Carefully consider what the business does well and how to improve the good things continually.
3. Currently, what are the weaknesses the business?
Like strengths, weaknesses are within the direct control of the company’s leadership. Most owners do not have to think too long about business shortcomings. It is a challenge determine how to overcome the constant, nagging deficiencies given the operational constraints. It helps to write down the weaknesses. Make a list and prioritize which weakness should be addressed first. Many times all the shortcomings are somehow connected, and if a key one or two are unraveled, others may begin to improve simultaneously.
4. Currently, what are the opportunities for your business? How can the company differentiate from its competitors?
Opportunities are typically outside the control of the owner and tend to be environmental circumstances. Opportunities are often fueled by creativity and innovative thinking within the company. For example, altering your product line to accommodate shifts in customer demographics. Or, thinking outside the retail brick and mortar and embarking into online sales or wholesale to industrial accounts.
5. Currently, what are the threats to your business?
Conversely, threats are factors outside the business that could prove potentially harmful. Sometimes threats cannot be entirely overcome however knowledge is always power and the more business owners know about the potential threats to the business the more they can prepare.
6. Describe in detail your customers. What are their demographics? What do they want from your business?
How much do you know about your customers? If you routinely work your store, you can learn about them through observation and conversation. You can survey customers and include specific questions about demographics such as age, gender, income; interests, attitudes, opinions; geographic segmentation; and reference groups, a social group that a person looks to in forming their lifestyle and behavior. Surveys assume that people know how they feel. Sometimes, however, it takes listening to the opinions of people in a small group setting to discover their thoughts and opinions.
Focus groups can reveal detailed information and deep insight. When well executed, a focus group puts participants at ease so they can thoughtfully answer questions in their own words and add meaning to their answers. Surveys are useful for collecting information about people and their attitudes but if you need to a deeper level of understanding, then use a focus group.
7. What are the three most important challenges facing the future of your business?
These should flow from the SWOT analysis if you have approached the self-assessment process with honesty. The quality of the self-assessment also depends on your ability to look introspectively with honesty and efficiently scan the environment surrounding your business.
The self-assessment requires you to identify relevant data that must be collected and then analyzed. Once you have completed this portion of the task, you can then use both quantitative and intuitive forecasting methods to predict future outcomes.
Strategic planning should address your ability to inspire and set to action the necessary resources and knowledge to execute the strategic plan. It should also address your ability to execute contingency plans and the flexibility to change and implement new ones.
David Castlegrant has extensive work experience as an executive retail operations manager, university professor and business consultant. He started David Castlegrant & Associates in 1992 and acts as a business services provider for profit companies, nonprofit organizations and institutions of higher education.