Recently published research shows that 87% of SME owners and managers think that business planning should be their top priority yet, 86% of the same SME owners and managers admitted that business planning rarely appears on their list of priorities! Other research shows that the survival rates of new businesses in the North West is the poorest in the UK apart from Northern Ireland.
Research over a long period of time demonstrates that businesses with an effective, strategic plan, regardless of their size, consistently out-perform those without a plan. Research also shows that although many businesses have plans, most are based on operational rather than strategic issues. So what is the difference?
In basic terms a strategic plan focuses on what the business wants to achieve, why it wants to achieve these outcomes and the ways in which it wants to achieve its objectives. A strategic plan sets out the business’s vision, defines its ethics and culture and creates the framework for an operational plan which focuses on the detail of how the strategic objectives are to be achieved.
So why is a strategic plan important? A quick look at the beginnings of some of today’s iconic brands such as Microsoft, Apple and Amazon, and some earlier brands such as Cadbury, Rowntree, Lever Brothers and Ford, shows that their founders each had a clear vision of what sort of organisation they wanted to build, even though they were often far from clear as to how they might achieve it.
At this point you might ask why, if strategic planning is so important, do so many businesses ignore it and focus on operational plans? In most cases this is due to owners and managers being so focused on achieving short term survival and raising working capital that they do not believe they can devote the time to anything that does not have an immediate impact. Ironically, in the current economic climate, most financial institutions evaluate the viability of a business’s longer term strategic planning as one of their lending criteria!
Another reason may be that many owners and managers, having gained their business experience “the hard way,” are not conversant with the concepts and techniques of strategic planning and find the complexity and jargon presented in many books and courses too daunting.
One approach to overcome this is Business Challenge Mapping which avoids as much of the jargon and complexity as possible by providing a structured, holistic approach to this topic and a proven framework for developing an effective strategic plan.
