The Beginning of the Year is the Best Time to Chart the Right Course for Your Business.
By Erica Olsen
You have two choices when it comes to running your home business: Be intentional about the path your business follows. Or run your business on autopilot.
|Why not join the elite 10% that have a strategic plan and are reaping the benefits?|
Turning on autopilot is kind of like hopping in your Hummer, turning on the satellite navigation system, and following its exact directions from your home to, say, Las Vegas. As you may have experienced, computers aren’t the best at making decisions. You’ll get to Las Vegas eventually, but it may take twice as long. In fact, you might not even get there. You could just as easily end up in Las Vegas, New Mexico, instead of Las Vegas, Nevada.
Many people deliberately plan their personal lives, but when it comes to business, for some reason, we don’t take the same approach. If you’re running your home business without a plan of some sort, you’re just using the auto-navigation system. To be intentional, you need to map out your path and then you’ll be a lot more likely to get to your destination.
This may seem overly simplified, but it’s really straightforward.. The fact is 90% of us are running our businesses without a plan. 90% of us are hoping our OnStar system will gets us there. But why not join the elite 10% that have a strategic plan and are reaping the benefits? The beginning of the year is the best time to turn off the auto-pilot and be intentional about the direction of your business. Let’s get started.
Clearing Up the Confusion about Strategic Planning
Many people are confused by the terms strategy, strategic plan, and strategic planning. Well, I am here to help you get a clear picture. For the moment, forget what you’ve heard about this subject. I promise that strategic planning makes a huge difference to your organization both tangibly and intangibly, so keep reading!
What is strategy?
Strategy and being strategic is about consciously choosing to be clear about your company’s direction in relation to what’s happening in the dynamic environment. With this knowledge you’re in a much better position to respond proactively to the changing environment.
What is a strategic plan?
Simply put, a strategic plan is the formalized roadmap that describes how your company executes the chosen strategy. A plan spells out where an organization is going over the next year or more, and how it’s going to get there. Typically, the plan is organization-wide or focused on a major function such as a division, department, or other major function. A strategic plan is a management tool that serves the purpose of helping an organization do a better job, and it improves organizations because a plan focuses the energy, resources, and time of everyone in the organization in the same direction.
Specifically, a strategic plan:
• Is for established businesses and business owners who are serious about growth
• Helps build your competitive advantage
• Keeps you focused on the right opportunities
• Prioritizes your financial needs
• Provides focus and direction to move from plan to action
The Day-to-Day Impact
Everyone wants better results, right? Those results can be more money, better allocation of resources, a more effective and efficient team, improvement of work/life balance, and so on. And strategic planning can help achieve all of those. Here are key specific benefits:
Spend more time on high impact, high-growth activities
Every day your work impacts aspects of your business. High impact, high growth activities are where you want to spend as much time as possible. With these maneuvers, you spend less time spinning your wheels. Think back on the past month. Were there any projects or activities you were part of directly or indirectly that didn’t actually move the organization forward because they were dead end opportunities? I bet there were. Get rid of this dead weight as fast as possible!
Identify true opportunities versus false starts
If you know what you’re best at and where you want to go, you can more quickly identify true opportunities versus false starts. You want to pursue true opportunities and quickly jettison false starts. Strategic planning helps you to put the boundaries on your business. When you ignore extraneous distractions, you use your resources more effectively and more quickly to grow your company.
The ability to adapt quickly is the name of the game in today’s business climate. When everyone on your team is on the same page and is pulling in the same direction, you can easily absorb shifts, make changes, and innovate on the fly. If there’s no clear direction in your strategic plan, your team may not know how and what to adapt to.
Be proactive instead of reactive
Being in a reactionary mode all of the time, puts you one (or more) steps behind your competition. Make sure that your strategic plan maps out proactive choices to propel your company forward.
A complaint I hear from a lot of clients is that they feel like they’re always trying to catch up. If you’re out of breath, stop running and get ahead of the change curve. If you have a strategic plan in place and you’re working on its key strategic activities, you have a little bit more time to think about how to take advantage of market movement — instead of always reacting to what’s going on in your environment.
Achieve your vision for success
You started your organization for a reason. You likely have a vision for your business. You want to achieve your vision for success. You have to specifically figure out how you’re going to get there. Having a strategic plan makes success intentional.
Making a Bottom-Line Difference
In addition to these intangible benefits, strategic planning has a real financial impact. Aren’t we all interested in increasing profitability? Businesses that have a strategic plan in place are 12% more profitable and effective. The results from the 2005 M3 Planning Strategy Benchmark of 280 firms in the U.S. are as follows:
• Companies whose owners had a high commitment to strategic planning reported 12 percent greater increase in sales volume than did those with a low commitment.
• Those same companies also reported 11% better net income than did those with a low commitment.
Up until now, strategic planning has been a business tool relegated to big companies with even bigger budgets (of course there are some exceptions out there). But no longer. Companies of all sizes can realize these bottom-line benefits of strategic planning without having to invest huge dollars and countless hours.
Who is Doing it Right?
Here are three home-based businesses who have realized the benefits of strategic planning:
Primary Key Technologies is a web development firm in Reno, Nevada. The owner clearly identified his vision for the business – to grow revenue without working additional hours. He wanted to stay small, not hire additional employees, but increase his profitability. To do so, he dedicated a portion of the company’s time each week to develop specific kinds of online services that allowed him to take the company in a more focused direction. Now that the company was not attempting to excel in many different areas, they could better allocated their time while also charging more for their expertise in their focus areas. While it took several years for his firm to be recognized as an expert in these focus areas, and even though he regrettably had to turn away business that was outside of the vision, the company is now receiving direct contacts from as far away as South Korea and Great Britain. He is generating more revenue while working less time. Having a clear strategic direction and making difficult choices were keys to making his vision a reality.
The Portland, Oregon company, Speak Shop, offers a real-time video-conferencing service for Spanish students to connect with tutors and instructors in Spanish-speaking countries. The company’s mission is to improve the lives of language tutors and students and to foster intercultural understanding and respect. The owners have been committed to strategic planning for the past two years through the company’s start-up product development phase. And the outcome? An online service that truly meets the needs of students and instructors and a company that is generating double-digit growth.
Transition Dynamics Enterprises’ mission is to give people the hope, insight, and direction they need to use their life’s transitions as catalysts to create a life that truly works for them. Through a strategic planning effort, the owner of this San Francisco Bay Area-based business shifted her strategy from focusing on public and retail sales to working with coaches, therapists and counselors. She trains and licenses these professionals to use transition programs in their work with clients who are changing careers and changing their lives. Because of this strategic shift, the company has doubled revenue from 2005 to 2006 and the company is only at the beginning of her growth curve.
Putting your plan in place
The key to successful planning is to keep it simple. This process is not about taking on additional work, but rather taking all those numerous daily decisions and making them part of an integrated whole. You are “planning daily” albeit in little chunks. So you want to take the time wasted in little chunks and incorporate them more effectively. On a single piece of paper, answer the following questions and you will have your strategic plan for 2007.
• Where are we now? Clarify your purpose. Why are we going on this mission? Always ask why. And review your current strategic position. What is happening internal and external that is impacting your business.
• Where are we going? Know where you are going by setting a big, hairy, audacious goal (also called a vision) that is crystal clear. Visualize the direction you are headed. Ask yourself, what mountain are we climbing?
• How are we going to get there? Layout the road to connect where you are now to where you’re going. Establish the three to five priorities you need to accomplish to reach your vision. For each priority, determine the goals you need to achieve in 2007 to accomplish each priority. Then determine one action item for each goal that you will accomplish in the next 30 days. Once you complete the action item, determine the next one and so on, until the goal is accomplished.
Now that you have your plan, don’t forget that a strategic plan is a living, dynamic document. But all the best missions and strategies in the world are a waste of time if they aren’t implemented. To be truly successful, the plan can’t gather dust on the bookshelf. Keep the plan active so, it doesn’t gather that proverbial dust. You’re sure to reap the benefits outlined above! When your company has a clear plan and acts accordingly to the plan, you’re going to go from where you are, to where you want to go! Your success will be ensured for the long-term. Happy Strategizing!
Erica Olsen (Erica@m3planning.com) is a principal of M3 Planning, making strategy a reality for growth-oriented organizations. Her company runs MyStrategicPlan, an online strategic planning software for business owners, executive directors, and department managers. Specifically designed for small organizations with less than 50 employees, MyStrategicPlan is a cost-effective, do-it-yourself solution for anyone who wants to develop and execute their business strategy. Her company also offers strategic planning consulting, facilitation, articles, and assessment tools. She is also the author of the new book Strategic Planning For Dummies. V14-1 Add: 4/11 CAR: 9/3/11 HP: 1/24/14 EXPO: ?