Important Strategic Business Planning

Strategizing Your Business for Survival

In today’s challenging economic environment, the name of the game is survival! In order to be successful today, businesses need to develop a much more strategic approach to conducting business than ever before in our history. Much of what is driving these demanding dynamics are the economic pressures, coupled with ever increasing regulations, as well as the world wide economy. Now more than ever, business owners need to have a very well thought out plan for the future of their business. Without such a plan you are much more vulnerable to failure than ever before. As has always been the case, but now more than ever, the strong will survive and the weak will fail!

Do you know what the number one cause of business failures is in this country? It is the failure to plan and set specific objectives. There are only two types of businesses, back door and front door.

A back door business is a firm that has a short-term “project-focus” with a poorly defined long-term organizational strategy. Leadership approaches the company every day with a day-to-day attitude which results in putting out fires, rather than preventing them. Management is forced to work in the business rather than working on it. Strategic direction is not identified or effectively communicated. Company personnel react in a disjointed and uncoordinated fashion to the barrage of internal challenges and external market forces exerted on the organization.

A front door business is one that is at the opposite end of the spectrum. This is the company that has an owner or owners that have a well thought out plan in mind. They know their people and themselves. They know what they want out of the company. They know what kind of work the company does best and what is most profitable. They set up projections as to what overhead will be, establish operating goals for both the company and their people and they hold people accountable to these goals and pay them based upon performance. They realize they cannot control the marketplace but they believe that an organization can choose how and where it elects to compete. They develop an organization to meet both short-term and long-term needs. Management takes steps to ensure that the entire organization has a solid understanding and commitment to the firm’s values and long-term objectives. In addition, management promotes operational action consistent with the long-term interests of the firm. Which type of company is yours - back door or front door? 

What is Strategic Planning? It is a systematic process for the development and implementation of organizational strategy. It is an analytical process incorporating an environmental assessment, organizational values and goals, and management intuition and judgment. Why do I need a strategic plan? It compels the organization to make fundamental decisions of major importance that shape and guide a firm’s actions. This is more important today than it has ever been in the past.

What are the benefits of developing a strategic plan? From a 10,000 foot view, organizational qualities are enhanced by the process, the plan improves financial performance and it helps the company determine its most favorable operating environment and competitive strategies. More specifically, strategic business planning provides a company with an enhanced strategic vision and operational alignment, and it also identifies organizational values and key drivers. These are qualities a business must have in order to survive in the business world today.

Owners of businesses must understand that development of the right plan for their companies requires leadership commitment. This means that leadership needs to have the desire to evaluate strategic alternatives, organizational buy-in, and regular monitoring and updating. Above all, they must understand that it is not a quick fix; it is an ongoing process that requires continuing commitment and focus in anticipation of long-term performance. If the owners do not remain committed throughout the entire process, it will fail.

What steps does a company need to take to do business planning?

1. Develop an understanding and commitment to the process – without this, the initiative will die.
2. Identify and assemble a core planning team – the team will be charged with the primary responsibility for plan development and implementation. It should be a diverse group of senior management personnel and would generally include people from sales and marketing, estimating, finance/accounting and operations. They need to be capable, energized individuals, willing to be actively involved in the planning process. These are the people who will champion the implementation of the plan.
3. Select a facilitator – some companies try to go at this alone or use the CEO or their own people to lead the process. Effective facilitation requires preparation, process knowledge, discipline, and significant “time commitment”. Often times, those firms who try to do it on their own fail for the following reasons:

a. Their people are too busy to do it correctly,
b. They lack objectivity and experience that an outside facilitator would have, especially with family dynamics in closely held businesses,
c. They may lack the same level of knowledge of what industry “norms” are compared to an outside facilitator, who is specialized in the particular industry,
d. Company employees are usually more willing to “get everything on the table” to an outside facilitator rather than management.
If you do choose to use an outside facilitator, make sure that the person has a solid understanding of your particular industry, understands your specific planning needs, and is capable and willing to address your organization’s unique requirements.

4. Collect and assemble data – this includes data on the general operating environment, customer needs and satisfaction, prospective customers and new markets, organizational strengths and weaknesses, owner needs and concerns, and analysis of past performance. After the information is gathered it is used to gain much more insight into the customer’s value chain and to improve the ways the firm could improve the customers’ service needs, to gain a better understanding of the company’s operating environment and valuable employee insight concerning the company’s strengths, weaknesses and problem areas, resources, current missed opportunities, and any threats that may exist.
5. Goal setting - these can be broad open-ended directions or aims. They can be both internally and externally focused. What is it precisely that you want to accomplish that will make you become what you want to be? In order to be effective and able to be accomplished, the general rule is that the number of final goals be reduced to 3-5 so that it is not overwhelming and able to be implemented.
6. Implementation - A champion needs to be assigned to be responsible for implementation of each of the chosen goals. This person needs to have the knowledge and authority to get the necessary resources to be able to accomplish the goal. Champions are responsible to help communicate the plan, implement and guide the development of action plans, as well as monitor and evaluate the progress.

Considering the above, the question still remains - how do you navigate tough times and plot a course to survive and thrive into the future without a well thought out strategic management plan that can be implemented in your company to counteract all of the perils in running a business today?  Give us a call at 1-888-353-9313, and we’ll help guide you there.

About the Author:  Gordon is the partner in charge of the Albany Office and the leader of the Firm’s Construction Team. He works with a variety closely-held companies and has extensive expertise in the Construction industry. In addition to providing traditional accounting services, Gordon is well known for providing construction consulting services, including business succession planning, operational reviews, retreat facilitation, mergers and acquisition, and retirement planning.