As we close out 2019, it’s a good time to discuss having a strategic business plan for the year ahead. Hopefully you already have one, with strong initiatives and funding for them baked into your new budget. But many businesses fail in the very first step of having a transformational year: coming up with a well thought out plan on how they are going to do things differently.
Sure, there are lots of reasons that business owners resist developing a strategic plan. Some see it as a “nice to have” that is low on the priority list. Some are so fully engaged with running the business that they may feel the plan is already in their head. And many folks envision putting valuable hours into developing something that will ultimately wind up sitting on a shelf gathering dust.
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But there are some really valuable reasons to develop a formal strategic plan that any entrepreneurial business owner should consider before putting it off for another year. Things like demonstrating legitimacy to outside investors, the financial benefits of a strong commitment to performance management, and the transformational nature of the process itself. Let’s explore these in more detail.
1. It Proves You’re ‘Together’: Outside sources of capital, whether they are banks, investors or potential buyers, all want to know that your company has its act together. Responsible parties expect your organization to have foresight into the future of your market. Moreover, they want to see a plan in place for how you will take advantage of market changes and increase performance. And if you’re looking for an exit, development and successful execution of a strong strategic plan can only help your valuation.
2. It Accelerates Performance: But even if you are not seeking outside money in the near future, a strategic plan can accelerate your company’s financial performance. Because strategic plans and performance management go hand in hand. In the words of Peter Drucker, what gets measured gets improved. Establishing a plan with clear goals is important. Even more important is actively managing by the lead metrics that will help you reach them. If your goal is revenue growth, having a game plan, keeping score and adjusting as you learn will always produce better results than winging it.
3. It Exposes Challenge Areas: One last reason, though certainly not the least, is the fact that creating a strategic plan requires going through the planning process. The leadership team’s collective journey through this process is often as valuable as the plan it produces. The process often brings to light ways in which the team is not aligned. Those sessions can be difficult, but properly facilitated they can become key moments of transformation.
Going through the process also forces people to step back and become really engaged in thinking through important questions. In a session with a CEO of a very successful company, I once asked what her most important goal was for the year ahead. She quickly replied, “profitability.” But after thinking for a few minutes about recent investment money and a temporary advantage in the market, she changed her answer emphatically to growth. Sometimes we get so involved in the immediate issues of running the business that we don’t take time to really process important decisions. Taking the time to do that can be priceless.
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If you’ve been on the fence, I hope I’ve piqued your interest developing and executing a formal strategic plan. In this season of resolutions for the year ahead, it just might be more beneficial than investing in a gym membership. And if you need some direction from experienced strategy professionals, Trilix has management consultants focused on organizational strategy who can help you create and execute on a transformational plan in 2020. Here’s to the year ahead!
Trilix partners with companies like yours on turning great ideas into noteworthy success. Click here to learn more about our Strategy Execution Assessment and start accelerating your transformation.