Strategic issues are critical unknowns driving you to embark on a robust strategic planning process. These issues can be problems, opportunities, market shifts, or anything else that keeps you awake at night and begging for a solution or decision. The best strategic plans address your strategic issues head-on.
Conducting an environmental scan will help you understand your operating environment. An environmental scan is called a PEST analysis, an acronym for Political, Economic, Social, and Technological trends. Sometimes, it is helpful to include Ecological and Legal trends as well. All of these trends play a part in determining the overall business environment.
The reason to do a competitive analysis is to assess the opportunities and threats that may occur from those organizations competing for the same business you are. You need to understand what your competitors are or aren’t offering your potential customers. Here are a few other key ways a competitive analysis fits into strategic planning:
Learn more on how to conduct a competitive analysis here .
Opportunities are situations that exist but must be acted on if the business is to benefit from them.
What do you want to capitalize on?
Threats refer to external conditions or barriers preventing a company from reaching its objectives.
What do you need to mitigate? What external driving force do you need to anticipate?
Strengths refer to what your company does well.
What do you want to build on?
Weaknesses refer to any limitations a company faces in developing or implementing a strategy.
What do you need to shore up?
Customer segmentation defines the different groups of people or organizations a company aims to reach or serve.
A SWOT analysis is a quick way of examining your organization by looking at the internal strengths and weaknesses in relation to the external opportunities and threats. Creating a SWOT analysis lets you see all the important factors affecting your organization together in one place.
It’s easy to read, easy to communicate, and easy to create. Take the Strengths, Weaknesses, Opportunities, and Threats you developed earlier, review, prioritize, and combine like terms. The SWOT analysis helps you ask and answer the following questions: “How do you….”
Want More? Deep Dive Into the “Developing Your Strategy” How-To Guide.
Determine your primary business, business model and organizational purpose (mission) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Identify your corporate values (values) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Create an image of what success would look like in 3-5 years (vision) | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Solidify your competitive advantages based on your key strengths | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Formulate organization-wide strategies that explain your base for competing | Planning Team (All staff if doing a survey) | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) | |
Agree on the strategic issues you need to address in the planning process | Planning Team | 2 weeks (gather data, review and hold a mini-retreat with Planning Team) |
The mission statement describes an organization’s purpose or reason for existing.
What is our purpose? Why do we exist? What do we do?
Step 2: discover your values.
Your values statement clarifies what your organization stands for, believes in and the behaviors you expect to see as a result. Check our the post on great what are core values and examples of core values .
How will we behave?
Step 3: casting your vision statement.
A Vision Statement defines your desired future state and directs where we are going as an organization.
Where are we going?
Step 4: identify your competitive advantages.
A competitive advantage is a characteristic of an organization that allows it to meet its customer’s need(s) better than its competition can. It’s important to consider your competitive advantages when creating your competitive strategy.
What are we best at?
Step 5: crafting your organization-wide strategies.
Your competitive strategy is the general methods you intend to use to reach your vision. Regardless of the level, a strategy answers the question “how.”
How will we succeed?
Want More? Deep Dive Into the “Build Your Plan” How-To Guide.
Action | Who is Involved | Tools & Techniques | Estimated Duration |
---|---|---|---|
Develop your strategic framework and define long-term strategic objectives/priorities | Executive Team Planning Team | Strategy Comparison Chart Strategy Map | Leadership Offsite: 1 – 2 days |
Set short-term SMART organizational goals and measures | Executive Team Planning Team | Strategy Comparison Chart Strategy Map | Leadership Offsite: 1 – 2 days |
Select which measures will be your key performance indicators | Executive Team and Strategic Director | Strategy Map | Follow Up Offsite Meeting: 2-4 hours |
If your team wants to take the next step in the SWOT analysis, apply the TOWS Strategic Alternatives Matrix to your strategy map to help you think about the options you could pursue. To do this, match external opportunities and threats with your internal strengths and weaknesses, as illustrated in the matrix below:
External Opportunities (O) | External Threats (T) | |
---|---|---|
Internal Strengths (S) | SO Strategies that use strengths to maximize opportunities. | ST Strategies that use strengths to minimize threats. |
Internal Weaknesses (W) | WO Strategies that minimize weaknesses by taking advantage of opportunities. | WT Strategies that minimize weaknesses and avoid threats. |
Evaluate the options you’ve generated, and identify the ones that give the greatest benefit, and that best achieve the mission and vision of your organization. Add these to the other strategic options that you’re considering.
Long-Term Strategic Objectives are long-term, broad, continuous statements that holistically address all areas of your organization. What must we focus on to achieve our vision? Check out examples of strategic objectives here. What are the “big rocks”?
Outcome: Framework for your plan – no more than 6. You can use the balanced scorecard framework, OKRs, or whatever methodology works best for you. Just don’t exceed 6 long-term objectives.
Once you have formulated your strategic objectives, you should translate them into goals and measures that can be communicated to your strategic planning team (team of business leaders and/or team members).
You want to set goals that convert the strategic objectives into specific performance targets. Effective strategic goals clearly state what, when, how, and who, and they are specifically measurable. They should address what you must do in the short term (think 1-3 years) to achieve your strategic objectives.
Organization-wide goals are annual statements that are SMART – specific, measurable, attainable, responsible, and time-bound. These are outcome statements expressing a result to achieve the desired outcomes expected in the organization.
Outcome: clear outcomes for the current year..
Key Performance Indicators (KPI) are the key measures that will have the most impact in moving your organization forward. We recommend you guide your organization with measures that matter. See examples of KPIs here.
Outcome: 5-7 measures that help you keep the pulse on your performance. When selecting your Key Performance Indicators (KPIs), ask, “What are the key performance measures we need to track to monitor if we are achieving our goals?” These KPIs include the key goals you want to measure that will have the most impact on moving your organization forward.
To move from big ideas to action, creating action items and to-dos for short-term goals is crucial. This involves translating strategy from the organizational level to individuals. Functional area managers and contributors play a role in developing short-term goals to support the organization.
Before taking action, decide whether to create plans directly derived from the strategic plan or sync existing operational, business, or account plans with organizational goals. Avoid the pitfall of managing multiple sets of goals and actions, as this shifts from strategic planning to annual planning.
Department/functional goals, actions, measures and targets for the next 12-24 months
Now in your Departments / Teams, you need to create goals to support the organization-wide goals. These goals should still be SMART and are generally (short-term) something to be done in the next 12-18 months. Finally, you should develop an action plan for each goal.
Keep the acronym SMART in mind again when setting action items, and make sure they include start and end dates and have someone assigned their responsibility. Since these action items support your previously established goals, it may be helpful to consider action items your immediate plans on the way to achieving your (short-term) goals. In other words, identify all the actions that need to occur in the next 90 days and continue this same process every 90 days until the goal is achieved.
1 Increase new customer base. |
1.1 Reach a 15% annual increase in new customers. (Due annually for 2 years) |
1.1.1 Implement marketing campaign to draw in new markets. (Marketing, due in 12 months) |
1.1.1.1 Research the opportunities in new markets that we could expand into. (Doug) (Marketing, due in 6 months) |
1.1.1.1.1 Complete a competitive analysis study of our current and prospective markets. (Doug) (Marketing, due in 60 days) |
1.1.1.2 Develop campaign material for new markets. (Mary) (Marketing, due in 10 months) |
1.1.1.2.1 Research marketing methods best for reaching the new markets. (Mary) (Marketing,due in 8 months) |
Want more? Dive Into the “Managing Performance” How-To Guide.
Action | Who is Involved | Tools & Techniques | Estimated Duration |
---|---|---|---|
Establish implementation schedule | Planning Team | 1-2 hours | |
Train your team to use OnStrategy to manage their part of the plan | HR Team, Department Managers & Teams | 1 hr per team member | |
Review progress and adapt the plan at Quarterly Strategy Reviews (QBR) | Department Teams + Executive Team | Department QBR: 2 hrs Organizational QBR: 4 hrs |
Implementation is the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.
Once your resources are in place, you can set your implementation schedule. Use the following steps as your base implementation plan:
Monthly strategy meetings don’t need to take a lot of time – 30 to 60 minutes should suffice. But it is important that key team members report on their progress toward the goals they are responsible for – including reporting on metrics in the scorecard they have been assigned.
By using the measurements already established, it’s easy to make course corrections if necessary. You should also commit to reviewing your Key Performance Indicators (KPIs) during these regular meetings. Need help comparing strategic planning software ? Check out our guide.
Never lose sight of the fact that strategic plans are guidelines, not rules. Every six months or so, you should evaluate your strategy execution and strategic plan implementation by asking these key questions:
Guidelines for your strategy review.
The most important part of this meeting is a 70/30 review. 30% is about reviewing performance, and 70% should be spent on making decisions to move the company’s strategy forward in the next quarter.
The best strategic planners spend about 60-90 minutes in the sessions. Holding meetings helps focus your goals on accomplishing top priorities and accelerating the organization’s growth. Although the meeting structure is relatively simple, it does require a high degree of discipline.
Strategic planning frequently asked questions, read our frequently asked questions about strategic planning to learn how to build a great strategic plan..
Strategic planning is when organizations define a bold vision and create a plan with objectives and goals to reach that future. A great strategic plan defines where your organization is going, how you’ll win, who must do what, and how you’ll review and adapt your strategy..
Your strategic plan needs to include an assessment of your current state, a SWOT analysis, mission, vision, values, competitive advantages, growth strategy, growth enablers, a 3-year roadmap, and annual plan with strategic goals, OKRs, and KPIs.
A strategic planning process should take no longer than 90 days to complete from start to finish! Any longer could fatigue your organization and team.
There are four overarching phases to the strategic planning process that include: determining position, developing your strategy, building your plan, and managing performance. Each phase plays a unique but distinctly crucial role in the strategic planning process.
Prior to starting your strategic plan, you must go through this pre-planning process to determine your organization’s readiness by following these steps:
Ask yourself these questions: Are the conditions and criteria for successful planning in place now? Can we foresee any pitfalls that we can avoid? Is there an appropriate time for our organization to initiate this process?
Develop your team and schedule. Who will oversee the implementation as Chief Strategy Officer or Director? Do we have at least 12-15 other key individuals on our team?
Research and Collect Current Data. Find the following resources that your organization may have used in the past to assist you with your new plan: last strategic plan, mission, vision, and values statement, business plan, financial records, marketing plan, SWOT, sales figures, or projections.
Finally, review the data with your strategy director and facilitator and ask these questions: What trends do we see? Any obvious strengths or weaknesses? Have we been following a plan or just going along with the market?
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What is strategic plan management?
10 steps in the strategic planning process.
Plans are worthless, but planning is everything. - Dwight D. Eisenhower
It’s that time again.
Every three to five years, most larger organizations periodically plan for the future. Many times strategic planning documents are shelved and forgotten until the next cycle begins. On the other hand, many smaller and newer organizations, propelled by urgency, may not devote the necessary time and energy to the strategic planning process.
Only 63% of businesses plan more than a year out. They fail to see that — contrary to Alice in Wonderland’s Cheshire cat — “any way” does not take you there.
For all organizations, a more rigorous annual planning process is critical for driving future success, profitability, value, and impact.
John Kotter, a former professor at Harvard Business School and noted expert on innovation says, “ Strategy should be viewed as a dynamic force that constantly seeks opportunities, identifies initiatives that will capitalize on them, and completes those initiatives swiftly and efficiently.”
There’s hardly a better case that can be made for dynamic planning than in the tech industry, where mergers and acquisitions are accelerating exponentially. Companies need to be nimble enough to navigate rapid change . In this case, planning should occur quarterly.
Strategic planning is an ongoing process by which an organization sets its forward course by bringing all of its stakeholders together to examine current realities and define its vision for the future.
It examines its strengths and weaknesses, resources available, and opportunities. Strategic planning seeks to anticipate future industry trends . During the process, the organization creates a vision, articulates its purpose, and sets strategic goals that are long-term and forward-focused.
Those strategic goals inform operational goals and incremental milestones that need to be reached. The operational plan has clear objectives and supporting initiatives tied to metrics to which everyone is accountable . The plan should be agile enough to allow for recalibrating when necessary and redistributing resources based on internal and external forces.
The output of the planning process is a document that is shared across the enterprise.
Strategic planning isn’t just for companies. At BetterUp, strategic planning is one of the skills that we identify, track, and develop within the Whole Person Model . For individuals, strategic planning is the ability to think through ways to achieve desired outcomes. Just as strategic planning helps organizations realize their goals for the future, it helps individuals grow and achieve goals in a unified direction.
Working backward from the desired outcome, effective strategic planning consists of coming up with the steps we need to take today in order to get where we want to be tomorrow.
While no plan is infallible, people who develop this skill are good at checking to make sure that their actions are in alignment with the outcomes that they want to see in the future. Even when things don’t go according to plan, their long-term goals act as a “North star” to get them back on course. In addition, envisioning desired future states and figuring out how to turn them into reality enhances an individual’s sense of personal meaning and motivation.
Whether we’re talking about strategic planning for the company or the individual, strategic plans can go awry in a variety of ways including:
The extent to which that document is shelved until the next planning cycle or becomes a dynamic map of the future depends on the people responsible for overseeing the execution of the plan.
"Most people think of strategy as an event, but that’s not the way the world works," according to Harvard Business School Professor Clayton Christensen. "When we run into unanticipated opportunities and threats, we have to respond. Sometimes we respond successfully; sometimes we don’t. But most strategies develop through this process. More often than not, the strategy that leads to success emerges through a process that works 24/7 in almost every industry."
Strategic business management is the ongoing process by which an organization creates and sustains a successful roadmap that moves the company in the direction it needs to move, year after year, for long-term success. It spans from research and formulation to execution, evaluation, and adjustment. Given the pace of change, strategic management is more relevant and important than ever for assigning measurable goals and action steps
Many organizations fail because they don’t have the strategic management team at the table right from the beginning of the planning process. A strategic plan is only as good as its ability to be executed and sustained.
A strategic management initiative might be driven by an internal group — many companies have an internal strategy team — or an outside consulting firm. Ultimately company leaders need to own executing and sustaining the strategy.
In this Harvard Business Review article, Ron Carucci from consulting firm Navalent reports that 61% of executives in a 10-year longitudinal study felt they were not prepared for the strategic challenges they faced upon being appointed to senior leadership roles. Lack of commitment to the plan is also a contributing factor. In addition, leaders attending to quarterly targets, crisis management , and reconciling budgets often consider the execution of a long-term strategy a low priority.
A dedicated strategic management team works with those senior leaders and managers throughout the organization to communicate, coordinate and evaluate progress against goals. They tie strategic objectives to day-to-day operational metrics throughout the enterprise.
A good strategic management group can assist in creating a culture of empowerment and learning . It holds regular meetings with employees. It sets a clear agenda and expectations to make the strategic plan real and compelling to the organization through concrete objectives, results, and timelines.
Strategy development is a lot of work, but the benefits are lasting. After all, as the saying goes, "If you fail to plan, you plan to fail." Taking the time for review and planning activities has the following benefits:
Begin by articulating the organization's vision for the future. Ask, "What would success look like in five years?" Create a mission statement describing organizational values and how you intend to reach the vision. What values inform and determine mission, vision, and purpose?
Purpose-driven strategic goals articulate the “why” of what the corporation is doing. It connects the vision statement to specific objectives, drawing a line between the larger goals and the work that teams and individuals do.
This stage includes identifying an organization’s strategic position.
Gathering data from internal and external environments and respective stakeholders takes place at this time. Involving employees and customers in the research.
The task is to gather market data through research. One of the most critical components of this stage is a comprehensive SWOT analysis that involves gathering people and bringing perspectives from all stakeholders to determine:
Strengths and weaknesses — In this stage, planners identify the company’s assets that contribute to its current competitive advantage and/or the likelihood of a significant increase in the organization’s market share in the future. It should be an objective assessment rather than an inflated perspective of its strengths.
An accurate assessment of weaknesses requires looking outward at external forces that can reveal new opportunities as well as threats. Consider the massive shift in multiple industries whose strategy has been disrupted by the COVID-19 pandemic. While it was disastrous to the airline and restaurant industries’ business models , tech companies were able to seize the opportunity and address the demands of remote work.
Michael Porter’s book Competetive Strategy: Techniques for Analyzing Industries and Competitors claims that there are five forces at work in an industry that influence that industry’s ability to develop a competitive strategy. Since the book was published in 1979, organizations have turned to Porter’s theory to create their strategic framework.
Here are the 5 forces (and key questions) that determine the competitive strategy for most industries.
Considering the factors above, determine the company’s value through financial forecasting . While almost certainly to become a moving target influenced by the five forces, a forecast can assign initial anticipated measurable results expected in the plan or ROI: profits/cost of investment.
The above research and assessment will help an organization to set goals and priorities. Too often an organization’s strategic plan is too broad and over-ambitious. Planners need to ask, ”What kind of impact are we seeking to have, and in what time frame?” They need to drill down to objectives that will have the most impact.
This next phase of operational planning consists of creating strategic objectives and initiatives. Kaplan and Norton posit in their balanced scorecard methodology that there are four perspectives for consideration in identifying the conditions for success. They are interrelated and must be evaluated simultaneously.
It’s a team effort. The success of the plan is in direct proportion to the organization’s commitment to inform and engage the entire workforce in strategy execution. People will only be committed to strategy implementation when they're connected to the organization's goals. With everyone pulling in the same direction, cross-functional decision-making becomes easier and more aligned.
A strategy map is a powerful tool for illustrating the cause-effect of those perspectives and connecting them to between 12 and 18 strategic objectives. Since most people are visual learners, the map provides an easy-to-understand diagram for everyone in the organization creating shared knowledge at all levels.
Following the development of strategic objectives, strategic initiatives are determined. These are the actions the organization will take to reach those objectives. They may relate initiatives related to factors such as scope, budget, raising brand awareness, product development, and employee training.
Strategic initiatives inform SMART goals to which metrics are assigned to evaluate performance. These measures cascade from senior management to management to front-line workers. At this stage, the task is to create goals that are specific, measurable, attainable, relevant, and time-based informing the operational plan.
Benchmarks are established against so that performance can be measures, and a time frame is created. Key performance indicators (KPI’s) are assigned based on organizational goals. These indicators align workers’ performance and productivity with long-term strategic objectives.
Assessment of whether the plan has been successful . It measures activities and progress toward objectives and allows for the creation of improved plans and objectives in order to improve overall performance .
Think of strategic planning as a circular process beginning and ending with evaluation. Adjust a plan as necessary. The pace at which review of the plan is necessary may be once a year for many organizations or quarterly for organizations in rapidly evolving industries.
The strategic planning meeting may have a reputation for being just another to-do, but it might be time to take a second look. With the right action plan and a little strategic thinking, you can reinvigorate your business environment and start planning for success.
It's that time to get excited about the future again.
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Meredith Betz is a Betterup Fellow Coach. As an organizational consultant and Executive Coach, Meredith's work focuses on leaders, teams, and the dynamics in the systems in which they live and work. She helps people become more influential and exhibit executive presence. Meredith is a certified Conscious Business Coach who helps leaders to exercise empathy and lead in a way that is consistent with their values. She gives them the tools to communicate and negotiate effectively with their stakeholders. Meredith recently co-wrote a memoir with a 103-year-old Estonian man who lived through the Nazi and Soviet occupations of Estonia in the 1940s. It was a profound experience. A seminal book for her is Man's Search for Meaning by Viktor Frankl, an Austrian Holocaust survivor and psychiatrist.
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Strategic planning is a process that may take months for some organizations, but its importance to the growth of the organization cannot be measured.
It helps guide company decisions, set measurable goals, and define the direction of the organization.
In this guide we will discuss what is strategic planning process and describe in detail the strategic planning process steps along with some visual techniques you can use during each phase.
Strategic planning is the process by which organizations make decisions about the goals they want to accomplish and the steps that need to be taken to get there.
The strategic planning process helps prioritize their objectives and effectively make use of the available resources to move from the current state to the desired state of things, or in other words accomplish their goals.
Strategic planning is crucial to the growth of any organization. Here’s why it is important to each and every small and large company out there.
The strategic planning process helps an organization fill the gap between its current state and the desired state. Below, we have explained the different steps you need to take along with tools that can accelerate the process.
To do an environmental scan, you need to gather a cross-functional team capable of providing information on different aspects of the organization. Get the input of relevant stakeholders, interviewing them to learn about the current strategic issues and situation.
In an environmental scan you need to take both internal and external factors that may affect the growth and performance of the organization into consideration.
Internal factors may include company resources, financial capabilities, employee skills etc. On the other hand, external factors include market trends, economic and political changes, technological advances etc.
You can make use of situational analysis tools such as SWOT and PESTLE analysis to gather and examine information relevant to these areas.
Using the data such as the available resources, financial situation etc. you have gathered through your environmental scan, you can effectively perform a gap analysis to determine whether you are getting the best out of the resources available to you.
It helps identify the gaps between the current performance of the organization and the desired performance and what you should do differently and what additional resources you may need to achieve your goals.
To learn about the gap analysis tools you can make use of in detail, refer to our articles on
5 Gap Analysis Tools to Identify and Close the Gaps in Your Business
Gap Analysis Templates to Edit Online, Download or Print
Clarify the vision (where are you headed?), mission (why do you exist?) and the core values of your organization.
Based on their definition, you can set specific, measurable, attainable, realistic and timely (SMART) goals and objectives.
Understanding the challenges posed by your competitors in the industry is essential to creating an effective strategic plan.
It can help you gather important insight necessary to identify market gaps and trends and develop new products and strategies.
Once you have a proper idea about the competitive landscape, you can tailor your strategies to overcome the challenges and increase the competitive advantage.
Here are some handy visual techniques to conduct a competitive analysis .
Once you have identified your objectives and what you should prioritize, create your action plan .
Allocate your resources, time and budget, outline the action steps and assign tasks to the relevant employees.
Use the following action plan template to proceed.
The purpose of a communication plan is to help guide the process of communicating your strategic plan and action plan to the relevant employees and other stakeholders.
Read our guide on Creating an Effective Communications Plan to learn how to create a consistent messaging strategy.
Once the strategic planning process is explained to everyone in the company, roll it out.
Monitor the progress of your goals and measure the performance on a monthly basis. You can inquire the responsible task owners for the status of their targets and hold them accountable.
Make use of Gantt chart to track progress on given targets.
Identify areas for improvements and take the necessary measures to fix them.
A proper strategic plan is key to keeping your business on track when reaching your goals. Follow the steps discussed above and make use of the visual tools provided to facilitate and accelerate your strategic planning process steps.
What are the strategic planning process steps your organization take. Share with us in the comment section below.
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The art of formulating business strategies, implementing them, and evaluating their impact based on organizational objectives
Strategic planning is the art of creating specific business strategies, implementing them, and evaluating the results of executing the plan, in regard to a company’s overall long-term goals or desires. It is a concept that focuses on integrating various departments (such as accounting and finance, marketing, and human resources) within a company to accomplish its strategic goals. The term strategic planning is essentially synonymous with strategic management.
The concept of strategic planning originally became popular in the 1950s and 1960s, and enjoyed favor in the corporate world up until the 1980s, when it somewhat fell out of favor. However, enthusiasm for strategic business planning was revived in the 1990s and strategic planning remains relevant in modern business.
CFI’s Course on Corporate & Business Strategy is an elective course for the FMVA Program.
The strategic planning process requires considerable thought and planning on the part of a company’s upper-level management. Before settling on a plan of action and then determining how to strategically implement it, executives may consider many possible options. In the end, a company’s management will, hopefully, settle on a strategy that is most likely to produce positive results (usually defined as improving the company’s bottom line) and that can be executed in a cost-efficient manner with a high likelihood of success, while avoiding undue financial risk.
The development and execution of strategic planning are typically viewed as consisting of being performed in three critical steps:
In the process of formulating a strategy, a company will first assess its current situation by performing an internal and external audit. The purpose of this is to help identify the organization’s strengths and weaknesses, as well as opportunities and threats ( SWOT Analysis ). As a result of the analysis, managers decide on which plans or markets they should focus on or abandon, how to best allocate the company’s resources, and whether to take actions such as expanding operations through a joint venture or merger.
Business strategies have long-term effects on organizational success. Only upper management executives are usually authorized to assign the resources necessary for their implementation.
After a strategy is formulated, the company needs to establish specific targets or goals related to putting the strategy into action, and allocate resources for the strategy’s execution. The success of the implementation stage is often determined by how good a job upper management does in regard to clearly communicating the chosen strategy throughout the company and getting all of its employees to “buy into” the desire to put the strategy into action.
Effective strategy implementation involves developing a solid structure, or framework, for implementing the strategy, maximizing the utilization of relevant resources, and redirecting marketing efforts in line with the strategy’s goals and objectives.
Any savvy business person knows that success today does not guarantee success tomorrow. As such, it is important for managers to evaluate the performance of a chosen strategy after the implementation phase.
Strategy evaluation involves three crucial activities: reviewing the internal and external factors affecting the implementation of the strategy, measuring performance, and taking corrective steps to make the strategy more effective. For example, after implementing a strategy to improve customer service, a company may discover that it needs to adopt a new customer relationship management (CRM) software program in order to attain the desired improvements in customer relations.
All three steps in strategic planning occur within three hierarchical levels: upper management, middle management, and operational levels. Thus, it is imperative to foster communication and interaction among employees and managers at all levels, so as to help the firm to operate as a more functional and effective team.
The volatility of the business environment causes many firms to adopt reactive strategies rather than proactive ones. However, reactive strategies are typically only viable for the short-term, even though they may require spending a significant amount of resources and time to execute. Strategic planning helps firms prepare proactively and address issues with a more long-term view. They enable a company to initiate influence instead of just responding to situations.
Among the primary benefits derived from strategic planning are the following:
This is often the most important benefit. Some studies show that the strategic planning process itself makes a significant contribution to improving a company’s overall performance, regardless of the success of a specific strategy.
Communication is crucial to the success of the strategic planning process. It is initiated through participation and dialogue among the managers and employees, which shows their commitment to achieving organizational goals.
Strategic planning also helps managers and employees show commitment to the organization’s goals. This is because they know what the company is doing and the reasons behind it. Strategic planning makes organizational goals and objectives real, and employees can more readily understand the relationship between their performance, the company’s success, and compensation. As a result, both employees and managers tend to become more innovative and creative, which fosters further growth of the company.
The increased dialogue and communication across all stages of the process strengthens employees’ sense of effectiveness and importance in the company’s overall success. For this reason, it is important for companies to decentralize the strategic planning process by involving lower-level managers and employees throughout the organization. A good example is that of the Walt Disney Co., which dissolved its separate strategic planning department, in favor of assigning the planning roles to individual Disney business divisions.
An increasing number of companies use strategic planning to formulate and implement effective decisions. While planning requires a significant amount of time, effort, and money, a well-thought-out strategic plan efficiently fosters company growth, goal achievement, and employee satisfaction.
Thank you for reading CFI’s guide to Strategic Planning. To keep learning and advancing your career, the additional CFI resources below will be useful:
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Joseph is the Vice President of Customer Success at ClearPoint
Use these strategic planning steps to reach your goals!
Table of Contents
To help you avoid that fate, we’ve outlined six strategic planning steps below that will keep you on the right track for the long term.
1. confirm (or create) your mission and vision statements..
Mission and vision statements provide important context for your future plans. Before you go any further, take the time to develop these statements, or take a critical look at your current iterations to make sure they’re still relevant. As a reminder:
Your mission and vision statements will serve as a compass as you develop your strategy, keeping you on track to make decisions that will get you where you want to go.
Strategy implementation is a major undertaking with lots of moving parts; that’s where strategy planning frameworks come in handy. Lots of different frameworks exist, and their approaches to strategy execution vary. But they all help you build a concrete path toward your goals and stay focused on achieving them.
For example, the Balanced Scorecard framework (our personal favorite) lets you chart a path to your goals based on more than just financial performance—it incorporates other elements that drive strategy, too. (It’s also readily adaptable to nonprofits and government organizations.) Choose the framework that applies most to your organization’s way of thinking.
Learn more about the various strategic planning models and the scenarios in which they’re most useful here.
You won’t be able to accomplish everything at once. Think about which goals will actually help you achieve your vision. (For example, if your vision has to do with becoming an industry leader, increasing your annual revenue might be a relevant goal.) Choose a few priorities to focus on; these can be called “strategic priorities,” “goals,” or “objectives.” They make up the key components of your strategy at the highest level.
Measures help you understand if you’re meeting your goals, and initiatives (also called projects ) are the action programs you develop to achieve your objectives. No matter what framework you’re using, you’ll need to define all these elements in order to translate your vision into an actionable strategy.
How you communicate and roll out your strategic plan is one of the most important elements of the plan itself, but it is often overlooked. We recommend creating a written plan outlining your communication strategy that describes how you’ll:
If you’re looking for ideas on how to spread the word, take a look at these resources on communicating strategy and getting buy-in from your staff.
Once your strategy is launched, it’s important to hold regular performance reviews and refine the plan accordingly. These reviews should be at least once a quarter, and possibly monthly, depending on your organization and industry.
If you don’t know where to begin when it comes to conducting a meeting to review your strategic plan, here are some suggestions to learn more about running an effective meeting and making your meeting great.
Your team of strategists might be driving this train, but you aren’t the only passengers! Your plan will be more realistic—and you’ll get better buy-in—when you involve other people in your decisions. All the strategic planning steps offer opportunities to open the lines of communication and engage people at all levels:
It can be lonely working in a corporate strategy office—out of 4,000 employees, you might be one of three, trying your best to chart a path forward for everyone! (Wouldn’t it be nice to be able to talk to the three people working in strategy in the next building over?)
We can’t promise you’ll meet the folks next door, but there are opportunities for strategy professionals from across the country to connect. At ClearPoint, we’ve developed an awesome community of people who work in strategy and are happy to share their ideas. ClearPoint Community members attend in-person and virtual events to learn from one another, getting insights on how other teams are tracking and reporting on their organizations’ strategies. Outside of ClearPoint, there are also a variety of LinkedIn groups for people who work in strategy—joining one of them is a great way to start upping your strategy game.
You might not get your strategic plan right the first time, and that’s okay. Just get started and learn while you're at it. Following the six strategic planning steps above is a good start, and will help you avoid some rookie mistakes in the meantime!
Published: 03 January, 2024
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Table of Contents
Organizations use Strategic Planning to gather all their stakeholders to evaluate the collection of current circumstances and decide upon their ongoing goals and benchmarks. They decide upon long-term objectives and establish a vision for the company’s future.
The efforts behind an organization’s Strategic Planning Processes are vital to its success, and yet, while many organizations acknowledge they need to do this kind of planning, they often don’t understand how to make it a reality. In this article, we explain the reasons behind Strategic Planning and how to make your Strategic Planning Process as powerful as possible.
Strategic planning is a systematic process wherein the leaders of an organization articulate their vision for the future and delineate the goals and objectives that will guide the trajectory of the organization.
Strategic planning is a process of defining an organization’s direction and making decisions on allocating its resources to pursue this direction . It involves creating a long-term plan that outlines the organization’s vision, mission, values, and objectives, as well as the strategies and tactics that will be used to achieve them.
Strategy is often misunderstood, which is surprising because fundamentally it’s a pretty basic concept. Strategy is a clearly expressed direction and a verified plan on how to get there. Your Strategic Planning Process formalizes the steps you’ll take to decide on your plan. The Strategic Planning Process facilitates using a Strategic Execution Framework that articulates where you’ll invest in innovation and where you can cut costs.
As far as business development planning is concerned, your Strategic Execution Framework is a vital tool for driving innovation, but first you must define the process you’ll undertake to determine how you and your team see the future of your organization. In this article, we discuss how to create your Strategic Plan and define its relationship to other concepts and documents that direct your business and its activities.
While it’s true that every business is different and must develop their own processes, we believe there are some process of strategic planning stepsthat benefit all organizations.
Below are our recommendations for the steps to take when undergoing your Strategic Planning Process, along with the questions we suggest you answer during each specific step.
Related: Strategic Goals: Examples, Importance, Definitions and How to Set Them
1) apple strategic plan process.
These examples demonstrate how strategic planning is a dynamic and integral part of the business processes of leading companies. They highlight the importance of a well-defined vision, rigorous analysis, adaptability, and innovation in the strategic planning process.
An easy way to distinguish your company’s Tactical Planning from your Strategic Planning is to separate your wants from your HOWs.
In your Strategic Planning, you identify what you WANT for the company. These are big-picture dreams (achievable, but big ) that are your definition of success. In your Tactical Planning, you identify the HOW for reaching those dreams, including the smaller necessary steps.
Inspire specific actions | Identify general concerns and interests | |
Short term | Long term | |
Specific results to achieve | Broad but realistic goals |
Each kind of planning is vital for securing the organization’s future, but they require different sorts of attention and philosophy, and teams that are good at planning one way may not necessarily be good at the other kind of planning.
Your Strategic Planning Process will of course be deeply connected to your Business Purpose .
We like to think of Business Purpose in broad terms, choosing especially to think of a business’s role in massive transformation. Embedded within a Business Purpose is the Business Plan that directs operations and how a company delivers value to its customers.
What is the relationship between your Strategic Planning and your Business Purpose? One feeds into the other. Your Business Purpose must point to a larger impact you’ll have on the people who purchase your goods and services, and your Strategic Planning takes into account how you’ll grow and expand that Purpose as you reach more customers more successfully.
Strategic planning and business planning are two distinct processes that are often used interchangeably, but they have some key differences.
Strategic planning is a top-level process that focuses on determining the direction of an organization over the long term. It involves setting goals, determining the key resources and actions necessary to achieve those goals, and allocating those resources in a way that best serves the organization’s future. The outcome of strategic planning is typically a long-term strategic plan that outlines the organization’s vision, mission, values, and objectives.
Business planning , on the other hand, is a more tactical process that focuses on the implementation of specific initiatives and projects to support the organization’s long-term goals. Business plans typically outline the steps necessary to launch a new product, enter a new market, or achieve a specific objective. They may also include budgets, marketing plans, and other operational details.
In short, strategic planning is about setting the direction for an organization, while business planning is about implementing specific initiatives to support that direction. Both processes are important for the success of an organization and should be used in conjunction to ensure that resources are allocated effectively and that the organization is moving in the right direction.
Imagine this scenario: A warehouse full of goods sits, unsold and unmoved. A collection of brilliant people languishes at desks all day. Outside, the world spins and changes. It’s ready for what these people could do, can do, and yet nothing happens. Needs remain unmet. Progress is halted. Everyday life takes several backwards steps. This is what your business will look like without proper Strategic Planning.
Strategic Planning forces you to consider your Strategic Objectives and critically compare them to the resources you have available. As you continuously evaluate the circumstances of your business and your customers, your Strategic Plan evolves to match your goals and business capabilities.
The process involved pushes decision-makers to practice Strategic Thinking . It limits wasteful spending, especially when upper-level managers are willing to forgo pet projects in favor of operations with a broader use and appeal.
Strategic Planning is important because it directs your resources to efficiently meet your overall Business Goals. Without Strategic Planning, you are likely to waste resources, make conflicting decisions, or fail to grow your business to its greatest potential.
Most businesses find value in reviewing their Strategic Plan every three years. This allows enough time to pass that you can evaluate the success of previous plans, reflect on the achievement of your Strategic Goals, consider developments outside your organization that affect your business, and begin formulating new goals that will become the next version of your plans.
When businesses first begin, they often have too many fires burning at once. They remain focused on existing today rather than planning for tomorrow. Most entrepreneurs remember those stressful early days of starting their businesses and can understand why formalities like Strategic Plans can fall by the wayside. We believe if your business lasts longer than a year it’s important to develop a plan for the future. Think of Strategic Planning as a celebration of a first anniversary—a sign that you’re poised to continue moving forward for years to come.
However, Strategic Planning is not a one-off event that is over once the cookies are all gone and the room clears. Your Strategic Planning team should meet regularly to measure how effective the plans are at helping you reach your Strategic Goals. Ad hoc subcommittees can play a role in gathering evidence to ensure that your plans remain appropriate, especially if conditions change.
For example, we recommended a close review of Strategic Plans and Strategic Goals once the COVID-19 pandemic made it clear that business was going to be affected at least short- to mid-term. We continue to recommend teams regularly revisit their Strategic Plans with global circumstances in mind to recognize opportunities and prepare for challenges.
As we’ve mentioned, there are many benefits of Strategic Planning . Some of those benefits include:
What is a business without Strategic Planning? In most cases, it’s not much, nor is it long for the world. While it’s possible to accidentally find success without much planning, most successful businesses are a result of careful thought mixed with the urge to pounce on the opportunity.
What prepares you to pounce?
Your Strategic Planning and the processes that make it possible.
A key objective of any business strategy is to improve operational efficiencies...
Understanding the intricate levels of strategy is crucial for any organization aiming...
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Ensuring strategic success often hinges on a well-structured framework. The Balanced Scorecard (BSC) facilitates this by converting your business strategy into actionable objectives and measurable goals , fostering alignment and focus across all organizational levels.
This article will give you the ins and outs of the Balanced Scorecard, covering its:
The Balanced Scorecard is a strategic management tool that comprehensively views a business's performance by looking at financial, customer, internal processes, and learning & growth perspectives.
This balanced approach ensures that all aspects of the business are considered, promoting a holistic view of organizational performance and strategic alignment.
The Balanced Scorecard outlines four critical perspectives organizations can use to track and measure performance . These perspectives help businesses translate their strategic goals into actionable objectives and metrics.
Let’s dive deeper into the four perspectives of the Balanced Scorecard:
Within each perspective, Balanced Scorecards employ three key components—Objectives, Measures, and Initiatives—that are essential for translating strategy into actionable plans and measurable outcomes:
Robert Kaplan and David Norton developed the Balanced Scorecard approach in the early 1990s. Kaplan, a Harvard Business School professor, and Norton, a business consultant, introduced this framework in their 1992 Harvard Business Review article "The Balanced Scorecard—Measures that Drive Performance." Their goal was to enhance traditional financial performance measures by incorporating perspectives on Financial, Customer, Internal Processes, and Learning & Growth, providing a holistic view of organizational performance and facilitating better strategic alignment and execution.
A Balanced Scorecard is beneficial if you’re a business looking to:
Suppose a leading car manufacturer like Toyota, renowned for its hybrid cars, wants to regain ground in the pure electric vehicle (EV) market. Their current EVs might need to improve in distribution networks, overall sales, and customer perception compared to competitors.
The Balanced Scorecard can help Toyota navigate this challenge by focusing on four key perspectives and their respective three components:
Here’s a step-by-step guide to help you use the Balanced Scorecard effectively:
Clearly articulate your strategic objectives across the four Balanced Scorecard perspectives: Financial, Customer, Internal Processes, and Learning & Growth. These objectives should align with your overall business strategy and long-term vision .
Next, identify the key performance indicators (KPIs) to help measure progress toward your strategic objectives across the four perspectives. These KPIs should be specific, measurable, achievable, relevant, and time-bound ( SMART ).
Set clear performance targets for each KPI and develop initiatives to achieve these targets. Initiatives are the specific projects or actions that will drive performance improvements.
Ensure your organization's resources and capabilities align with the strategic objectives and initiatives. This involves allocating budget, personnel, and other resources to support the initiatives.
Track and review performance regularly against the established KPIs and targets. Use performance data to make informed decisions and adjust strategies as needed.
The Balanced Scorecard offers numerous advantages for businesses seeking to enhance their strategic management and performance measurement. These benefits include:
Quantive StrategyAI can help you leverage the BSC in your internal business processes by automating data analysis and providing real-time insights. You can rely on it to:
This lets you make informed strategic planning decisions quickly and confidently, giving you a competitive edge to help sustain your position in a market rife with rapid changes.
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2. trading style selection, 3. strategy development, 4. realistic expectation setting, 5. comprehensive market analysis, 6. risk management rule development, 7. trade management plan, 8. trading discipline maintenance.
The bottom line.
Ask any trader who consistently makes money in the financial markets and they will probably tell you that you have two real choices as an investor: write a plan and stick to it, or fail.
It takes time, effort, and research to develop an approach or methodology that works for you. While there's no guarantee of success, developing a detailed trading plan and following it without fail eliminates many of the biggest causes of failure by investors.
A reasonable plan has just 10 steps. If you don't get it right the first time, refine your plan as you go along.
A plan for day trading is much the same as a plan for long-term investing in the markets. But sticking to the plan becomes even more critically important. Invest only as much as you can afford to lose. Set target prices for gains. Build in stop-loss orders. Above all, don't let impulse guide you during the trading day.
Trading is a business, and you have to treat it as such if you want to succeed.
A plan should be written—with clear signals that are not subject to change while you are trading, but they should be subject to reevaluation when the markets are closed .
The plan can change with market conditions and might be adjusted as your skill level improves.
No two trading plans are the same because no two traders are exactly alike. Each approach will reflect important factors like trading style as well as risk tolerance . What are the other essential components of a solid trading plan? Here are 10 that every plan should include:
If you are new to trading , you should determine your financial objectives, risk tolerance , and time horizon. These items need to be clearly articulated in advance to ensure that your trading activities can be achieved.
A trading style needs to be identified. This style should reflect your personality, culture, and preferences. The plan can include day trading , swing trading , position trading , or long-term investing . The chosen style should align with your goals and timeline.
Your strategy is your approach to the markets. You could rely on technical indicators , fundamental analysis , or a combination of both.
When building a strategy, entry and exit tactics, risk management techniques, and position sizing rules all need to be specified.
Trading always has inherent risks. Realistic expectations for returns need to be set and the potential for losses needs to be recognized.
Avoid the trap of chasing quick profits or risking too much on a single position or trade.
You need to conduct a thorough market analysis to identify potential opportunities. If you're considering a stock, analyze charts, study market trends and news, and monitor the appropriate economic indicators .
Then take a step back and consider the overall market condition.
Allocate a percentage of your portfolio for each trade and don't ever go above the amount you have determined is right for your account.
This amount should be equivalent to the amount that you are willing to lose per trade. Make use of stop-loss orders to avoid big losses and establish clear profit targets to secure gains.
Determine how you will manage your open positions . You should determine when to adjust your stop-loss orders, take partial profits, or exit the trade entirely.
Once you have written your trading plan down, stick with it, Avoid situations where you abandon your trading plan impulsively because the market is doing something that elicits an emotional response from you like fear or greed.
Train yourself to embrace discipline and consistency when executing and exiting trades.
Keep a detailed record of your trading activity, including entry and exit points, reasons for taking the trade, and the outcomes.
A frequent review and evaluation of trades is necessary to becoming a good trader. The evaluation and review of your past trades will allow you to identify patterns, strengths, and areas for improvement.
The percentage of day traders that quit within two years, according to a 2017 paper titled "Do Day Traders Rationally Learn About Their Abilities?" by Barber, Lee, Liu, Odean, and Zhang.
Stay updated on market trends, economic news, and new trading techniques. Read books, attend seminars and webinars, follow reputable financial news sources, and interact with experienced traders to enhance your knowledge and skills.
Traders need to maintain a disciplined and systematic approach to their trades. Also, a well-defined trading plan helps remove subjectivity and impulse from trading decisions.
A trading plan incorporates risk management strategies such as setting stop-loss orders and determining position sizes based on risk tolerance.
Without a plan, traders are exposed to excessive risk.
Some key factors when traders assess risk tolerance are the financial situation of the trader, personal investment goals, risk appetite, and experience and knowledge of the financial markets.
A risk tolerance questionnaire or even a meeting with a financial advisor will help you determine your risk tolerance.
There are many ways to evaluate your trading performance. Not surprisingly, most of them come down to adding up your wins and your losses.
A few common methods include calculating the total return of your trades, determining the profit factor, and using the Sharpe ratio .
Other metrics include analyzing the win rate, the average win amount, the average loss amount, the drawdowns , and the recovery rate. In this case, the recovery rate is the percentage of the drawdowns that the trades recovered.
Practice trading is a useful exercise before you start trading real money in the markets. But it doesn't help a new trader understand how emotion can sway decision-making.
That's one reason why a plan is important. If you make a plan and stick to it, you won't be prone to impulsive moves and uninformed guesses.
Traders who win consistently treat trading as a business. While there is no guarantee that you will make money, having a plan is crucial if you want to be consistently successful and survive in the trading game.
Barber et. al. " Do Day Traders Rationally Learn About Their Ability? ," Page 1.
Learn how to create, manage, and stick to a small business budget with this comprehensive guide. Enjoy a free budget template to streamline your financial planning!
Every small business owner wants their organization to be a success. However, 82% of small businesses fail due to cash flow problems, pricing, and/or cost issues highlighting the importance of proper business budget planning.
A comprehensive business budget is the best way to avoid these issues and support your revenue growth. It helps you identify how best to use your funds to meet your business goals both in the long and short term.
In this guide, we'll break down what a business budget is as well as how to build a budget for your small business with one of our helpful (and free) business budget templates.
A business budget is an essential process that allows you to view your financial resources at a glance helping you to project profits, losses, and overall financial health. It consolidates all your essential financial information including income, expenses, and other variable costs, letting you pinpoint areas that need improvement.
Every business should maintain an annual budget that can be broken down into monthly or quarterly segments. You can also create a business budget for specific events and times of year to help you manage seasonal business and one-time expenses. This allows for more detailed financial monitoring during busy periods.
When creating a budget you need to keep accurate records of outgoing expenses including:
Your business budget also needs to outline expected income.
Every organization needs a clear understanding of their business finances and operating expenses. A comprehensive budget demonstrates your ability to manage finances and plan for future expenses, like loan repayments, to help build a financial plan.
This can increase confidence among lenders and investors regarding your business's prospects. Knowing your income and anticipated expenditures helps you estimate your annual profits or losses and make informed decisions accordingly.
Your budget is a vital tool for evaluating your business strategy, offering insights into what’s working well and where improvements are needed. By creating and analyzing your budget, you can identify successful areas to expand and pinpoint challenges that require your attention and resources.
To make your budget effective, it's crucial to be both accurate and realistic. Overestimating income or underestimating expenses will lead to financial shortcomings and unexpected losses. A balanced, honest budget helps you anticipate challenges, seize growth opportunities, and maintain a clear view of your business’s financial health.
Understanding your business budget helps you anticipate where your business is heading financially, leading to better future business decisions. A budget helps you plan for unexpected costs so you can prioritize and implement changes, limiting the negative impact on your business.
Forward planning enables you to identify cost-saving techniques and opportunities for growth. So remember to consider outside factors, such as market evolution, new competitors, and fluctuations in demand. These factors can influence your business’s finances, but a well-thought-out budget can help you adapt.
A detailed business budget is essential when applying for business loans or investments. Without it, lenders may have misgivings about your company's financial health and cash flow budget. A small business budget distills confidence in your ability to repay the loan both on time and in full.
A strong track record of reliable and detailed budgeting shows lenders and investors that you have the ability to develop a business plan and execute it effectively. Stakeholders need to closely examine your financial history first to be sure they’re getting a good return on investment.
As your organization grows, you may need to implement different types of business budgets, such as:
While each type of budget tracks different expenses, the process of creating a business budget is relatively simple and follows the same step-by-step process.
The first step to take when creating a budget is to list your predicted expenses. This includes both fixed and variable costs associated with business expenses like rent, debt repayment, and the cost of raw materials for products. To make things simple, break these costs down into specific expense categories, this helps you identify and track your biggest financial commitments.
You should also consider potential one-off expenses, like purchasing new equipment or upgrading tools. Think about potential future expenses like marketing campaigns and factor these costs into your budget early on. This ensures that you have the funds you need when you need them.
For example, paid advertising on social media might seem optional at first, but this can become a crucial part of your marketing strategy as your business grows. While specific costs will vary depending on your business, a thorough and realistic budget will help you plan for both expected and unforeseen expenses.
This step is particularly valuable for businesses that rely on multiple suppliers for their products and distribution. Before finalizing your annual budget, consider negotiating with your suppliers to secure discounted rates for any raw materials, products, or services you need.
Building strong relationships with suppliers through negotiations is especially beneficial when struggling with a low cash budget. For instance, you could offer advance payments when you have sufficient cash reserves, and in return, suppliers might be more lenient about late payments in the future. The key objective is to find effective ways to reduce operating costs and improve financial stability.
When creating a business budget you need to estimate your projected revenue based on your income. You can calculate this by multiplying your predicted number of sales by the price of each product or service. Existing businesses can base these predictions on past sales data, but if you’re just starting out, it’s wise to be conservative in your estimates to avoid overspending based on overly optimistic projections. Accurate revenue projections ensure that you can cover your expenses and avoid financial shortfalls, while still allowing room to exceed your expectations as your business grows.
Your gross profit and loss statement represents the cash remaining after your business has covered all of its expenses for the year. It offers a clear view of your company's financial challenges and success, so understanding the metric is crucial.
For example, if your company generated $10,000 from revenue streams but owed more money due to unexpected expenses or an exceeded operating budget then you have poor financial health. This is a sign of bad business performance and can signal trouble for a growing business.
If this is the case for your existing business then you need to identify and eliminate nonessential expenses from your yearly budget. To get a true sense of whether you're running a financially successful business you should calculate the cost of goods sold (COGS) for all materials and subtract this from your total sales revenue. This insight helps you focus on increasing future revenue while reducing unnecessary costs.
Cash flow consists of two main components: customer payments and vendor payments. Maintaining a balance between these is essential for sustaining healthy cash flow within your organization.
To help ensure that customers make their payments on time, offer flexible payment terms that can help if they're experiencing personal finance issues. Despite this flexibility, some customers may not adhere to these terms which can disrupt your cash flow forecast. To avoid this, offer a grace period and establish strict rules around late payments.
Additionally, allow some space for change by first creating a rough budget. Once you understand your liquidity better, you can create a final budget and use this to set aside funds for business essentials. If there is a surplus of cash and you're exceeding your financial goals, then you can allocate these extra budgets towards business initiatives like professional development or purchasing new equipment.
Sales volume can change throughout the year based on seasonal trends, so it's important to create a budget that factors in these fluctuations in revenue. Seasonal changes in revenue require careful cash management to ensure that your business and budget remain stable during the slower months.
To ensure this, create a master budget that analyzes when your business performs best and try to generate enough revenue during peak season to keep things running during the slower periods. For example, if you own a summer clothing company, most of your revenue will come during the warmer months. You can use these earnings to keep your business running throughout the year and offer discounts or promotions to generate more sales during the winter.
With this approach, you can better understand your product's off-season performance, estimate off-season revenue, and determine how much to save during peak periods.
A budget for your business needs to do more than just calculate your net income and losses, it's about strategically allocating resources to ensure your business success. The effectiveness of your spending plays a critical role in how your company manages unexpected costs. Setting clear spending goals allows you to evaluate whether your funds are being directed toward the right areas, helping you avoid unnecessary or wasteful expenses.
For example, if you find that money is being spent on supplies or services that aren’t being utilized in your operations, then you need to assess those costs. Regularly reviewing your budget, helps you identify where to cut costs and eliminate these inefficiencies, ensuring that every dollar is contributing to your business’s growth.
Another crucial aspect of smart budgeting is creating a contingency fund. Unforeseen circumstances can result in unexpected expenses, and having a financial cushion can be the difference between overcoming a challenge and facing a crisis. By setting aside a portion of your budget for emergencies, you ensure that your business remains stable even during tough times, allowing you to navigate uncertainties with greater confidence and security.
Now you have all the information you need to create your own business budget. After you've subtracted your fixed costs and variable expenses from your projected income you'll be able to determine how much spending money you have left. This initial calculation gives you an idea of your available funds helping you understand your financial limits and opportunities.
To help you get started, consider using our free small business budgeting template to help you simplify the process. It includes everything that small businesses need to get started managing their budget without having to invest in pricey accounting software. It covers all the basics you need to start tracking your fixed and variable costs and can be altered to fit the specific needs of your business helping you to make informed decisions that align with your business’s needs.
Creating, managing, and sticking to a business budget is crucial for long-term success. Proper budgeting allows you to effectively allocate resources, anticipate challenges, and make informed decisions that align with your business goals.
You don't need to invest in top accounting software to get started, by following the steps outlined in this guide, you can establish a solid financial foundation for your business and ensure it remains on track throughout the year.
Key takeaways:
For more help, download our free small business budgeting template to simplify the process and start managing your finances more effectively.
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Published: Aug 13, 2024, 7:15am
What is a marketing plan, marketing plan vs. marketing strategy, why businesses need a marketing plan, essential marketing channels, how to create a marketing plan, bottom line, frequently asked questions (faqs).
The difference between a flourishing business and a floundering business often comes down to an effective marketing campaign. This is especially true for small businesses. Every successful marketing campaign starts with a well-thought-out marketing plan. In this article, we will guide you through the steps on how to create a top-notch marketing plan to help put your business on the road to success.
A marketing plan is essentially a roadmap that guides businesses through the complex terrain of promoting their products or services. Think of it as a blueprint that details specific marketing campaigns, timelines, target audiences and channels such as social media , email or traditional media. Your plan should also establish clear metrics for success, the methodology used to evaluate performance and allocated budgets.
It is important to note that a marketing plan is not a static document. It is supposed to be an ever-evolving plan that adapts to market trends, customer feedback and the successful or unsuccessful marketing efforts. If done properly, a marketing plan will help you synchronize your marketing objectives with your overall business goals and ensure every marketing activity aligns with your broader vision of growth.
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Some assume that “marketing plan” and “marketing strategy” are the same thing, but be aware they hold distinct meanings and serve different purposes. A marketing strategy is more big-picture thinking. It identifies your target market, your value proposition, how you position yourself against competitors and how you will sustain your value over time. It involves deep insights into your customers’ needs, market trends and competitive analysis. It is essentially the “why” behind all your marketing actions.
The marketing plan, on the other hand, details the “what” and the “when” of those efforts. Once you have your marketing strategy outlined, you can begin to create a marketing plan. The plan should outline the specific campaigns, activities and tactics you’ll use to carry out the strategy. This includes details on the marketing channels you’ll use, the timeline for implementation, the budget and the key performance indicators you’ll track to measure success. It’s a blueprint that translates the strategy into actionable tasks and schedules.
A carefully crafted marketing plan can be a game-changer for small businesses dreaming of steady growth and a competitive edge over larger companies. Marketing plans with smart strategies and targeted campaigns can level the playing field by helping small businesses carve out their niche. It provides a clear roadmap that aligns marketing efforts with business objectives to ensure every marketing action contributes to the broader company goals.
This focused approach saves small businesses money by efficiently focusing resources instead of using a scattergun approach that can drain limited budgets. By identifying and understanding target markets, businesses can tailor their messaging to meet specific needs, which increases the likelihood of conversion. A solid marketing plan offers a framework for measuring success by setting benchmarks. With careful tracking, small businesses can quickly see what’s not working and adjust strategies in real time for better outcomes.
Today’s businesses have a wide array of marketing channels available to them. From highly analytical PPC advertising to engaging in-person event marketing, there’s no shortage of methods to promote your company.
During the past two decades, social media has proved to be a highly effective way for small businesses to market themselves at little to no costs. Platforms including TikTok, Facebook, Instagram, X and LinkedIn offer businesses a dynamic platform to engage directly with their audience. They allow for the sharing of content, running targeted ads and fostering community through comments and shares. Effective social media marketing can enhance brand awareness, drive traffic and strengthen customer loyalty.
Email marketing is another highly effective way to reach an audience directly. Newsletters, promotional offers and personalized content can nurture leads, promote loyalty and drive conversions. Email marketing offers measurable results and high ROI, making it a staple in a digital marketing strategy toolbox.
Content marketing involves creating hyper-relevant and compelling content that will act as a magnet to attract a laser-focused group of people. You can create blogs, videos, infographics and podcasts to cultivate an engaged community of followers with whom your brand’s message genuinely resonates.
SEO is the practice of optimizing website content to rank higher in search engine results pages. Effective SEO strategies including on-page optimization, quality link building and keyword research help drive traffic to your website.
PPC advertising is a method of online marketing where you pay a fee each time someone clicks on your ad. Popular platforms such as Google Ads and Bing Ads guarantee your ads show up first in search engine results for specific keywords, allowing you to bypass the “organic” results. While the pay-per-click fees can add up, this form of advertising provides immediate traffic and measurable results.
Influencer marketing leverages the reach of influencers in specific niches to help you promote your business to a larger audience. When you partner with a credible influencer, you can tap into their loyal followings, gain trust quickly and drive engagement that will hopefully lead to greater sales. Affiliate marketing can complement influencer marketing by allowing influencers to earn commissions on the sales they drive. This performance-based option is cost effective, as you will only pay for actual results.
Event marketing involves marketing your brand, company or service through in-person or virtual events. It can be anything from interactive webinars and educational workshops to large-scale conferences and industry trade shows. Event marketing gives you the opportunity to directly engage with your audience and hopefully provide a memorable experience for your customers.
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Creating a marketing plan is a step-by-step process. Make sure you take your time with each step before moving on to the next one.
An executive summary is a snapshot of your simplified marketing goals, significant milestones and an outline of future plans. It should encapsulate relevant facts about your brand, setting the stage for the detailed strategy that follows. This section provides stakeholders with a clear understanding of where the company stands and where it intends to go, concisely summarizing the essence of the marketing efforts.
Who are you trying to reach? By identifying your target market you can tailor your marketing strategies effectively to help them reach the people most likely to be interested in your products or services. Outline the characteristics of your ideal customer including age, location, goals, pains and trigger points.
Competitor research is a critical step in forming a marketing plan. Analyze the strengths and weaknesses in other businesses in your industry. This insight can help you identify opportunities for differentiation and areas where you can fill in the opportunity your competitors may have overlooked.
Without clear marketing goals, you are just shooting barrels in the dark. Are you trying to increase brand awareness, boast sales or grow your digital footprint? And if so, by how much and in what timeframe? Use the SMART criteria for goal setting, which advises that goals should be specific, measurable, achievable, relevant and time-bound.
Once you determine what your marketing goals are, it is important to track their effectiveness.
To do this, set baseline measurements for key performance indicators related to your goals, such as website traffic, conversion rates or social media engagement. Monitor these benchmarks on a regular basis and adjust strategies as needed to enhance marketing performance.
Are you going to throw all your eggs in the social media basket? Or are you going to diversify your marketing strategy with both digital and in-person events? This step requires a deep dive into the various channels available—be it social media, email marketing, SEO or traditional advertising. When choosing your marketing channels, be sure to ask yourself where your target audience is most engaged.
Finally, create a budget that covers all aspects of your marketing efforts from paid advertising and content creation to software subscriptions and event sponsorships. This will help you stay financially responsible as more marketing opportunities arise.
One of the keys to a successful business is setting yourself apart from the competition. A strategic marketing plan that details your marketing efforts can not only help you stand out but also provide a step-by-step guide toward reaching your business objectives.
The main elements of a marketing plan typically include an executive summary, marketing objectives, target audience definition, marketing strategies, budget and metrics for performance evaluation. It outlines the company’s strategy for attracting and retaining customers by detailing specific actions to achieve campaign goals, timeline with key milestones, channels to be used and team members responsibilities.
A realistic marketing budget is typically determined as a percentage of a company’s revenue. It is recommended that B2B companies spend 2% to 5% of their revenue on marketing. Because B2C companies typically have a broader range of marketing channels, it is recommended they spend between 5% and 10% of their revenue on marketing.
Every marketing plan should start with a clear mission statement for the marketing department that aligns with the overall mission of the business. This statement should be specific enough to guide marketing efforts but also allow room to adjust the plan as needed. For example, if your company’s mission is “to revolutionize home cooking,” the marketing mission might be “to inspire home cooks and provide them with innovative cooking solutions.”
Jennifer Simonson draws on two decades as a journalist covering everything from local economic developement to small business marketing. Beyond writing, she tested entrepreneurial waters by launching a mobile massage service, a content marketing firm and an e-commerce venture. These experiences enriched her understanding of small business management and marketing strategies. Today, she channels this first-hand knowledge into her articles for Forbes Advisor.
Build a culture of belonging among your people no matter where they are in the world.
Ready to see NFP’s full guide to global employee benefits?
Expanding internationally is an exciting step for your business; it’s a statement of your success and your desire to continue growing. However, without thinking about how to implement a global employee benefits strategy that is consistent with your business’ values and locations, the success of your overseas operation could come under threat.
In this article, NFP’s global employee benefits team shares their top tips on how you can achieve a level of consistency within your business’ international employee benefits strategy. By focusing on global benefits management, you can work to build a culture of belonging among your people no matter where they are in the world.
When it comes to your international employee benefits approach, we suggest having an overriding philosophy as well as several key principles. Ultimately, your capabilities may be limited by local rules, regulations, norms and access to solutions, but you can still create some core values to stand by regardless of location, such as:
The values above can be whatever makes sense for your business and can help you build a picture of what you want your company to be known for, both internally and externally. These clear statements can improve the employee experience and help you recruit and retain the best talent, no matter where in the world your people are based. According to research from Gartner, “Organizations that effectively improve the employee experience can decrease annual employee turnover by just under 70% and increase new hire commitment by nearly 30%.”
By creating a consistent global employee benefits strategy for your people, no matter where they’re based, you can ensure:
Your budget will play a huge part in determining your global employee benefits strategy and which benefits you can offer to your people.
Benchmarking and networking with peers can be a good measure of how an employer’s global benefits strategy shapes up in the market, allowing you to offer a starting point from which you’re able to develop further. At the very least, you should be looking for the legal minimum to make sure your offering is compliant, then beyond that, ask yourself questions like:
Although it may sound easy to create global employee benefits philosophies and standards to support the well-being of your people, the challenges appear when you start looking at things on a granular level. While you may be able to keep your core values more general, you have to get specific when it comes to the insurance coverage that you are providing to your people. We’ve examined some general global employee benefits philosophical statements and highlighted why they may be hard to implement.
Philosophy statement: “We will provide all our people around the globe with at least three times salary life coverage.”
Challenge: Norms for this specific type of coverage can be four or even five times in some parts of the world, including in certain parts of Europe. So, because this norm has a wide range, it can be very difficult to implement three-times salary life cover; this would be not enough coverage in certain parts of the world.
Philosophy statement: “We will provide a retirement program for all employees.”
Challenge: When it comes to pensions and retirement, these can look very different from country to country, and many nations even offer retirement programs in some form. France, for example, has a state system, while in the UK it is standard to also pay into private plans. In parts of the Middle East where there is very little tax, pension and retirement benefits are not the cultural norm, with employers instead usually offering termination indemnities instead of a workplace saving plan.
Philosophy statement: “Everyone will need coverage, but we will leave it to each location to make its arrangements.”
Challenge: While it may be true that everyone in your organization needs medical insurance, figuring out if you should leave it up to each country or implement this benefit from a central level requires a lot of factors to consider. These are the types of conversations a specialist employee benefits partner can have with you through the process of benchmarking and ongoing consulting.
In scenarios like this, your business can deeply benefit from external global employee benefits consultants and partners. The biggest challenge is basing your strategy on principles that can be consistent from location to location, even if the benefits themselves may not look the same. A partner you can depend on can help you come up with these consistent principles and back them with benefits that fit the location and your predetermined business values.
If you run an international business, we understand how challenging it can be to manage the global employee benefits strategy in all your locations. From navigating legal and tax legislation to understanding local cultures, creating compliant and competitive benefits packages in multiple countries is no easy task.
In our latest guide, our global employee benefits management specialists outline how you can help your business thrive internationally , i mplement new benefits and, importantly, ensure they remain fit for purpose . You will learn:
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Why do I need a small business budget? Every organization needs a clear understanding of their business finances and operating expenses. A comprehensive budget demonstrates your ability to manage finances and plan for future expenses, like loan repayments, to help build a financial plan.
Revising your financial projections is a critical first step in adapting your business plan for capital raising, as it ensures your business remains aligned with current economic realities. By reflecting these realities in your forecasts, you demonstrate to investors that you are aware of and responsive to shifting market dynamics.
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