Every business owner wants to succeed, but success is rarely reached in one day. Getting from point A to point B requires you to sit down and evaluate your current position, as well as what you need to do to move toward your goals. Strategic planning is the process you need to make this happen.
Backing your brand with a solid business strategy is the best way to help it get a competitive advantage. By committing to paper your goals, opportunities, and complete action plan, you’ll be better equipped to build a sustainable, growing company.
Keep reading to learn more about what exactly strategic planning entails and how it can benefit you.
What Is Strategic Planning?
Strategic planning is the process of setting specific long-term goals and short-term action items to guide all of your team’s decisions. This process requires you to consider both your own company and your external environment, so you can wisely move through each step.
The result of effective strategic planning should always be a written strategic plan that outlines your path for the next 3-5 years. As you communicate the overarching details of your plan to your team, your entire organization will be better aligned and working toward the same goals together.
Benefits of Strategic Planning
No matter the size of your business, strategic planning will help you establish where you’re headed, leading your team to be more accountable and more proactive than you would be otherwise. When you’re no longer reacting to changes in your market, you can always be one step ahead, whether you’re launching innovative new products or creating unique business processes for max efficiency.
A strategic plan is also useful for bridging the gap between leadership and staff. It better enables you to communicate your company’s “why” and “how,” so every team member’s actions are fully aligned with your organization’s missions and strategic goals. This organization-wide clarity will lead to greater productivity and desired results that are more quickly accomplished.
5-Step Strategic Planning Process
Every strategic plan includes five key elements that help you move toward your ideal results for your business. To effectively put all of these elements together, follow our step-by-step strategic planning process below.
1. Define Your Mission and Vision
Before you dive into the specifics of your strategy, you’ll want to set clear statements that your leadership team can refer to as guidelines throughout the strategic planning process. Most frequently, business owners will use a mission and vision statement.
A mission statement is best described as the purpose of your company. Think about why your company exists and what value you want to provide. Here are examples of mission statements from two successful companies:
- IKEA: “Offer a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them.”
- Southwest Airlines: “The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.”
As you can see, mission statements are traditionally highly actionable statements that can directly inform your strategy formulation. Vision statements, on the other hand, will be more concise and offer a broader picture of your aspirations. Take a look at these examples from the same two companies:
- IKEA: “To create a better everyday life for the many people.”
- Southwest Airlines: “To become the world’s most loved, most flown, and most profitable airline.”
Together, your mission and vision are the two parts of your strategic plan that will offer your team members the most clarity when it comes to what your organization stands for. Most businesses choose to communicate these two statements to consumers as well.
2. Select Your Core Values
Once you have your mission and vision statements set, it’s time to select your core values. These are short phrases or words that describe the beliefs that drive your decision-making and help you determine the right and wrong paths. Your values are key to encouraging consistent actions and finding like-minded employees who fit your culture.
Most companies will select 3-10 concise values, and some will even write out a deeper explanation for each one. For example, take a look at Gusto’s list of core values:
- Ownership mentality. Every employee has the power to make our company better.
- Don’t optimize for the short term. Short-term gains never justify long-term sacrifice. Invest in the future.
- We are all builders. We are collectively building the product and company of our dreams.
- Go the extra mile. Go beyond delivering what works. Discover what delights.
- Do what’s right. What is right isn’t the same as what is easy.
- Be transparent. Share information. Share mistakes. Share victories.
Much like your mission and vision statements, your core values are often shared publicly, as consumer loyalty increases when buyers know their favorite brands stand for the same beliefs.
3. Perform Your SWOT Analysis
The next step is figuring out where you stand in your market by considering external factors like competitors and consumer trends. In strategic planning, this process most commonly takes the form of a SWOT analysis — with “SWOT” as an abbreviation for strengths, weaknesses, opportunities, and threats.
Within the SWOT analysis, your strengths include what separates you from your competitors and what resources your company uniquely has. Your weaknesses, on the other hand, are things that are holding your business back from performing its best or beating competitors. These may include resources that you lack access to.
The “opportunities” part of your SWOT analysis allows you to consider the gaps between your strengths and your competitors’ strengths. Think about what trends, events, or audiences that neither of you has tapped into, but can help you succeed.
While your threats can include factors like new competitors that impact your business, they should also include factors that will negatively impact your industry as a whole. For example, new technologies, local regulations, and changes in consumer demand can be major threats to your company but also impact your competitors just as negatively.
4. Set Your Goals and Objectives
With your strengths, weaknesses, opportunities, and threats in mind, you can move on to the next step in your strategic planning process: selecting long-term goals and short-term objectives.
Your goals should be fairly high-level milestones that you plan to achieve by the full 3-5-year time frame that your strategic plan remains relevant. For example, you may plan to increase your profits or increase your market share.
Most business owners will use “S.M.A.R.T.” criteria to build their objectives. This acronym stands for specific, measurable, achievable, relevant, and time-based. That said, your objectives should provide exact numbers and deadlines for your achievements. For example, if your goal is to increase your profits, your S.M.A.R.T. objective may be “to decrease operational expenses by 20% within six months.”
5. Outline Your Strategies and Tactics
Your long-term goals and short-term objectives are accomplished through the development and execution of your strategies and tactics. Within the strategic planning process, your strategies are the overarching plans of action that you’ll take, whereas your tactics are the specific steps that you’ll have to take to complete the strategy.
Let’s say for example that your objective is to become a recognized brand among 75% of consumers in your state within three months. Your strategy may be to increase your locally-based Facebook following by a given percentage, while your tactics may include setting up targeted Facebook ads.
Each strategy within your plan should have its own set of tactics listed under it, much like tasks you need to check off.
Frequently Asked Questions
Now that you understand how to start your strategic planning process, you’re ready to take your business to the next level. Here’s a set of answers to frequently asked questions so you can form the most effective plan possible:
1. What’s the difference between a strategic plan and a business plan?
Every business owner needs to write a business plan to launch their business, product, or service and get their initial funding. This is because a business plan is focused on detailing your brand, what you’re selling, and how you’ll operate — typically over the course of a year or less.
A strategic plan, on the other hand, serves as your guide for long-term decision-making and is necessary for continued growth. While a business plan is often written with external investors in mind, your strategic plan is most often communicated to your internal team, so you’re all moving in the same direction.
2. Can I make changes to my strategic plan before the 3-5 years are up?
Absolutely. In fact, we recommend re-evaluating your plan and performance at least once per quarter. The business environment is constantly changing in the modern world, which means you need to be proactive when new technologies change the landscape, competitors move toward new strategies, and consumer behavior shifts.
While your organization’s goals should remain fairly stable, the results of your SWOT analysis are bound to change every once in a while and you may choose different tactics as a result.
3. How long should my strategic plan be?
There’s no specific length that your strategic plan should reach, as long as it’s a thorough summary of your strategic planning. This can result in a 15-page (or longer) plan.
Because strategic plans can be lengthy, many will include an executive summary at the top to capture the basic details of the plan. Some businesses may even create a one-sheet summary to share with their employees.
Achieve More Goals
As you move further down your strategic planning process, your path to success becomes clearer and clearer. By the end, you’ll know the exact steps you need to take to achieve your goals and make your overarching mission and vision possible. This, in turn, enables your business to continuously stand out as a leader in your industry.
If you’re just beginning to bring your ideas to life, you may need to create a business plan before you even think about strategy. Get started learning how to run a business and develop this initial plan in our guide.