Important Elements of Business Strategy Planning Process

Business Strategy Planning is a process in which an organization's management team analyzes its business affairs and outlines a course of action that it will take to increase the value of the company.  A strategic planning process should be conducted periodically to help an organization develop its goals and objectives.  It enables senior managers to make long-term plans for their businesses and to assess the short-term (1-year) plans that are formulated in the Business Planning Process.  It is not easy to conduct this strategic planning process, as it requires time and money; therefore, only those companies that are committed to shaping their business' future should attempt it.

In this article, I will explain the foundational elements you need to start your strategic plan such as vision statements, long-term goals, and an action plan, developing Key Performance Indicators, how to create a SWOT Analysis, different business strategies you should consider, and finally, five factors business leaders who develop the strategic plan should take note of.

Foundational Pieces You Need to Create a Great Strategic Plan

Businesses, no matter what the size, need a vision for how it is going to be successful. The vision can come from existing practices, or be completely unique and innovative. Once there is a vision in place, a business needs to develop long-term goals and a plan of action to achieve that vision.

Vision Statements

Vision statements can come from business owners who have been in the industry for decades, or vision statements can come from innovative, young entrepreneurs. Vision statements are important because they provide a vision of the future that you want your company to have. Although vision statements are typically quite long, they should be concise enough so employees and customers will understand it quickly.

Long-Term Goals

Once there is a vision statement in place, vision plans have to be made with long-term goals. These long-term vision goals may not seem realistic at first, but once a company is able to work towards these vision goals and make them a reality, it will set they business up for success.

Action Plan

Developing vision statements and vision plans are great when you can use them, but vision plans are never useful if no action plan is ever created. It is important to create an action plan that will work at achieving the vision goals of your vision statement. If there is no action plan in place, it becomes difficult for employees (and other stakeholders) to understand how they can help you achieve vision goals.

Vision planning is an important process that vision statements, vision plans, and action plans are all created. The vision planning process can be difficult to understand at first, but vision statements make vision planning simpler because vision statements provide a vision of the future many businesses hope to achieve.

Businesses that have vision statements, vision plans, and action plans can be more competitive because it allows them to bring a sense of vision realism to their business.

Once a vision plan is in place, you can begin creating an action to achieve your vision. It is important for businesses to have concrete vision plans because it sets them up for success from the very beginning.

How to Determine Your Key Performance Indicators

Key Milestones

Milestones are the significant targets that need to be achieved by a company in order for it to achieve its vision and mission on time. Milestones are measurable as they have specific start and end dates as well as a target completion date.  In order to strengthen your company's financial performance, milestones should be focused on the delivery of key business plans and objectives that have been outlined in your Strategy Roadmap. Examples of Key Milestones include:

• Earn a revenue of $50,000 a month by March 2022

• Achieve $10,000 in net profit by July 2022

• Increase brand awareness among the target market by 10% a month between January and June of next year

• Have a 50% growth in sales this August as compared to last August.

• Supply more than 80% of your key customers' demand by September 2022

• Achieve a return on investment of 100% within 6 months.

Key Strategic Objectives

Strategic objectives are the goals that help your company achieve its vision and mission over time.  They are measurable as they have specific start and end dates, along with target values for completion.   They should be aligned with your company's mission statement, vision and core values.  The best way to develop key strategic objectives is by following the SMART system:

Specific – The objective must be specific in nature. For example, instead of just saying "increase revenue," you would say "increase quarterly revenue by 15% to $5,000 by December 2022."

Measurable – An objective must have a target date for its completion.  This allows your company to know that the objective has been achieved upon reaching it.

Attainable – The goal that you set should be realistic and achievable within the designated time frame.  It's important to challenge yourself when setting strategic objectives, but it's also important to make sure they are not too difficult to reach.

Relevant – The objective should be relevant and in line with your company vision.  For example, "achieve a 15% quarterly revenue increase by December 2022" would be more relevant than "achieve a 25% quarterly revenue increase by December 2022."

Time-bound – A time-bound goal has a specific deadline.  Since we're talking about strategic planning and not just day-to-day business planning, you should set a time frame for the completion of your objectives.

Key Business Initiatives

Business initiatives are those activities that help achieve strategic objectives and maximize your time, money and energy.  It's best to prioritize initiatives that will have the biggest impact on revenue growth.

Key Performance Indicators

KPIs are measurements that help you track progress within a certain timeframe against specific goals or objectives.  They should be relevant to the vision of your company and should be measurable with specific start and end dates.  For example, if your company's vision is to "increase brand awareness," one of its key performance indicators could be the number of social media followers it has gained over a six-month period of time.

Key Performance Indicators should help you track progress against goals or objectives that have been set by your company.  They should be specific, measurable, attainable and relevant to the vision of your company.

They help you determine whether or not you are on track to achieve your key business objectives. They also allow businesses to monitor performance over time so that they can make any necessary adjustments in order to meet their milestones and ultimately, increase profitability.

For example, if your company's vision is to "increase brand awareness" among the target market by 10% a month between January and June of next year, one of its key performance indicators could be the number of social media followers it has gained over that six-month period.  By tracking this KPI monthly, you'll be able to determine whether or not your objective is on track, and if it's not, you can make adjustments as needed.

When developing key performance indicators for your company, outline the specific progress you hope to see made by a certain time frame.  Then figure out how you'll be able to tell when this goal has been reached.   For example, instead of "increase the number of qualified leads," you would say "increase the number of lead conversions by 20% in a six-month period."

They should be relevant to the vision and mission statement of your company, as well as allow you to track progress over time.   They should include specific start and end dates.  For example, "increase quarterly revenue by 15% to $5,000 by December 2022."

When developing a strategic plan for your company, include the following:   Your Key Business Objectives and Initiatives;  Your Key Performance Indicators; and  A time frame in which you hope to complete your Key Business Objectives.

Key Performance Indicators are important to business strategy planning because they allow you track progress against your strategic objectives and help determine if your milestones have been reached in a timely manner.  Having KPIs in place will also help you monitor the efficacy of your business initiatives, which should help increase profitability, brand awareness or whatever other goal you are striving to make reality.

They are important to business strategy planning because they allow businesses to monitor performance over time so that they can make any necessary adjustments in order to meet their milestones and ultimately, increase profitability.

The SWOT Analysis: A Key Deliverable of the Strategic Planning Process

A SWOT analysis is an analytical tool used to identify the strengths, weaknesses, opportunities and threats involved in a project or business venture .

This method has four categories which are often listed as:

Strengths - Weaknesses - Opportunities - Threats

The acronym SWOT originates from the first letter of each word.

The SWOT analysis uses this information to help answer the question "what opportunities and threats does this present for our business?"  A SWOT is created by answering key questions about your business, the environment you're operating in and its position within that environment.

These may include questions such as:

- What are our existing strengths that we can build on?

- Where are our weaknesses?

- Where are the opportunities within our environment?

- Where are the threats to us coming from ?

A SWOT analysis is particularly useful at the early stages of business planning.  It helps you identify potential obstacles, estimate potential demand or work out what areas you need to research or invest in before you can progress with your project.

A SWOT Analysis Example

- Our company, xyz Ltd. is a design firm specialized in the construction industry

- We are known for our creative designs and have worked on many projects involving large building megastructures around the world

- Unfortunately, we have struggled lately to find new business

- We need to research how we can turn this around and find new opportunities within the construction industry

Strengths - Creative design ideas unique to our company, knowledge of the construction industry

Weaknesses - We lack any corporate structure so don't have managerial experience in the field

Opportunities - New building megastructures being built around the world

Threats - Our main competition, abc Ltd. is a well established business seen as leaders in the industry and specialize in large construction projects.

7 Different Business Strategies to Consider in Your Plan

Businesses worldwide are in a constant state of fluctuation, and to survive the ever-changing business landscape, it is necessary for businesses to adopt new strategies that will aid them in achieving their goals.

As such, companies must not just be aware of how the market changes, but also they must entrench themselves in research on what works best for them and their own market.

There are several common types of business strategies that work, and which can help companies to achieve their goals:

Price-based strategy

This is a business strategy where the use of lower prices than those offered by competitors is used as a sales-driving tactic.

An example for this would be Black Friday sales in the US, where retailers slash prices to encourage customers into their stores.

The price-based strategy works by ensuring that the customer always links value with price, and thereby provides other incentives for purchase other than low cost e.g. convenience of location or other services. Price-based strategies are particularly effective during recessionary periods when inflation is low and customers are looking to save money.

Product-based strategy

This is a business strategy where the product is best positioned as premium or luxury e.g. Apple products.

The product-based strategy works by ensuring that the customer always links value with high quality, and thereby justifies higher costs for items since they will last longer. Large companies with vast resources are more likely to be able to adopt the product-based strategy, whereas small companies would not have the resources or economies of scale that are needed for this strategy to work.

Promotion-based strategy

This is a business strategy where promotional campaigns are used as a sales-driving tactic e.g. the Coca-Cola polar bear advert.

The promotion-based strategy works by ensuring that the customer always links value with promotional campaigns, and thereby encourages other purchases since they are attractive or desirable. Adopting this strategy requires large advertising budgets since commercials will need to be played regularly for consumers to take notice of them.

Place-based strategy

This is a business strategy where the use of retail channels with favorable locations is used as a sales-driving tactic e.g. the Apple Stores in the US and UK (where they are most profitable per square foot).

The place-based strategy works by ensuring that the customer always links value with retailer location, and thereby encourages other purchases since they are attractive or desirable. Success of this type of strategy requires retail outlets to be strategically placed in areas with high footfall, therefore retailers must always keep up with the latest trends in terms of consumer behavior and where people spend their time (e.g. shopping malls).

People-based strategy

This is a business strategy where employees are treated well in terms of salary, benefits and job security, in order to attract the best talent.

The people-based strategy works by ensuring that the company always links value with its employees' well-being, and thereby encourages other purchases since they are attractive or desirable. This strategy requires large budgets for staff salaries and other benefits, therefore it is typically only suitable for larger companies with sufficient financial resources.

Process-based strategy

This is a business strategy where emphasis is put on streamlining processes to make them more efficient e.g. ISO standards in the process of manufacturing to reduce wastage, time and cost.

Process-based strategy works by ensuring that the company always links value with process improvement, and thereby encourages other purchases since they are attractive or desirable. Success of this type of strategy requires internal restructuring and improvement in processes and procedures to make them more efficient, therefore it is typically only suitable for larger companies with sufficient financial resources.

Productivity-based strategy

This is a business strategy where emphasis is put on increasing productivity levels e.g. deploying new staff or modernizing equipment in order to increase output per worker/unit of input.

Productivity-based strategy works by ensuring that the company always links value with increasing productivity, and thereby encourages other purchases since they are attractive or desirable. Success of this type of strategy requires internal restructuring and improvement in processes and procedures, therefore it is typically only suitable for larger companies with sufficient financial resources.

5 Factors the Management Team Should Consider in the Strategic Planning Process

A strategy is a high-level plan for achieving specific goals. It involves both the goal and the steps needed to get there, and it must be realistic and achievable. The entire management team should work together to create a strategy.

First, the team should make sure everyone agrees on what the business's mission statement is; this will affect how they define their target market and how they approach the marketplace.

Second, they should look at their organization's strengths and weaknesses. Doing thorough research on this can help them to decide how to proceed with the strategy; for example, if they are strong in finance but weak in production, it would be wise for them to create a business relationship with another firm that is strong in production.

Third, it is important for the team to define their target market; this will give them a better idea of how they can make themselves stand out from their competition and be unique.

Fourth, the management team should consider what goals they want to meet and what objectives will help them achieve those goals. For example, they might decide to increase their annual revenue by 20%. In this case, they will need to come up with a series of objectives that can help them reach that goal.

Fifth, once they have done all of the research and laid out a plan for achieving their goals, they should develop a strategy that is realistic and achievable. They need to make sure they have a good understanding of the marketplace so they can put together an appropriate strategy.

It is important for everyone on the team to work together because without their collaborative efforts, the entire company will suffer. All members should be open to sharing ideas and opinions in order to create a well-rounded plan that has managers across all departments involved.

All members of the team should be open to new ideas and perspectives, while being realistic about the goals they have set. Being aware of their own strengths and weaknesses will help them to come up with a workable plan for achieving their goals. It is important that everyone helps with brainstorming and coming up with the best possible solution; if not everyone is included, the team stands the chance of missing out on an important piece of information that could drastically affect their strategy.