8 practical strategy and business planning tips that makes a difference
Entrepreneurs spend almost all their time awake thinking about and developing their business – this article gives you 8 proven and practical business planning tips. Listen to peers, customers and employees and resonating with them self while seldom including more than one or maybe two close colleagues in their business development thoughts.
There is usually some kind of strategic thinking behind their business development but strategy documents as such are seldom needed in the early days of building a business. The business idea is created and gradually developed on a trial and test basis.
Sooner or later however the entrepreneur comes to a point where he starts to lack ownership, initiative, accountability and leverage from his employees. His resources. Despite their hefty salaries and sales commissions.
This is where strategy and business planning can play a role. Developing a strategy together, even if it only means that an already existing de facto strategy is discussed and documented, serves the purpose of engaging your employees to become more than only your resources. You cannot tell employees to be as target oriented as you yourself the owner and entrepreneur. You need to create a target-oriented team together and here is where strategy and business planning as a process usually serves a role.
It takes time to go through a strategy and business planning process with 10 or 20 key employees from sales and operations. The benefits however include a jointly created foundation that will nurse employee ownership, initiatives and accountability. Setting aside a few days-worth of strategy work easily pays off with much more engaged and accountable employees then before. That’s leverage.
8 proven and practical tips for a strategy and business planning process that makes a difference to your business:
- Articulate an ambition and direction as the starting point for your business development discussion. It should be challenging and forward-looking but not completely unrealistic. It’s your company mission.
- Set a sales and business development framework by starting the strategy work by discussing the market, the ambition and how you can and will make a difference vis-a-ví competitors. Start listing possible leads and discuss how you as a company can make a problem-solving difference for those potential customers. Be specific with a 2-year focus and a 5 – 10-year directional ambition.
- Discuss operations. This is often an overlocked area but involve your key sales executives together with your operations people to discuss the sourcing, purchasing, production and logistics strategy and planning. The benefits will include your sales executives deeper understanding of the pricing and operations complexity and what they as sales executives need to consider when they make new sales promises and contracts.
- Set activity-based milestone targets for the business as a whole, for each business area and for major functions like engineering and operations. One to three quarterly milestone targets during Year 1 and one or two semi-annual milestone targets for Year 2 for each area and function is quite common. It will not be too detailed but still enough activity-based milestone targets to work against to really make a difference within all parts of the company on its transition towards the overall growth and margin targets.
- Don’t overdue. It is the process itself, the discussions, joint-conclusions and not list the (coordinated) milestone targets that’s makes a productive business development process. You can use one of many strategy frameworks to structure your processes or you can make it really easy for yourself and follow these eight advises on mine.
- The format for your process shall typically include kicking-off with a one full-day off-site venue for item 1 – 3 on this list. End your day with a joint dinner for those important unofficial discussions afterward which will be an important part of your team-building exercise for your 10 – 20 key employees. A month later you reassemble the team for another full-day off-site venue to recapitulate and start discussing and defining relevant and synchronized activity-based milestone targets for each area and function. The thoughts and conclusions from your first off-site venue will have matured with your team and this second session will be the ownership and accountability foundation for the next 1 – 2 years.
- Document your discussions. Your articulated mission and the initial framework discussions are essentially your strategy that you have now involved your key employees to draft and hence can start to expect some ownership and accountability from. Your agreed milestones together with a financial budget is your business plan. Make draft power point documents after your first off site discussion and distribute it well in advance of your second off-site venue. Don’t miss this and don’t distribute the material only at your second venue. Finally make your two final documents nice looking and you will find parts or them very useful also for general communication purposes (with your bank, at sales meeting, employee gatherings, etc).
- Once done you need to follow-up on the quarterly delivery of milestone targets. Fulfilment of these activities ensures that all parts of your business work according to your expectation and ambition. Having synchronized all milestone targets from the beginning ensures that sales and operation grows in harmony and that you don’t miss-out on sourcing or other areas that could hurt your margins in a negative way. At the end of Year 1 you reiterate the process and move the 2-year horizon forward (like a rolling-forecast). This second strategy and business planning process and the once thereafter will become much smoother than your first inaugurating process. Once again, you will empower your team and continue to build on ownership and accountability. Once again, it is nothing you can tell or direct people. You earn it by giving your employees their benefit of trust in co-developing your strategy and business plan.
There are many resources on the internet should you like to digg deaper into what other say about strategy and business planning. Here is a link to some examples from McKinsey. Many consultants will be happy to help you with your strategy and business planning process and most of the larger firms have their own strategy planning models and steps to go through. I myself use above simplified and proven 8 steps to boost the value of strategy and business planning beyond the documents it self. To me, the journey and getting your 10 – 20 key executives on board in terms a to-do ownership and accountability is amongst the most important with the strategy process. Getting a list of synchronized activity-based milestone targets is also important to me although not always part of other advisors planning processes.
Bonus tip: Enhancing your status with other stakeholders:
Beyond formulizing your ambition and the direction of your business and start building ownership and accountability with your 10 – 20 key executives, you will find other stakeholders benefiting from your strategy and business plan document:
Your bank: Most businesses don’t have documented strategies or business plans while bankers themselves are employed in environments surrounded by planning and follow-up processes. Correct or not; well prepared strategies and business plans are often seen as a sign of a successful client to many bankers. Clients that are private equity owned and clients with multi-billions in sales has extensive strategy and business planning documents making their way of presenting themselves a benchmark also to smaller businesses. Use your strategy document and an extract of your business plan to pro-actively communicate with your banker. Stand out amongst your peers. It pays off long-term. That I can guarantee.
Sales meetings: Ambitious customers likes ambitious suppliers. Use parts of your strategy document at introductory sales meetings with prospective customers. “Hey, we have great ambitions within your area and like to share this with you.” Few prospects will turn down such an invitation and off you go for more in depth discussions on challenges these leads are facing themselves.
Supplier meetings: As with sales meetings, you can sometimes benefit in meetings with major suppliers or distributors if presenting a solid growth strategy. Done correctly with key suppliers can help you get priority within their system and organization.
Staff meetings: You will find parts of your strategy and business planning documents very useful at general staff meetings. It will be a handy reminder and culture building material to reconnect with and talk about also at larger staff gathering and venues.
Exits: Often strategy and business planning only come together ones the entrepreneur starts to consider his exit. It is well-known that such documents are desired at an exit process. Often suck documents also put a finger on important areas to fine-tune ahead of a sale and hence working with a somewhat formulized strategy and business planning process well ahead of a possible exit is almost always very value-driven.
Three common strategy and business planning mistakes:
- When less than a handful of people set together a strategy or business plan they leave ownership and accountability to these few alone. I.e. not involving key individuals in each business area and major function means missing the main points of the process: ownership and accountability for the direction, desired initiatives and deliverables.
- The journey is the key benefits. i.e. discussing, understanding, aligning and excluding will be completely missed when strategy or business planning is a set of power points only and not really used as a condensed process to develop the business. It’s the process, not the document, that is the journey and the benefit when attempting to scale with productive co-workers rather than resource employees only.
- In larger organizations planning professionals becomes a problem, often difficult to see for those involved. The executives do often not know the inner part of the business. These people often organize year-around planning cycles with strategy discussions and templates in the spring, a strategy conference in the late summer and an exhaustive business planning process during the autumn. It’s their only job. Get rid of them and hold executives, key sales and operations people accountable to develop and plan their own business in above proven and much simplified eight value creating steps.
No need to wait to year end with your strategy and business planning. No need to follow the calendar-year to rip out the main benefits of above practical strategy and business planning process:
- Ambition and direction clarity.
- Joint sales and business development to create ownership and accountability.
- Operations buy-in and understanding.
- Activity-based milestone targets.
- Ownership and accountability for desired initiatives and deliverables.
- Follow-up framework.
- Documents made available for multiple purposes.
Good luck! Great entrepreneurs not only know how to surround them self with the best people available, they also know how to engage great people and how to make them feel part of a team. If you need help, please find more info hear.