Developing a Strategic Plan for Your Business

by E. Keith Uselton, CPA

"Mountain climbers don't start climbing from the bottom of the mountain. They look at where they want to go, and work backward to where they're starting from. Like a mountain climber, once you have the summit in view, you figure out all the ways you might get there."

Warren Bennis
On Becoming A Leader

A well-conceived strategic plan can help your business reach the summit of success. Given the amazing speed of change in our global economy, strategic planning is essential in enabling business owners to cope with, and capitalize on, the environment in which we operate. The following are some key components of a business strategic plan.

Where Do You Want To Go?

You've heard it said before, "Begin with the end in mind." In this situation, "the end" is your summit. Look at your business’ past accomplishments, then develop your vision for the future. A "S.W.O.T." (strengths, weaknesses, opportunities and threats) analysis serves as a good model for strategic planning. Here is an abbreviated definition of the components of the S.W.O.T. analysis.

Strengths - These are the functions your business is performing well. These functions work effectively while supporting growth and profitability. In addition, any area of your business considered beneficial by your customers can be considered a strength.

Weaknesses - These are the functions that fail to meet the standards or goals set by management. Positive, proactive reflection on your company's weaknesses can actually lead to opportunity, which is the next step in the S.W.O.T. model.

Opportunities - These represent the external or environmental factors that give your company a real or potential competitive advantage. Naturally, you will want to create a strategic plan that will seize your opportunities.

Threats - These are external or environmental factors that are real or potential competitive disadvantages for your company. Threats may come from the same place as your opportunities – in the marketplace, in technological advances or even from regulatory agencies.

Consider a broad perspective in your S.W.O.T. analysis by seeking the input of your managers, employees, customers, suppliers and even the public. Armed with the vital information obtained through this analysis, you can develop or enhance your vision for the future of your business.

Develop Your Vision for Your Business

Well informed with an honest "self-assessment," you can now proceed to enhance your vision for your business. Focus on your strengths. Anticipate how those strengths can help you today and into the future. Define or enhance the mission for your company and seek to truly make it part of your organization's culture.

Mold Your Strategic Plan to Achieve Your Vision

Will you need to introduce new products or services to achieve your vision? What changes in revenues do you anticipate in the next three to five years? Is market expansion part of your mission? Addressing these questions and preparing a written commitment of your goals will provide the guidelines for your strategic plan. A strategic plan will lead you to focus on both your customers and your market conditions. Your plan should also help you focus on human resource issues. Considering your work force now, as well as potential changes needed in the future, will be critical to achieving your goals. Also, given your strategic plan, what capital requirements will be needed in order to achieve your vision? Planning for such needs will give you more time to explore your options and makes approaching potential lenders or investors far more effective.

Business Results - Reaching for the Summit

You will certainly want to set benchmarks by which you can measure the success of your plan. Maybe your benchmarks will be a particular level of customer satisfaction derived from researching the attitudes of your current customer base. Perhaps it will be based on sales goals. It is very likely you will have several benchmarks against which to measure.

Your strategic plan should also include action items that are associated with each goal or benchmark. While some of these action items can be established at the outset, others may be determined as the strategy is implemented. Once you have completed your strategic plan, the next step is to develop a budget that reflects the direction you intend to take based on your plan.

Summary

Developing a strategic plan is a time-consuming process. This is especially true for your initial plan. Most companies will need to review their plan annually, perhaps by scheduling a planning retreat.

A strategic plan serves as the road map for where you want your company to go in the future. Without such a road map, an organization is subject to being tossed about like a ship without a rudder. A business with a well-developed strategic plan, however, is in a far better position to control its own destiny.

Your strategic plan should be a document that is appropriate for communicating to management, staff, shareholders and others who will play key roles in its implementation. Done effectively, it can function as a tool for boosting morale, teamwork, growth and personal satisfaction. And, it can help you "reach the summit" of success for your business.

About the Author

E. Keith Uselton, CPA, is a partner with Daniels, Uselton & Clay, PC., a certified public accounting firm in Kingston, Tenn. Uselton is a member of the Tennessee Society of Certified Public Accountants, the state professional organization for more than 8,000 CPAs in government, education, industry, business and public practice and its Knoxville Chapter. TSCPA's Knoxville Chapter is one of eight chapters across the state with more than 1,100 members in 17 counties. For more information on small business issues, visit the Tennessee Society of CPAs' Small Business Resource Center on the Web at www.tscpa.com.