Strategic planning is a process that every business should undertake no matter how big or how small. Some smaller businesses think that if they have a business plan that is enough. But it is not enough. Businesses without strategic plans are vulnerable to environmental issues of every kind- physical, political, competitive, consumer trends, etc.
A business without a strategic plan is like going out to work for the day when there is a 30% chance of rain and leaving your umbrella at home. It might rain but it might not. And there is a good chance that when it rains it might really pour. Failure to adequately plan is what’s wrong with business and strategic planning. A small poll I conducted showed that some companies are still conducting strategic plans on a limited basis, like every three or five years. I discuss this in my article “What’s wrong with strategic planning.”
Strategic planning for small business is equivalent to having a business survival plan at your disposal. Here are a few recent examples of why strategic plans are necessary.
- A new retail clothing business located in a downtown area is in its second year of operation and it is finally starting to gain some foot traffic and name recognition. Suddenly the community is faced with very visible national publicity of its high crime rate. The negative publicity will most likely affect the walk in traffic this business was starting to see.
- An island restaurant business is counting on the last week of the summer to make profit objectives but is taken by surprise when a hurricane hits. The last hurricane to hit the area was more than 7 years ago so it simply did not plan for another one. While the business has a emergency plan in place it did not have strategic plan in place to address loss in revenue and marketing considerations.
- Who knew that a road paving project would take three weeks and cause local traffic to avoid an entire shopping area? One small medical practice did not anticipate this kind of disruption and the impact it would have on its customers. Having the information after the fact put this company in the position of having to reach out to patients it lost during this period who were frustrated with trying to figure out how to access their location.
In my consulting practice one major customer was acquired by another corporation. The company was not only a major customer but a neighbor with offices contiguous to our downtown office properties. We had 26 accounts with this corporation nationally that all disappeared after the acquisition. The vacant contiguous property had an impact on our business. Fortunately, our own strategic plan anticipated the potential impact on our business revenue and property at the loss of this customer. Our product development plan was designed to mitigate this impact.
Strategic plans provide proactive thinking that helps you anticipate potential issues that may impact your business and plan for them. The impacts that I discussed here were all environmental and were negative. Next time I ll talk about positive impacts.